Click on Chart to Enlarge
The above chart is a 5 year chart of coffee futures prices, covering the last couple bear market lows and some intervening bullish phases.
Currently prices are retesting a spike low which occurred in June of 2017. And of note, there is now record net short positioning in the large speculators even as price is stabilizing at a higher bottom than the June low.
This indicates that there is a tremendous amount of short covering possible to be unleashed on a price advance. The last 2 major bullish phases were 50% and 100% roughly in a year or less after comparable positioning among the major market players.
Not shown on the chart above is that "managed money" category of the positions is record net short basically equaling the level of the June low, at which point a 2 month 30% price rise occurred.
It certainly seems possible that price action will become "sloppy" before a rally occurs.
But to me it makes sense to take every "buy" signal generated in a daily or weekly time frame from here forward. And don't underestimate the potential price rise that could occur over the next several months. From the visible data of the past major rallies, a 30-100% rally over the next 6 months would be reasonable.
I have eyes on purchasing JO, which is an ETN to participate in this potential move.
Pete
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