Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Great report. We don’t know what the decrease in commercial shorts is. It could be as you say simply short covering. It could also be EFP related because we see EFPs as liquidating factors during this time, or it could be undoing of spreads. It’s impossible to determine but I go with spread theory because commercial shorts have been adding for weeks and the spread has now narrowed giving them the opportunity to liquidate. Also worth noting is that commercials bought calls. It’s not easy to make anything but a bullish conclusion with the COT report. But unfortunately algos continue to sell and they will stop only when they reach their collective position limits, whenever that may be. Until then we can will likely have short covering here and there but even if the buying is strong enough to propel the market 5 cents higher so that the algos will reverse, we then have the longs that will likely prevent any serious gains. I continue to say that any incentive to invest in several markets including ours is not present. The environment is simply uninviting for investors with all the damaging rhetoric coming out of DC that is hurting all markets. But it’s a mistake to believe that spec shorts will remain so indefinitely and just continue to roll forward. I have included Nagual’s COT chart from early November ‘16 as we were heading or were in the area of 175.00 reminding us that the potential for a an upward reversal is not only likely but the probability of one increases the more we weaken.