Jump to content

NY Sugar N.11 - Soft commodity reflation trade


Mercury

Recommended Posts

I have been tracking a few soft commodities to see if there is anything to this idea of a reflation (wider economy inflation) across all commodities.  The idea is that the Fed policy will eventually produce the much sought (by the Central Banks at least) inflation but that the Fed will not be able to control it so we will get runaway inflation that will be led by commodity prices.  This has proven correct on Coffee so far...

Sugar is a contrarian play as the received wisdom is "sugar bad!".  However, as has been suggested by @TrendFollower I think, there seems to be an under supply at present as producers exit the market.  Again similar to coffee but for different reasons: for sugar is seems to be a consumer health driven issue but for Coffee it is good old fashioned supply/demand.

On the Technicals front the situation is similar between Coffee and Sugar on the charts with a wide price range and the markets completing a touchdown at or near the bottom in an A-B-C wave form, suggesting the next move will be up and will go higher than the recent highs, it certainly has been on Coffee!  Note this is also similar on Gold...

  • The recent move down looks like and A-B-C with strong PMD at the recent turn (monthly chart).  Wave C concluded on the Fib 76%, not marked on chart
  • On the weekly we can see a possible 1-2 (pink) rally and retrace within a channel that was then broken and failed a retest before rallying further in a series of 1-2 waves
  • Zooming in on the daily we can see a V-Bottom at wave 2 (pink) and then the 1-2 (blue) produced a double bottom with PMD at wave 2 (blue).
  • There is an ice line across the top of the V-Bottom that coincides with the next 1-2 (green) and is a strong area of resistance (now support after the breakout).
  • We now appear to have a 1-5 up to wave 1 (brown) and a short wave 2, which has just broken higher as I am writing this...

There is still a possibility that we see a retest of the ice line (crica 1290) but if the break of 1380 is confirmed then this is, for me, a bullish sign.  A next resistance level break would seal it for me.  If this is a turn bullish then this trend could run for some time and many points.

SB-Monthly_100120.thumb.png.713a3bee6fe5874b4a0cfe2e2cf8d558.pngSB-Weekly_100120.thumb.png.d61a5740067ff8e4268dbe9e2e536d25.pngSB-Daily_100120.thumb.png.b297c4fcda2fef9c5259ad48f91c618f.pngSB-1-hour_100120.thumb.png.99641e894ea3d440d0003c3f68cd3a6a.png

  • Like 1
Link to comment

Break higher occurred right on cue.  Certainly looks bullish on the weekly chart but need to guard against a potential reversal at the next resistance point, which could produce a retrace (counter trend) back to that ice line (1290).  A firm break higher would be a strong support for a long term rally from here.

SB-Weekly_110120.thumb.png.bd00b31f3a2a032d5c14dc5259cb3f33.png

Link to comment

Price has poked into the previous high (pink 1) resistance zone, which could spell a big breakout.  Risk is a pull back before that but for me the chances of a retest of the ice line (see previous post) are reduced as a result of the break above 1380.  Sugar is getting interesting now...

SB-Weekly_140120.thumb.png.fb254b185775fd2117dc9283d39be426.pngSB-1-hour_140120.thumb.png.894beb7e5be057201036549d0d4b83bf.png

Link to comment

May be seeing a short term retest and rally at the breakout zone on NY Sugar.  If we do get a higher high then the next target resistance would seem to be around the 1540 area and a break out through this puts the market into clear air for a long term rally IMO.  Short term retrace bearish moves still a concern until the breakout but the signs are good and the chances grow with each resistance broken, given the bullish set up outlined in the opening post.

SB-Daily_150120.thumb.png.be6f2500f6a901bca49b5d49aab7e723.png

  • Like 1
Link to comment

NY Sugar looks like it is breaking out of a so-called inside bar price action configuration.  This is where subsequent candles are contained within the range of the first candle in the series.  It is simply a way to visualise consolidation that is not a retrace but part of an ongoing trend.  If the price breaks out in the direction of the major trend then trade with it.  If it breaks below then reassess if it doesn't fit your route map.  There is a catch, as always, you can get a fakeout that reverses so close stops required but in the main this is signalling a continuation of the rally that my route map supports.

SB-Daily_220120.thumb.png.d0e68c613f48ae61a43d5ad1be822529.png

  • Like 2
Link to comment
1 hour ago, Mercury said:

NY Sugar looks like it is breaking out of a so-called inside bar price action configuration.  This is where subsequent candles are contained within the range of the first candle in the series.  It is simply a way to visualise consolidation that is not a retrace but part of an ongoing trend.  If the price breaks out in the direction of the major trend then trade with it.  If it breaks below then reassess if it doesn't fit your route map.  There is a catch, as always, you can get a fakeout that reverses so close stops required but in the main this is signalling a continuation of the rally that my route map supports.

SB-Daily_220120.thumb.png.d0e68c613f48ae61a43d5ad1be822529.png

You can see that for the week it's 4th in this weeks relative performance. 

image.png

Chart from https://www.finviz.com/futures_performance.ashx?v=12

  • Like 1
Link to comment
23 hours ago, dmedin said:

illennial do not want unhealthy sugar :P

In fact it is the older generations that are giving up sugar as science realises what Sci Fi comic book writers of 2000AD knew back in the 70s, that it is sugar not fat that kills your heart.  Of course that was in an age when people took 2 spoons of sugar with their tea...  But try to bake a cake or a cookie without sugar!  🤢

15 hours ago, TrendFollower said:

There are now other substitutes which are being used for sweetness in foods and drinks. These are more healthier

I assume you do not have any qualification in food science nor medicine?

"Most health authorities consider saccharin to be safe for human consumption. That said, there is still some skepticism about their potentially negative effects on human health. A recent study found that using saccharin, sucralose, and aspartame may disrupt the balance of bacteria in the gut."

There have been health scares with saccharin in the past, none proven but that doesn't mean it will not be in the future.  Personally I pref a natural produce (raw cane sugar typically) than a chemical but then again I use very little sugar these days.  And the chemical alternatives taste like $h1t!  I'd rather just give up cola, which I did and feel a lot better for it!

From a trading perspective the issue is that as a result of the negativity towards sugar, which has drive changes in consumer habits, the demand for sugar reduced and supply followed but too far, hence the potential for a bull market.  Simple S/D equation.

  • Like 1
Link to comment

The thing with these kinds of reports @TrendFollower is that they are based on statistical studies.  Advice changes over time.  When I was growing up there was no talk of cholesterol and then it was the scourge of the world and now it isn't so much it is sugar that is the killer.  My point was that no one can rely on this kind of evidence and I would not bet my health on such studies.  Therefore it is better to NOT use artificial sweeteners at all , just give up sugar.  Also sugar is a problem only if taken in excess (like most colas for instance...).  A modicum of sugar in your diet is not a bad thing and as it releases energy into the body it is actual food where as artificial sweeteners are, well just a drug!  I know doctors who will say privately that "a little bit of what you fancy" is a good thing because of the body and brain chemistry results it produces, not to mention good mental health (what would we all be like if we lived like ascetic I wonder..?).  This is why a balanced diet (not necessarily a health crazed one) and regular exercise are still the sane way to a health life.  Therefore I take issue with the notion that a chemical substitute for a natural produce is "healthier".  It just isn't and time and again this is proven and proven over again in the long run.  Just look at the Fats debate.  Now fat is not bad for you, just excessive amounts.  My relatives all ate fat and sugar in their diets and most of them died in their 80/90 and some are sill going...

So that is a fundamentals backdrop to my conviction that the sugar industry is not about to die, it is just adjusting to the new reality of lower consumption per capita (note there can be growth with population growth...).  Ont he back of this I think there has been an over correction in supply, which appears to be causing a supply issue.  So net I think we will see a sugar bull run until that supply issue is resolved and sugar as an industry is here to stay so no existential issues.  Within that backdrop I can let the technicals guide me to a decent trade if that is where I want to be.

 

 

Link to comment

Sugar seems to be on the rise again.  There are at least a couple of scenarios in play:

  1. With the breakout of the Triangle consolidation and Ice line the market is now in a strong bull phase with a series of 1-2s that should push through the next resistance level (1550) and on up
  2. The current rally is still to top out (maybe at 1550) and then a strong retrace 1-2 to set up the next rally phase.

Let's see...

SB-Daily_040220.thumb.png.b23d8988b722d831c57c2cdacfe417b8.png

  • Like 1
Link to comment

Not sure whether NY sugar has turned yet or not  we could see another higher high test on the key resistance zone before any retrace but if price turns lower before then the retrace to at least the 1380 level is on.  The more interesting opportunity here is getting Long after any bearish dip.

Link to comment
  • 2 weeks later...

Sugar has arrived at the Ice line support zone my technical analysis projected (and they say TA doesn't work...  Well well there have always been flat earthers!).  What next?  Naturally either price bounces back off this zone and into a long term rally or it breaks back below it.  I haven't a clue which TBH.  My current line of thinking suggests a bounce but the price action on the weekly and monthly charts is strongly bearish and I can see the market heading below 1000 before the reflation trade as seems to be the case with many soft commodities at present.

SB-Daily_070320.thumb.png.1b3105212a46894414638d4d73a0221c.pngSB-1-hour_070320.thumb.png.a5b3c4bcee5a2fbad6967f8cabcfb9b3.png

 

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Commodity Market Elliott Wave Analysis for Bitcoin, TLT Bonds, US 10 Yr. Yields, USD/ DXY, Gold, Silver, Copper, Uranium, Crude Oil, Natural Gas  Commodity Market Elliott Wave Analysis Update: Bitcoin is in the final stages of its bullish corrective pattern and will likely push higher in line the 2014 bitcoin halving. Precious metals gold and silver and GDX are in a wave four once completed expect another trend higher. Copper and Uranium are also in wave fours. The USD DXY and the 10 Yr. yields will continue to trend higher, that can take Crude oil higher also. Video Chapters 00:00 Bitcoin (BTC) ETHUSD GBTC 07:39 US Dollar Index, DXY / TLT Bonds. US Gov Bonds 10 Yr Yields 13:49 Precious Metals: Spot Gold XAU /GDX ETF / US Spot Silver XAG  17:20 Base Metals:Nickel, Uranium URA ETF / Copper 24:44 Energy: Crude Oil WTI OIL / Natural Gas NG 33:16 End Analyst Peter Mathers TradingLounge™  
    • As the cryptocurrency space evolves, Bitget keeps bringing up worthwhile initiatives to make crypto trading interesting and easy for its users as well as helping them maximise profit.  Gleaning from the likes of Candybomb to PoolX and the likes, the CEX has been seen to steadily provide these services. The PRE MARKET trade seems to be the newest product on the block right now. It is an over the counter trading platform that specialises in providing a pre-traded marketplace for new coins before official listing.  Simply put, it is a p2p framework of some sort that facilitates trading between buyers and sellers enabling them to acquire coins at optimal price thus enhancing advance liquidity and complete delivery at a mutually agreed upon time.  The interesting thing about the Pre Market is that; it allows the advocates or supporters of newly launched projects to trade through a contract before the token goes mainstream or before being airdropped.  This framework is very good for projects that have very high speculation, speculative traders should check out this product.  Good thing is the Pre trade is already live, you can leverage on it to purchase $MERL before its official listing, you could get to earn massive ROI. Here's the link; https://www.bitget.com/pre-market/MERLUSDT
    • Atomic Wallet is experiencing issues with their staking and rewards, so I would like to transfer my ATOMs to another crypto wallet. I contacted Atomic Wallet Support and they recommended Cosmostation Wallet and gave me instructions on how to do this. I followed the links they sent me, which required me to fill in my seed phrase. My ATOMs transferred to Cosmostation Wallet but were immediately transferred out. I never made that transaction. I contacted Cosmostation Wallet Support and asked them what happened. They informed me that I must have been talking to a scammer posing as support from Atomic Wallet. I contacted Atomic Wallet and they said I wasn't talking to a scammer and those links are legit. I lost my funds because my PC must be infected. Atomic Wallet wouldn't outright scam me would they?  
×
×
  • Create New...
us