click chart to enlarge In this week’s edition of our Trade Focus which was prepared on Thursday during the course of the business and trading day, we had this to say about the sugar market:
Sugar (Oct.) – Sugar may be poised for a correction of some consequence if not having placed its top. Tomorrow’s close will be important as to whether it signals a weekly reversal. For now we believe that the more aggressive well margined trader can initiate short positions at a price level of 2350 or above with suggested stop protection of intraday penetration of 2490. The retrenchment resistance levels based on the monthly data are approx.: 1889 (hit); 2402m (hit); 2915. The next series above is approx.: 2663; 3414; 4166.
Unfortunately only our email mail list of clients and subscribers were able to receive this prior to trading today (Friday Sept. 4). There would have been a chance for those who agreed with the idea and plan to have initiated the short entry in the October Sugar prior to its more than 250 collapse (at today’s lows) and 150 lower daily close. Every point in the Sugar market is worth $11.20. If a short entry was initiated at 2350 and the close was 2160 that would be 190 points x 11.20 which equals $2,128 per contract.
We do not like to sound like we deserve a pat on the back or leave a wrong impression of any sort by bringing this instance to attention. As they say, even a blind squirrel finds an acorn every now and then.
What this may illustrate, though, is that if you wait to see the Trade Focus on the website which often is a full day after our sneak preview via email there may be something that would spark an interest and cause an action that could be missed by waiting.
Now let’s figure some other possibilities using the Fibonacci retracement levels of support. If a position was short from a price of today’s 2160 close basis the October contract and the first fib level of ~1976 was attained, the increase in value would be $2,060.80 (2160 – 1976 = 184 x 11.20). At the next fib retracement level of support, the .500 at the price of ~1817, it would be $3,841.60. Finally at the preferred .618 golden ratio at ~1658 it would be $5,622.40 per contract.
Of course a trader may initiate a short entry at today’s 2160 close of the October sugar and see the suggested stop protection elected at 2490 which would mean $3,696 could be suffered as a loss. This suggested stop protection, however, was originally based on a short entry from 2350 as in the Trade Focus and likely would not be chosen with an entry from the lower entry point of 2160 used in this example. A better risk to reward is typically much more preferred.
If you don’t want to miss something like this and believe it would be of benefit for you to receive the weekly Trade Focus the day it’s written we’ll be happy to add you to the email list. All you need to do is ask.
jmajer@mfglobal.com312 261-5810
800 321-5810
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