Week Dec 13th - Sell, sell, sell....

 .... is what I want to say, but I admit it's becoming harder.  However, had you sold into the 213 and bot into the 200 area as recommended last week, you'd be very happy right now.  So, do you sell again into 213? I'm going to argue yes, but with a tight stop looking to sell again into 220. I think if you try playing this three times from the short side, you will be rewarded handsomely - tight stops.

Who is going to buy this?  Short funds have a record small short position (read; no more short covering).  While there still remains industry buying, I don't see them doing it aggressively.  So, that remains small and large spec and trade. All are at least a bit long and would have to extend their positions substantially, which I think sets up a short term top (ie, if they do, it will be too much and we will get rapid liquidation into little buying).
Fund Open Interest - raw data * funds have never held such a small short position.

So, while I admit the markets ability to hold above 200 is impresssive, I still see the better reward/risk on the sell.

Bull:
* Daily slow sto is offering a buy signal.
* SP500 is pushing up and China did not raise rates - bullish commodities.
* Holding 200.
* Brazilian farmers not selling before next year

Bear
* Weekly bearish candles
* Monthly bearish candles
* End of year window dressing
* Weekly slow stochastic over bought and showing bearish divergence.
* My Open Interest indicators are screaming "sell".

60 Min - hit target on upside, bouncing of downsloping line. Still holds open this as a bullish wedge. Even if it breaks, the choppy nature of this makes it look more corrective.

Point and Figure - captures the trend well, removes some of the noise and shows where support has to hold. Caps the near term at ard 230.

Proprietary Indicator - capping any upside and indicating near a top.

Proprietary Indicator - also maxing out.

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Week Dec 6th - Classic bullish wedge, classic H&S formation or nice Elliot ABC correction down?....

...one bull vs two bears: But one bull in the direction of the trend. Weekly and monthly bearish candles still in play and zero volume last week, however, mkt easily held the 2.00 level.
Conclusion: i'm bearish, but probably a buy near 2.00 and a sell into the 2.13 area with a tight stop and possible new short near 2.20.  A definite sell beneath 198.65/35.

* Daily closing beneath 10 and 20 day MAs
* Further sell confirmation on daily Slow Stochastic
* UBS to liquidate 9,000 lots for index fund
* Brazilian farmers not likely to sell before next year due to tax incentives.


60 Min - possible bullish wedge, but I am still looking more at an elliot ABC correction down.

Key proprietary indicator - broke support (held for 8 weeks).

Euro/Daily - broke key support but found support at 1x1 multiple of first wave down.  Leave open this as corrective with invalidation given on a close above 134.47.  However, still held back by 10 and 20 MAs. Any indication that up trend has resumed will be bullish coffee.

Weekly - bearish shooting star and engulfing candles.  Last week was an indisde week. Slow Stochastic with bearish divergence.

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Week Nov 29th - OI update - N.Korea's "rain of furious hellfire"....

....has yet to materialize in coffee or anywhere for that matter, but Europe's woes have taken it's toll its currency and that has put pressure on coffee.  As per last night's Euro graph, we have closed solidly below the channel line and support.  This does not bode well for coffee, but nor does it preclude any short-term rally.  Open interest didn't offer any surprises but it makes me a little more sure we will not see a new high this year, but also a little less sure see exaggerated downside (155?). New high this year? Back to only 20 %.  Big new high next year (270 +)? 90 %.  Do we see 170 before 240?  60% chance and increasing.

Note: very surprised how many people are super bullish.

Bear graphs

Monthly - if tomorrow closes close to this, it will be a very bearish evening star candle.

Weekly - lots of stair step support on the way down.
* bearish divergence on slow stochastic
* 2 weeks ago, bearish shooting star still holding high in place.
* Last weeks bearish engulfing pattern/dark cloud cover - very bearish since it encompasses  the high and the close
* open interest steadily declining

60 Min - after break, found resistance at trend line.  Still, I expect this to be choppy and wouldnt be surprised at more attempts up.
* i dont buy this head and shoulders pattern

Open interest indicator.- makes me think upside it at best limited in the short term.

Week Nov 29h -

Open Interest comes out tomorrow, but a quick update.

Tough to read too much into Friday's fall off given the volume, but my single worst trade (long) was Thanksgiving 2008 with a similar low volume fall that precipitated a 5 day fall off to a 3 year low.  Lots to be weary of these days - I'll elaborate tomorrow.

Notable: Weekly chart showing a bearish engulfing pattern (key reversal) on further slow stochastic divergence and monthly to post a very bearish evening star.


60 Min Chart - cleaned up the chart and am now building bear targets. The bull counter argument is that this is a wedge pattern pointing to substantial upside.  Im still in the only 30 % chance we see a new high this year (but 90 % we see one next year).

Euro - evening started off with a big move up in reaction to the Irish bail out, but has come off sharply.  Friday's close below the 133.37 level was key, but needs further confirmation.  All quite bearish coffee.

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Week Nov 22nd - Tuesday update

12 Cent fall from Sunday - I'm right?  10 cent rise from today's low - Im wrong ? Answer, both are wrong.  The pattern off of the 213 high was a perfect ABC, 1:1 correction (Today's low was an exact 1 multiple of the first leg). Unfortunately, it still leaves open the upside.  But, I have not changed my odds on a new high:  still 30%. All bets off with a close above 216.  If this plays out as a correction with further downside, market should not get too into the 216 area.

Tradeflow: Looking for that 216 level.   Still recommend the short call vs the 190/180 puts spread.

Euro below 133.36 should strengthen the downside argument.

Week Nov 22nd - "...real money is made by the waitin' and not the tradin'..."

Mkt held the 212 area on both Thursday and Friday, but given strong Euro and SP500 futures, would expect to break that tomorrow morning, generating some more short covering; however, not too much since the fund short position is at near historic lows (short 3,808 as per Friday's disaggregated OI report).

Still, in general, I am sticking with the short-term bear opinion; 30 % chance we see a new high this year.  If we get in corrective mode soon, I expect we can surprise on the downside - 170 to 160 even. 60 cents from high and yet still 30 cents above this years early range.

Trade: still the H11 190/180 put spread financed by the H11 270 call.  Patience on this one is generating 1 to 2 cents premium.

Bull argument:
* Trend is up
* Buckets of money have/had been pouring into commodities.
* We have basically held the 198.65 level - leaves open another wave up.
* Fund net position is not too exaggerated - at 29,878.  2008 high was near 55 k.
* Washed shortage being aggravated by weather problems in CentAm and Asia.
* ICE stocks dropping at big clips.
* Elliot Wave showing big upside over next year and half.
* Who will aggressively sell this?

Bear
* Trend is up, but we are well oversold at 13 year highs.
* Daily and Weekly slow stochastic sells - Weekly showing negative divergence.
* Candles: Weekly still with bearish shooting star and daily still with three black crows.
* Mkt has hit all bull targets and now seems to pointing towards corrective targets.
* Elliot Wave suggesting we need a corrective 4th wave.
* Definitive shortage, but we should see more selling pressure coming in next weeks/months as more production comes to market. (Brazil probably ard 60 % sold).
* Open Interest indicators pointing down.
* OI has dropped nearly 20 k in 8 trading days.
* Who will buy this? Little short covering from funds left, roasters were forced to buy into FND.

Graphs
Tradeflow - if this rally is corrective, then it should not get beyond the high and may only point as high as 216

60 Min - don't want to see a new high, but if we do, I don't expect it above 226. So far, these targets have worked well; strengthens the long term bull argument, but also makes a short-term swing play down interesting.

Weekly - still looking for the question mark, but long term is up - big new highs next year.

Proprietary - getting the big reversal I was looking for.  Looking for confirmation this week.

Proprietary - confirming downside.

Week Nov 15th - Thursday Update

As expected in Sunday's post, Mkt has had its gasp up into exactly 212.00.  Last gasp? Not sure.  Yesterday I thought there was a 20 % chance for a new high this year.  Today, I still see it only as 30 % - basically due to the generally positive sentiment.  Still, The move off of the high as a nice 5 wave decline with an ending diagonal finishing just above the 198.65 break out a few weeks ago (bullish).  The rest of the move has been another 5 wave move up - which makes me think there may still be some more upside in the next few weeks.  But, again,  I still do not see a new high.

Still like the put spread combo with short calls; 270 call vs 190/180 put spread.

Tradflow - finished right at the 211.95/ resistance and near the 62 % retracement.
The fall was more impulsive than this rise and more volume with the decline.
OI has fallen from 150 k to 130 k in 7 trading days.
Weekly and daily slow stochastic sell signals.

.... let's see tomorrow's OI report.