We know that it will take a close on Friday at or below $112.85 to reverse the trend to bearish.
We know that ten weeks ago March Coffee entered the Negative equivalency zone and stayed in or near that zone for the next eight weeks.
We know that two weeks ago March Coffee began to correct this situation by dropping over Thirteen dollars from the close of December 27 to January 10.
We know that once a market becomes severely unbalanced (as Coffee did) it can take two to four weeks to become rebalanced.
We know that a market can correct so quickly that for a brief period it can become over balanced.
We know when the market becomes overly rebalanced the Positive Standard Deviation Indicator and the Negative Standard Deviation Indicator can converge. This convergence occurred this morning, Tuesday January 14.
We know that when they converge it may be a good time to look at re-establishing the position consistent with the trend.
I issued a buy recommendation early this morning Tuesday, January 14.
As a friend pointed out to me after I made the initial buy recommendation, Coffee retraced .618 of the October lows to December high, in my opinion Lee this is a good low risk trade.
Keep in mind we both could end up very wrong but for what is worth I did buy March Coffee. Yes, I have some skin in the game here is hoping I dont get skinned.
Lee Gaus - International Futures Group
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