Sugar 8% off Last Weeks Highs

Sugar #11 futures in March 14′ have retraced 38.2% and are challenging the trend line that has served as support since futures put in a bottom in late August. As of this post price action has dragged futures under their 20 day MA (red line) as seen below. This is the first trade under that pivot point since 9/6 when this contract was trading just above 17 cents…current trade 18.55 or 8.5% above that level. The next support level is seen at the 50 day MA (light blue line) that currently comes in at 18.27. Much of the recent appreciation has been a result of improving global demand (Brazil for ethanol and China potentially building inventories) and ideas that the supply issue ahead would be less burdensome.

I had advised last week to lighten up on bullish trade or to gain bearish exposure for a retracement. The easy money has made made on short plays in my eyes so I have advised swing traders to start working back into bullish trade. The spike that occurred on 10/18 that lifted futures briefly above 20 cents/lb. caused by a fire at a terminal in Brazil was likely an overreaction. Though the Copersucar terminal will be off-line for some time it does not appear to effect the overall export expectations of Brazil. End users have been able to source sugar from Australia, India, Thailand and Pakistan with these countries picking up the slack.

So the correction has played out let’s get back in the BULL camp…

Sugar 8% off Last Weeks Highs

Sugar 8% off Last Weeks Highs

I am operating under the influence a major low was established this Summer and I will be playing from the long side using the Fibonacci retracement levels to help guide me with entry and exit with clients.

Sugar Trade idea:

Long March 14′ futures and use some sort of options protection. My suggestion is either selling March 14′ out of the money calls 1:1 or buy December or January out of the money puts 1/2 your futures position.

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Bradbard Research

As always, I’m here to discuss specifics and give guidance. Shoot me an email…Give me a call… you can reach me at: mbradbard@rcmam.com or 312-870-1653

Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.

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