Sugar futures (SB: Number 11) broke below the lower channel today. It's possible that it bounces back into the channel but I sense that we happily go down the memory lane to the bearish tune we so love.
By the looks of the chart, the trade was to short at the upper channel line. Now it looks like a good long entry (to me), which is why you should short the hell out of it. LOL
I did say it's still "possible that it bounces back into the channel". Hence I'm holding only a small bag of shorts but will likely add more if we continue to go south from here come next week.
the real high for that spike was actually 28.9, good ol ICE canceled the 100s if not 1000s of lots that traded above that level...if that makes any difference.
The seasonal tendency is sideways to down through April: http://mrci.com/client/seapat/sb//sbk012.pdf The COT commercial index indicates that the commercial traders are more short than they have been in the last 5 months. The weekly stochastic reading is overbought and there is a shooting star on the weekly chart. On the daily chart, there is bearish divergence on stochastic and MACD and a VSA downthrust bar at the pivot high on 1-7-09 (see next post for daily chart). All of these factors are clearly bearish. The daily chart can be found in the next post and the weekly chart can be found 2 posts down. If you like to call tops and fade a strong uptrend, there is certainly plenty of reason to expect at least a temporary pullback.
Daily chart showing a pivot high on 1-7-09 with a VSA down thrust bar as well as divergence on stochastic and MACD.
Here is the weekly chart showing that the commercial traders are more short than in the last 5 months, stochastic is overbought and the shooting star:
Commercials do not short because they believe the top is near. They do so mostly to lock in profits or simply to cover production costs. They have the luxury option of selling short at any price they wish because they have the ability to deliver the physical commodity. So in our books their positions are meaningless in trading strategy.
I agree with your first paragraph, but those of us who successfully use the COT report for trading decisions would strongly disagree with your second paragraph.
Pour some sugar on me. Ya might as well enjoy the same ride baby! <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/CRgP-C7XU-s&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/CRgP-C7XU-s&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>