Just be long..

Have not had a chance to keep up on this and still dont.  So, I still think this mkt takes out the high and actually have a new target at 3.38.

Previous rec was "buy blindly into 241".  Maybe shouldn't have used the "blindly" but it did rally into 272, but then fell sharply into 232.

But the overall trend is still up and the weekly chart bounced nicely of the 52 week MA (as it always does).

So...be long.

Note to self: wait for the mkt to fall 24 cents before making bullish prediction.

..or at least wait 1 or two days.  Litterally, the next day, the makt failed to take out the down trend and MovAve mentioned in the point and figure charts and then began it's plummet (for lack of something more pejorative).  The early warning signs at 265 and 261, would have helped, but probably the catalyst was Euro's big drop the very next day. 

So, does this mean that the second hypothesis of 240/220 is likely?  Probably, but I can still make a loose argument that the Expanded Flat had not completed it's five wave move down at 254 and is only doing so now. If so, a good target would be the 242 area.  With 4 straight down days and today's arguably down, we need a correction.  So, if it does get to 242 tomorrow, buy it blindly. Or, be patient and wait for confirmation of the resumption of the trend. 

Funds should be nearly 5 to 8 k net short as per COT report. 
Daily bullish doji harami today
Blaring H&S pattern targeting 2.00.
Baring any Europe catastrophe, I think equities will resume uptrend too.



60 Min - would like to buy into the red rectangle.

Point and figure - downside targets being confirmed with a very aggressive target at 212. 

d

Been a while, but not much has changed my opinion...except...

The last two posts (april/may) were looking for coffee to top out at 299 and return to 270 or 240.  Bold, yes, but that was what I thought.  The fact that it got above 3.00 made me doubt for a few days, but I needed consecutive closes above 3.00 to change my mind and we did not get them.  Now....

I am still looking for 3.20 / 4.00 in the next 12 months but, after going through the 2.70 target, I am less convinced it needs to correct to the 240 area first.  The correction from the 3.00 had two possibilities:
1) Expanded flat - this idea places the third wave top at the first 297 target and everything since that has been part of the correction, which ended at the end of the 5 wave fall from 308 to 254. This my preferred view, as long as the market stays above 254.
2) Zig-Zag correction - the other possibility places the third wave top at 308 and that this last 5 wave down is part of an ABC correction that goes to 240/220. This recent consolidation might just be the B wave of this correction. Not impossible, but not my opinion now.

If this current move starts getting impulsive, then I think the first hypothesis will be confirmed.  Impulsive should be a big move up that is sustained.

* bollinger bands have contracted substantially suggesting an impending breakout.
* daily stochastic has signaled a buy
* daily candles offer nothing
* BMF/NY Arbitrage strengthening - suggest market has to go up, especially considering that there will be more fine cup this year and yet the diffs are getting more expensive.
* Reverse H&S pattern seen clearly on the  60 minute chart
* Point and figure looking like a breakout.
* Open interest - last six months the correlations have been weaker, but none the less, it seems to be setting up for a rally. 
-- early invalidation can be had at 265/261

...oh, and I almost forgot, SOMAR is placing this year's frost risk the highest in 10 years. As I sit, freezing in Santos, I buy it.

First - fundamental side.  Not too useful in the short-term, but part of why I have the mkt at 4.00 eventually.

S&D - basically, if everything goes well (a Brazil crop of 59 mil in 12/13, for example), the situation will remain tight.  If something goes, wrong, well....

Weekly - thought we'd try for those boxes, but am less convinced now. Volume picking up, but OI dropping. 

Point and Figure- pattern is similar to sugar's recent reversal up.  As each of these MovAve get taken out, the new upswing should be confirmed.  Only good target for now is 307.  But too far away to bank on in the short term. Pattern is a catapult.

60 Min - reverse H&S.  Big H&S too.  But these obvious H&S seem to be a trap.  Id suspect at least 280 regardless of trend.

Funds- too much liquidation for a bull market.  Net short option position.

Merchant position - quite a bit of options protecting the upside, but the further this rises, the more bullish it gets.

May 1st - Really funds, you couldn't get a 3.00 close on a zero volume Friday w/settlment at 299.85?

Not sure what to say about a 299.85 Friday settlement.  Last two weeks have been the two weekest volume months since Dec.  Frost season coming, so I may not get the correction I was looking for, but Ill still hold out for my consecutive closes above 3.00 as confirmation the trend has resumed.  Open interest seems more bullish than bearish, but nothing standout.  Roaster position interesting in that still relatively low futures but high option component (roaster position probably has some 100 % long trade houses, therefor their OI position moving into the "roaster side").

Point and figure - so far, PF has been the most reliable chart tool.  None of the downside targets are being met and nearly all of the upside targets are being met: confirmation of the strength of the overall trend.  Targeting up to 334 now.

60 min - pattern less clear, but of the two possibilities, still seems to point down in the short-term.  If it does continue up from here, it will like a 5 wave move off of 255 and therefore, likely beginning of wave 5 of 5 and the big rally I was hoping for later on.  I am about 60 % sure on that; ie, not very. More of a wait and see approach now.

Weekly - took out the bearish shooting star candle, but still trapped in upper channel line.

Real - bouncing off 2008 low.

Roaster - roaster position interesting.  relatively low OI, but very high option component. At the least, its supportive over then next 6 months.

Funds - fund position turn up again. Relatively low option component going in to frost season. Might be indictive of a willingness to play the long side with futures....and thus, probably a lot of volatility going forward.

April 25th - 299 Target met

299 target met and a little more.  As illustrated in the 60 minute chart, I still favor this as a large ABC correction.  In this case, it would be a big, irregular flat or possible running flat.  If it's an irregular flat, we should correct back to ard 244.  If it's a running flat, mabye only to 270 area.  I prefer the 244 area.  However, the other alternative is that the first move from 297 to 255 was the correction and this last move up is part of a new and powerful uptrend.  For the latter to be true, I would need several days closing above 300.  The last few weeks have traced the technical script really well, so I am going to continue to believe what the graphs are telling me; and they are saying it goes down from here.   Stop on this would be any close above 300.   If you don't believe it, but are short, a close intraday stop would 295.85.

Ill follow up tomorrow with open interest.  

60 Min - illustrating the above possibilities.  This last wave was pretty impulsive, but no follow through above 3.00, does suggest some weakness.

Real - when i first got to Brazil a year ago, I told everyone we would be testing the 2008 dollar low (Real at 1.5650) and no one believed me.  Now everyone is saying 1.45.  Technically, this looks like an ending diagonal.  It does not mean that it cannot gasp down, as it is doing, I think it's possible that the 1.56 will hold. Watch this over the next few days.  A break below 15650 will open up a big area and will be bullish coffee. If not, it will favor my correction.

April 14th

No longer updating every Sunday; only when my opinion changes or targets are met.  And they were met today.  So, is that constructive with more upside or do we retrace.  I am still thinking the larger move off of 297 is still part of a correction that implies a new high eventually.  The new up move off of 255 is a correction of a correction ! Not exactly clear yet, however market has traded nicely in technical terms with today's high hitting near the 78 % retracement of 297/255. This second leg up, launched from a bull flag with base at 270, is projecting up to 299.  I also have some other point and figure targets at the same level.  So, I would continue to err on the long side with your first stop ard 281.60. Or more agressively, 279.50 /277.90.

60 Min - also, depending on how you draw this, you could make the last few months a bullish wedge pattern.  Seems the first leg down was a a 5 wave diagonal pattern which makes me think we test lower in the medium term.  Can we take out 300, test lower and then resume the trend? I think so.

Weekly - held nicely the trend line with volume increasing substantially. Bearish candles still in play.  Again, this looks like a third wave of the final 5th.

Point and figure - pointing to 299.

Open interest - fund future only position showed liquidation, however, quite a bit of options (yellow bars) recently, adding to long position.  (mkt has increased nearly 20 cents since report (tuesday mkt).

Week April 4th (brazil export update)

How big was the 2010/11 crop? Jan/March shipments as per Cecafe (unofficial).
* There was a larger than normal proportion of Conillon, but only slightly. However, could be indicative of blend changes.
* Record month after record month of shipments.  Even at 56 million, there is not going to be much left.

Week April 4th (Tuesday)

Despite the big day, seems obvious that, after a nearly a 42 cent fall, we would have a substantial correction.  I expected it last week, but we never got the buy signal (break abv 270); and even today, we still didn't break it vs K11. Still, today was a key reversal bullish engulfing pattern (opposite of what launched the fall from 297).

Not much to add this week.  Tomorrow should break 270 and that will provide the correction targets.

Expectation in medium term is that we still see a little more downside before the trend up resumes. Short term (this week next..??), maybe another test of 282.

Daily - bullish engulfing, but bouncing off 20 day MovAve. Slow stochastic oversold and nearly nearly offering buy signal.

60 Min - looks to be a completed 5 wave down (beginning diagonal ?).  So, would imply more downside after the correction up.

Week March 28th - Double bottom or H&S?

Let's start where Wednesday's update left off and look at a few possibilities. Thursday's morning break of the 268.20 led to a near vertical fall to test 260 and then retraced the whole move in a similar fashion.  Obviously 260 is now very significant and the move off suggesting a test of the new range highs (280/285).  Will it? I do not believe that the move from 297 to 260 was the full correction.  I still find open interest a little bearish but becoming less so with the fund longs getting less and less net short. Still, few new shorts and thus no conviction to the downside.  If the mkt breaks 270 tomorrow, I would be looking for another attempt up.

Conclusion: still looking for more downside, but expect this bounce to develop a little more. 276.60 or 281.20/285.


60 Min - if the assumption is that the move from 290 to 260 was impulsive, then thus correction looks text book ABC (3-3-5) correction.  This would target between 281.20 and ard 285. If ends up being a running flat, then it would not make it past 276.60.  Either way, better to be flat and looking for what then next move is.

Daily - shows nicely the bearish signals (engulfing pattern) with fall to 260 and now the bullish hammer off the test of 260.  However, we did test the 10 day MovAve on Friday and came off. Basically, if we can't take 281.20, we are going lower than 250.

Point and Figure - break of 45 degree line would open up the possibility of hitting 283 target and consistent with the Elliot ABC count discussed above.

Commercial Net (open interest) - surprisingly, still lots of selling to do. If market does fall, expect to see this go back to 2008 net position and set up another bull run.

Supply and Demand - my own Supply and Demand showing a deficit for 2011/2012.

Euro - still held back by trend line and retracement at 143.

Week March 21st (Wednesday upate)

Looks like you could add to a short with a break below 268.20 and lower the stop to 275.40.  A break above 275.40 would target 290 and might make a new short term long interesting.  Still, pattern is bearish.

60 Minute - never call a H&S before it happens...but it is tempting.

Point and Figure - triple bottom sell set up. Targets 250. None of the upside targets were met = bearish.

Week March 21st (Monday update): Bull resumed?

So far the rally off 260 has hit what could we be considered good "bounce" targets (281.20 was previous support and a 1.38 multiple of first bounce).  So, is it a bounce, or a bull resumed?  Last week I thought we would try for 280; mission accomplished, Sr Arbusto. Therefore, I'd be a seller with a stop at today's high and would have sold 280 gladly. Again, trading against trend, but tight stop with good downside potential. Open interest mixed but more supportive of bear argument, than bull. Still, any move to the downside should be viewed as corrective and eventually we will see a new high.

We will probably have a lot of people talking about the new head and shoulders pattern forming, again (remember all the talk at 200).  There is the potential, but far from any sell signal as of yet.

In conclusion:  we got where I thought we would and I think we could see further downside.  All bets off/postponed with a close above 282.

Weekly - bearish shooting star in effect and slow stochastic offering sell signal.

Fund - substantial long liquidation with little increase in shorts.  So, no short cover and ammo to sell and those that didn't get out probably thinking twice about it now and likely to take advantage of this bounce.

Indicator turning up but not yet accelerating.  Still, it is bearish.

60 minute - rally looks corrective on little volume.  Possible H&S pattern forming.

Euro (weekly) - at critical point.  needs to be held back by 143 level. A break of that changes the scenario substantially = bullish/ supportive of commodities.

Week March 14th - Targets reached

Targets reached...and then some, but the 292 + target met all criteria for an intermediate top and has since plummeted.   What would be some good targets on the down side?
If this was the end of the 3rd wave, then a 38 % retracement would be 215.35 and a 50 % would be 195.05.  Seems substantial, but in %, its only a 27 %.   What is the likelihood that we get there?  100 % of some period !! , but in the next 3 months or so, I'd say there is a 50 % chance and increasing by the day.  Is it a sell now?  I'd be looking to the intraday charts to guide that.  Intraday, this has the look of a 5 wave move down.  So in the short-term, we should see some retracement. I would have liked to see this try for 257 first, but if it doesn't, then I could see it try at 280 again.
Once the panic settles, there is still the massive bull trend.
Bull arguments:
1) Bull trend is still intact.
2) Fundamental picture hasn't changed.  Brazil exports hint at little carry over.
3) Fund position is not over extended by any strech and much less so now.

Bear arguments:
1) Hit the upper channel line on 10 year weekly chart.
2) Hit the 292 + target
3) Daily key reversal
4) Weekly bearish shooting star with follow through this week.
5) SP500 looks like it topped earlier and commodities followed shortly.
6) Risk aversion
7) Slow Stochastic now hooking and suggesting sell signal for this weeks close.
...etc.

Bear arguments dominate for time being.

Weekly - nice bounce off upper channel line and very bearish shooting star candle with follow through.

Point and Figure - Broke through all support.

OI Indicators - indicator needs to accelerate, but it is pointing to more downside.

Week March 7th - Fat Monday?

Phat Monday if you are a sambaing (sp) Brazilian producer.  Today had the feeling of just being out the gate.  With no Brazilian selling, Centrals arguably done and some talk of a less than stellar Brazil off crop in 2011/2012, maybe 292 near term is cutting a little too conservative.   Open interest seemed to confirm that trade is lifting hedges and fund position is liquidating into it (or taking a breather); arguably a very bullish OI report and Monday's performance seems to confirm that. Furhtermore, I have my close (and then some) above 276.  This should open up 292 + (80/20 odds).

Brazil exports - unofficial Feb exports seem to show the pace steady, leaving less and less coffee in Brazil.

Weekly - love how this last wave taken a perfect 3rd wave feel - vertical and effortless. Not sure when and how the 4th wave will come in, but my guess is it won't have the energy to do too much damage?  30/50 cent correction?

Point and Figure - lets try something a little different.  These graphs take a lot of the noise out, but to be honest, there hasn't been noise since the second move off of 2.00.

Open Interest - Disaggregated producer open interest - futures and options.
looks like a lot of hedge lifting there.

Week Feb 28th -

Still think there is more upside.  As of today, Tuesday, market is selling off and we still haven't closed above 276, but I think if we do, then we target 292 +.
* Fund position while relatively high, has room.
* Historically, roaster position at this time of year, is bullish.
* Things can only go wrong (ie, there will be no good news), so, if there is bad news (frost..for example), it will be explosive.
* Brazil has been exporting at record levels (see below).

(as I write, coffee is now 4 cents off it's lows).

Weekly * still closing below 276.

Funds

Brazil Arabica Exports - * record exports for 2010 and first month of January.  Despite Brazil's record 2010/11 crop, there will be little carryover over.

2010 jan through Dec

2011 jan

Up, up and away

Been a while since last post....which I wish I could erase.  Mkts effortless run continues with (reckless) abandon.  Or, is this the most fundamentally sound bull market ever? One interesting point to note is that the market bounced off what had historically (last 30 years) been a point of resistance; in that, it was the high of 86 and 94. While not documented, my view was that if we broke the 252 fibonacci target, the next target would be 276 (which we did within 10 pts). Next target, if mkt follows through, is 292. This week was the most bullish weekly performance since Dec/10. Driven obviously a bit by price fixing before first notice day, but I think complacent funds are now hoping back on.

Long term perspective
* A close above 276.00 should open up next tgt box and upper trend line.
* From elliot wave perspective, this is still the extended 3rd wave of a 5th.  Expectation then is that, even if this is an intermediate high, there is still more upside eventually.

Roaster position as per Futures and Options COT report.
* Disaggregated open interest for Roasters
* Grey - Nov-Mar, higher demand
* Obs: steep drop off of OI is obviously option related.
1) could be an exorbitant amt of long calls/short puts with  low deltas expiring (1 week before)
2) faulty data * if the option were in the money, there would be less of a drop off.  Deltas 1 week before expiration would have been low enough that the net position should not have moved, unless there were lots and lots of options.  ?? still not clear to me yet.
* Take home: historically (last 5 years) high roaster position at this time of year has marked at least a period of price stability if not, further upward movement.

GCA stocks - stocks have moved up recently, but looking at the historical monthly movements, that trend is likely to nipped in the bud shortly. Feb and March should be months in which stocks increase.  Jan in both last year and this year was below norm. Last year, Feb was dramatically below average (actually a decline).  I think it is very unlikely what we will see stocks increasing, especially given Brazil's off year coming up (despite being a very strong off year).

Conclusion:  Tough to buy now, but this mkt has more upside (4?? maybe). 3, a given.  3 a given without a meaningful correction?  Seemed so unlikely, but maybe this market is that bullish.