Coffee futures, short for 13 lucky days, closed today with an end-of-trade gain of $2,976 on a margin requirement of $2,970 per contract. Doesn’t that seem kind of mystical?
They were a bit deeper into profits at yesterday’s or today’s low but what does that matter? A profit is a profit. And there have been a lot of profits in coffee since I wrote this September 13th:
KC – Coffee futures find their swing rhythm
Indeed, up 360% on swings long and short in less than a month.
The contract, after adding this swing’s 100% gain to that total, is now long on today’s close.
(click on the UPDATED CHART for a larger view)
The current coffee swing, which is short, is up $2,568 per contract at today’s close. The margin requirement is $2,970 per contract.
Would like to see at least some additional weakness on tomorrow’s open to lock in another 100% gain the margin. If it doesn’t happen there is a good chance coffee will reverse to a long swing at tomorrow’s close. This is likely, at this point, on both counts so tomorrow’s a key day for coffee trades.
I last wrote about this here on September 13th:
Coffee Futures Find Their Swing Rhythm
The swing rhythm observed in that post has obviously continued (see the chart below).
(click on chart for a larger view)
After wobbling around all year with little winners and little losers and coming out flat, coffee futures in the past couple of month have found the swing rhythm that has characterized the commodity for the last few years.
I last posted on this when it finally had a single 100-plus percent move on margin. That post is here:
That was a short and it was just as the reliable back-and-forth swings in the commodity were getting going. On June 23, Coffee was flat for the year on swing trades, and since june 23, the futures are now up nearly 300% (on its margin requirement) with both bulls and bears making money on the long and short swings.
It is currently overbought (up more than 100% on margin), just as in the last post it was oversold. So the time has come for bulls to lock in the profit with a tight stop on at least part of a position, or if one chooses one can wait, looking for more upside while being alert for the reversal to the downside.
(click on the chart to see a larger view)