Discussion in 'Ag Futures' started by alientrader, Nov 20, 2007.
anyone trading this here?
The largest exporter of Coffee is Brazil, specifically the Sao Paolo region. They primarily export Arabica but a small amount of Robusta also originates there.
The price of Coffee was rising earlier in the fall due to a lack of rain. However, if you have your entire life savings in your coffee position like myself ( long 1 contract Mar Coffee), you check the weather every day during your crappy low-paying day grunt job. ... actually I check the Sao Paolo weather several times a day (Yes, I have no life. )
and since we're dealing with REAL money, I check the weather here: ... just in case the above forecast is wrong.
and just for good measure here:
Finally, coffee does NOT have a very strong seasonal tendancy (vis a vis hogs and cattle) but it does have a slight tendancy to rise from late November into 1st 1/2 of December. Refer to the following seasonality works: (Schwager on Futures -- Fundamentals by Jack Schwager; Seasonality by Jake Bernstein; Commodity Traders Almanac 2007 by Hirsch and Barrie) See also
Steve Moore's seasonality web site:
I have not checked out John Momsen's seasonality book and would cordially invite comments on it by interested Elitetrader members.
Of course, the above can be completely thrown out the window and you could lose your shirt if you run into a "black swan" event (ref The Black Swan by Nicholas Nassim Taleb)
KC Chart for your comments... (Mar 2008)
You need to expand the y-axis on this chart to get a better VERTICAL look at its true action. Within the last two weeks, there have been a couple of interesting gaps in places that belie the actual price action. Additionally, there have been at least three large price-bar constructs during this same time that are VERY HIGHLY indicative of STOP-RUNNING -- so, right now, this is a HIGHLY-MANIPULATED market. Finally, over the last 4 weeks, per the COT, the COMMERCIALS have been in the process of unwinding massive short positions, at the expense of the Funds and the Small-specs, with more to come.
Due to the price pressure being applied by the Commercials and the "head-fake" direction of the price manipulation, it looks to me like KC is headed for a drop that has potential to go all the way into the 115 area. This drop may have already begun on Monday, in spite of the last two days' action, so keep your eyes open and watch the fur fly
If I were you, I would stand aside until I see KCH08, currently at around 127, trade either ABOVE 130 or BELOW 122.50 -- this is the SAFEST WAY to determine direction. You will have time to get into the trade if the KCH breaks either of these levels.
Oak Harbor, WA
Here's a daily KC chart with expanded Y axis.
Have at it!
Many thanks for your insight and comments.
That's a lot better. You can actually see the action better, huh? I LOVE candlesticks, too. However, and I should have mentioned this in the last post, sometimes you just need to look at this stuff in simple OHLC bars to see what I was talking about.
I already gave you my thoughts in the first post, but, at that time, I had to look at a different view of the same chart to see what was going on. I also "cheated" and looked at a few indicators, which didn't tell me that much. It was when I saw the Commercials unwinding what looks like RECORD large short positions on the COT over the last month or so that I was a little impressed.
Anyway, go back to my last post and see what I wrote, again, then see the chart I used instead of yours, below:
Now, if you can imagine this chart without my messy comments, you can see what a clean look you get of price action with the simple bar chart.
I'm not saying the bar chart is better than candlesticks -- they COMPLEMENT each other pretty well. So, when you're looking at something and trying to make a decision, it is often important to view the chart in BOTH simple bar and candlestick mode.
Directionality is usually easy to see with the simple bars. On the other hand, I can visualize momentum a little better with the candlesticks. If your y-axis is too flat, you can't really see either of these.
I find that, most often it is the successful scalpers who put up chart examples in candlestick mode with real short y-axes. This is usually because they are also viewing 3-4 different indicators on the same screen with the datastream chart. It works fine for them, but I would have to have at least dual monitors to do this, simply because I would want to expand the y-axis of the bars/candlesticks.
Oh well, enough of this. I hope this helps you understand my previous synopsis of KCH08. REMEMBER THE POINT I MADE about WAITING until either 130 or 122.50 to decide WHICH WAY you would enter this trade!
Oak Harbor, WA
Great advice on the coffee market! Not much of a coffee trader (hell I dont even drink the stuff) but what you are saying technically sounds good. Im Gonna have to check out the fundamentals in the market and go from there.
I feel like I just took a full semester of KC Chart Analysis. Thanks again. As you all are painfully aware, I'm a newbie to this and appreciate the insightful analysis.
With great thanksgiving gratitude,
Just thought I would bring this topic up again. Im short march from 130. Funds continue to cut longs and increase shorts. Looks like the head fake prediction that mike stated should come true. Brazil weather is favorable for the crop and the brazilian report wednesday was a non event. Todays tropical commodity report will be interesting. I think this is all setting up for an absolute free fall in this market pretty soon.
We are at the beginning of a multi year coffee rally from a tachnical standpoint. I am staying long the March Coffee.
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