View Full Version : coffee

03-12-2002, 12:15 PM
Coffee got over the 5000 level (May contract) on 3/8/02 and we've see a nice run up to the 5530 area.(short covering?) If you are looking at this, the time to enter would be on a pull back to the 5050/5075 area. Just my opinion.

NYBOT will still not accept a GTC order, day orders only. So you or your broker will have to place orders and/or stops each day.

03-15-2002, 11:32 AM
If there is a near-term trend in coffee, I would say it has to still be down. There have been up-blips, but none of them has shown any followthrough in any underlying buy-side demand mechanism.

This is a larger up-move than we've had recently, but the number of downtrend traders who had to flatten out shorts, and the number of systems that would treat this as an upside breakout, would have to be enormous, and could themselves account for 80% of the move they are reacting to.

Of course, this is the first time buyers have had two misses in a row - one at the beginning of December and one at the beginning of March -without the second one coming at a lower price, in a while.

I would buy it here if it goes sideways, or if it, like, closed two days above 58. Or, if it washes people down and out from here, I would buy it if it inches its way back up to here. So yeah, I'd call this an uptrend if I could have gotten in sooner (to front-run the current crop), but at this point I'd rather wait to see if the current longs hold.

But, if it goes back down to where people actually get a chance to buy - something more buy-opportunity-creating than a one-day shakeout and reversal - is the last time I'd be eager to bet on an uptrend that has already begun. This may just be a natural place for selling to taper itself off, and we could expect a choppy interleave of buyers, developing for various reasons, coming in.

But I want some proof that the sellers can't be manufactured in a heartbeat, and I'd rather see the people who make coffee wither a little longer, to make prices like 70 and 80 harder to jump on. Course, like I said, once it went dead, might have been a good time to start fishing for just the kind of quick uo-blip we've had.

So give it another day for the system action to sort itself out, and see what happens, where.


03-16-2002, 12:07 PM
As the economies anticipate a pickup, it seems all the commodities are rising as the bonds fall. But when you look at how this has manifested in crude oil, as compared to coffee, it looks like crude is in more of an uptrend. It seems like the coffee is battling it, and all the groups have picked up a lot of system buyers, but crude looks like it is taking it the most naturally.

Economically, I have no reason to think crude should ever do anything but go to zero. But that's why trend-following is so magical! Perhaps it's, like, binomial, where OPEC suppliers only have to cheat when the price gets low, and can sell even less when the price is sufficiently high, or something.

To reiterate, it doesn't make any sense to me that crude should rise in price. But because it is an uptrend, regardless of what a million idiots with their own ideas think it should be doing, you have to buy.


P.S. I remember once, many years ago, I was short way too many thousands of barrels of crude, and one day it spiked up at the close (before dropping two bucks the next day). On the way home, I was driving slow past all the restaurants, looking longingly at those big grease-recycling bins out back, trying to figure a way I could get them on a rail car to Cushing, Oklahoma.

03-16-2002, 03:44 PM
Crude right now is too dependent on two pieces of news to get too caught up in the trendline. If Russia continues to hold their exports and if the US attacks Iraq are probably about 95% of the determinant of the price right now. My gut feeling is that Russia will start pumping more, but maybe not announce it. If that is the case then your bet on it going up might just work for a very short time. Definitely don't sit on it for more than a week. Maybe best strategy is wait until after the supply numbers come out on Tuesday/Wednesday. If they are bullish on crude, then ride the trend. If not just sit it out for another week. Short term the prices can go up to about $25/barrel, not certain but its possible, but medium and long term its impossible to maintain that level as you say.

03-16-2002, 04:43 PM

03-19-2002, 12:55 PM

03-19-2002, 12:58 PM
A number of months ago I said to keep an eye on the coffee market and if it stabilized(it did)

sell at the money calls and buy many out of the money calls.i have been on vacation or the road for almost two months and don't know if the volatility in the options made this a good play or not.