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CT overbought. Looking for sideways to take a breatherTechnically overbought. New highs made with declining volume. Not an indicator for continued strength. Overall uptrend is intact, but we are near upper end of trend channel. On top of that market is overbought based on BB, RSI and Stochastik. Targets: 1. Middle bollinger Band 2.Upsloping red shorter term trendline 3. Longer term red trend line, and 100 day MA and lower BB (all similar area). --> big support 4. 200 day MA (yellow)
C
by mjhillpp
1
Things point to 140 for now (2nd month continuation)Looks down to the 140 area for a test. However as long as the orange or blue trends hold, the upwards trend is still intact IMHO. short call spreads above 165 in Dec or January might be a good idea. I would buy any puts as downside seems limited for the moment and option volatility might decline during a sell off diminishing returns on long option strategies. 1x2 put spreads 10 to 15 cents wide for flat selling the 2 buying one over two month could be good IMHO
KShort
by mjhillpp
2
KC shortUpdate on a upsloping trendline (blue) which acts as resistance On the 5 hour chart, we should have generated a sell signal. I still remain short via puyt spread 1x2s, as frost is no longer an issue. It appears the market is still digesting this from last week and should correct lower IMHO as physical supplies out of Brazil remain steady. Warehouse stocks in EU and US plenty as well. Dont get me wrong, as shown in the blue channel, even if we have a correction lower, the blue trend channel might indicate a change in trend, however the frost damage is simply not there and in order to rally, this market would need breaking news like that.... without anything of that sort coming out, I see a correction lower before making new highs. Still, knowing coffee, I remain short with 1x2 calendar spreads, buying the downside 1 leg in one month and selling 2 lower puts in a month further back.
KShort
by mjhillpp
2
No frost in BrazilSeems like no frost in Brazil. It was a busy weeks last week and throughout the weekend with fears a frost could hit coffee areas. None has been confirmed and worst fears did not play out. Once all of this is digested I expect some downside opportunities as the market goes back into trading technicals rather than emotions. Quite oversold and we saw sell signals on RSI and Stochastik a while ago. Also, the 5 hour chart will provide with a sell signal, which has been a superb indicator of short term price action (5-10 days). I am short via 1x2 calendar put spreads, long the 135s in Q and short the 125s in U and various other like this. As we move lower, option vega will come in and provide some nice profits. Also, selling the Sep (U16) contract provides with some good premium as this is considered the frost month. Looking at futures spreads, they have been weak the past two trading sessions and also foreshadow price action. Support at 134, then nothing until 125
KShort
by mjhillpp
5
Still waiting, beware bulls; risk reward not so greatPro Long (Chart): - RSI and Stochastik created buy signal - Orange support line Pro Long (Physical): - ICE warehouse stocks new lows - spreads tightening ever so slightly Contra (Chart): - still in middle to upper end of trend channel - room to go in terms of lower Bollinger band - long term trend still down - risk/reward for long position not there IMHO I start looking into selling put spreads out in August or September. For example the U16 110/100 p spread. Due to the negative put skew, 1x2s also work great IMHO (selling the one buying the 2s are also an interesting idea).
K
by mjhillpp