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Philip wrote:
> I was pondering sugar as a potential short, maybe not tomorrow but soon
> (watch what happens now that I'm on the record!). But then I fired up
> the old fib tool and well, have a look at the GIF. Looks like the 536+
> level is a classic case of resistance turned into support. Back in May
> 536 was a tough hurdle to take, while over the last 6-7 trading days
> roughly the same level is where somebody's just as adamant about buying
> it.
>
> Maybe a short at this point would have limited potential. Last weekend,
> everybody did their homework and came to the conclusion "Yup, it's
> turning down again." There must have been all sorts of sell orders
> waiting on Monday morning to drive price down like that. But then
> somebody stepped in and really bought in no uncertain terms (and at a
> nice price too).
>
> Am I on the right track?
Philip,
What is the risk, the reward, and the potential? The potential for
Sugar can be somewhat determined by studying the range for the past 20 years.
The high was 45 cents and the low was 2 1/2 cents. Now, where in that range is
sugar currently trading? Is there a lot more upside or downside?
I would much rather be on the long side here and take the risk that sugar will
test its all time low at 2 1/2 cents. If it were to do that, I would just
keep rolling it over an eventually I will be able to ride it for mucho dinero.
I don't understand why you would want to sell sugar now when you had a
chance to sell it at least 100 pts higher just a few weeks ago? I think it is
more likely that sugar is now in or just was in an Elliott Wave II and when it
turns higher, it will go to new highs. The last swing was 393 (basis July) to
664 (basis Oct.) = a range of 271. .618 x 271 = 496. A few days ago, Oct.
Sugar made a low at 505. Given that these numbers are not perfect due to a
blending of different contract month highs and lows, it woujld seem that one
should allow the possiblity that the 505 low was significant. If the 5 cent
area holds, a new up wave could now be on the way. Using the measured move
method, adding 271 points to 505 = 776. If the upmove were a wave III then
various harmonics of the 271 measurement should be considered. 1.618 x 271 =
438 added to 505 = 943.
So, bottom line is that currently there is a lot more upside than
downside potential to sugar.
Sweetly,
Norman
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