Commitment of Traders Report to Cap Coffee's Rally

Commercial Traders Nail 20% Rally. Anxious to Take Profits.

Classic Commercial trading pattern mimics the rise and fall normal market behavior.

 

July 23, 2012

This trade setup is merely a random sample of the day’s trades generated by COT Signals. To track our work their and receive all of our nightly trading recommendations, click here.

We published a buy recommendation in the coffee futures market on June 22. We suggested that based on the movement we saw in the Commitment of Traders Report as well as the discrepancy between JO, a coffee ETF versus the coffee futures, that the coffee futures market had become oversold and commercial traders were building a base to force short covering in the futures market.
The coffee futures market has rallied 20% since then and commercial buyers from one month ago have turned sellers. Commercial sellers have pared their position by 23% in the last three weeks. The heavy selling has turned momentum negative while Thursday and Friday’s action created a reversal and sell signal from overbought levels. We will be selling September coffee futures and placing a protective stop above Friday’s high of  190.85.

Commitment of Traders shows reversal in Commercial positions.

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ANDREW WALDOCK
866-990-0777
This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities 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 as to the accuracy, and is not to be construed as representation by Commodity & Derivative Adv. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

Covering Coffee Futures Short Positions

Commercial Traders Holding Long Coffee Positions

Small Speculators and Funds Covering Short Positions

The coffee market has been one of the weakest markets of 2012 with prices declining more than 25%. Commercial traders were heavy buyers on the market’s decline to the 180-190 area where the market consolidated for months until May’s decline hit all market sectors.
Commercial traders have held fast to their position with very little net change since the middle of March. It appears that they may be getting the bounce they’ve been waiting for.
I expect this is primarily a large speculator and fund driven short covering rally given the magnitude and the timing as the July contract expires. Never the less, it’s perfectly conceivable that we trade back to the bottom side of the resistance between 170-180. Our protective sell stops will be placed at the swing low of 150.10
Trading Signal provided by COT Signals.
Call for Free Trial.  866-990-0777.

ANDREW WALDOCK
866-990-0777
This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities 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 as to the accuracy, and is not to be construed as representation by Commodity & Derivative Adv. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.