We wrote in the October 16th and October 19th editions that both Coffee and Sugar were likely to dip but that the longer-term picture remained positive. They did both indeed drop and now we have some new signals to report. Coffee first - the 'front month' is about to expire and has generated some bottom extensions. Buy the next one along, which is March:
Sugar has also made a signal, as has Cocoa - they have both compressed:
There is no particular reason to think that these two will start new trends in the same direction - it is mere coincidence that they have both compressed at the same time. Nonetheless, we watch with interest to see which way they 'break' and will follow Sugar if it breaks upward. We have no preference about the future direction of Cocoa and so will probably follow it either way - unless the break is too fast to catch. It is range-trading however, so beware of whipsaw - don't take a long position near the range highs or a short near the lows.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com