We have noted the ‘rolling speculations’ aspect of the broad commodities sector. At times it seems as though the hot money is rolling in and out of different commodities (ref. the general Agriculture moonshot at the end of June and big drop in early July to retrace a majority of it). Suddenly REE became all the rage and did a vertical leap after being ignored for months. History is replete with these examples.
Credit where it is due, I saw this setup in Sugar because Ross Clark, an associate of Bob Hoye’s service, saw it. Bob was kind enough to include me as a complimentary subscriber a few years ago. He is one of my early analytical influences (going back to 2002) so that was really cool. A downside is that I often have to disagree with him and that is harder to do when you’ve learned a lot from someone. But those are the things that make markets.
I’ll draw up the sugar play, in my own words and with my data points using the ETN, SGG. Much like what we’ve been looking for with the Energy ETF (XLE), the price is trying to make a hold above the SMA 50. Big volume came in last week and that is a positive. MACD just went positive and RSI has ground its way above 50.
The weekly chart shows a massive spike in negative volume. So it was a slightly down week, but the daily chart’s more detailed view shows that much of that ultimately negative week actually featured positive daily volume. The weekly also shows a massive decline from a topping pattern that formed from mid 2016 to early 2017. The big downtrend into the end of June fully realized the bear pattern’s measured target of 26-28.
As for targeting, if a trade in SGG is successful (i.e. it holds the daily SMA 50 on the 1st chart and moves upward) the 1st resistance comes in at the 32.50 area. But commodity speculations being what they often are, the moves can generate a lot of power and I’d think that a minimum target could be a 38% Fib retrace to 37. But the 1st real resistance (after 32.50) comes into play at the 50% Fib, so let’s call 40 the best target if the trade works out. That is about 31% higher than the current level.
Taking it further, per Sentimentrader‘s Commercial Hedgers data, it is very clear that an extreme to the contrarian bullish side is in play just as its opposite condition was in play before the decline.
A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.