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Jdonato98@xxxxxxx wrote:
> Looks as though Sugar has followed the charts we discussed here last week.
> Sugar closed higher yesterday, filling the overhead gaps.
> Our buy target was a break over the 580 level, which is what happened as buy
> stops were hit as prices surged through the 590 level, eventually closing
> over the pshchological level of 600.
> I see prices continueing to the upside near term as the market looks to fill
> tin the gapsbetween 605 and 611.
> Next level of resistance may be 611 to 634 , support at 560.
> Good trading .
>
> All the Best,
> Jerry Donato
Jerry,
Relax. The last swing on sugar, based on whatever the current nearby
contract was, took sugar from a low of 393 to a high of 646 = a swing of 253
points. So, even if this is a bearish Elliiott ABC rally, one would normally
expect for C to at least equal A. The last pullback, which in the bearish case
would b the B wave, took Oct. sugar back to the 520 area (don't have exact price
handy). Adding 253 points to 520 would take sugar to the 773 area. Additionally,
sometimes an ABC pattern has a C wave which is 1.618 times the A wave so this
would project a 409 point swing added to 520 = 929. On the other hand,
occassionally an ABC corrective wave has a C wave which is only .618 of the A
wave.
This would be the most conservative and bearish projection. In this case it
would be .618 x 253 = a 156 point move added to 520 = 676. So, at a very
minimum, one should expect a test and probably slight break out to the upside of
the last swing top at the 646 area. Now, I must tell you although I have tried
studying Elliott since 1979 when I first met Bob P, I admit to still being
stuck in Elliott Wave kindergarten. I find Elliott Wave to be a great
descriptive language for market analysis. But, when it comes to forecasting, I
usually find it too subjective & complex for the pea size brain of this simple
minded Astrologer. <G> So, I welcome any expert criticism of my above analysis.
Anyway, the point of all of this is that I think that the 99% of the trading
community tends to be
too myoptic. Gann taught that the best trades were found by studying the
monthly and yearly charts.
Look at a long term chart on Sugar. It was 15 cents just a couple of years ago.
Back in the 80s, it traded as high as 45 cents and as low as 2 1/2 cents. Given
that perspective, when Sugar was at 4 or5 cents what was the risk to reward
ratio of buying some sugar as a long term holding? That is what I have been
doing. My last purchase was at 405 on the July contract. At that point I owned 4
contracts.
I rolled to Oct. and then reduced my long position by 1 at 620 based on a 50%
retracement of the preveious near waterfall 400 point drop which was absent of
any significant correction. I have no plans to reduce my position at anywhere
much below 8 cents. If sugar were to drop to the mid 4 cent area, I would add 1
contract to my current position. If sugar drops to 2 1/2 cents, I would buy
another.
The flaw is that I will have a substantial drawdown if sugar goes under the old
low of 2 1/2 cents.
I am willing to take that risk. On the other hand, while my broker is not going
to get rich on my lethargic trading, I figure that if I distribute 1 sugar
contract on every 200 point increase in price, I stand to gain between $20K to
$40K on this position, depending on how it gets there and how long it takes.
This is not a bad annuity for something requiring a few thousand dollars of
margin and admittedly several times that in equity. So, what I am recommending
is to relax, get the bigger perspective, have a drink, read a good book, cancel
the live data feed (theres another $5K per year you just saved) get a hobby to
keep you occupied during market hours, spend more time with friends and family.
Bottomline, you will make more money, have less stress, and be happier.
Concidentally, this post seems very timely given the breaking news about
the day trader in Atlanta who went bonkers. I am not saying that anyone on RT is
gonna go out and shoot anyone if stressed out from short term trading.. But you
may be tempted to yell at your spouse, bark at the dog, or ignore your kids.
Warning:: if you adopt this layed back motis operandi don't expect a big
Holiday present from your broker. <G>
Relaxedly,
Norman
P.S. I am going away for a few weeks. Trading is too boring. I am planing a tour
of the top ten Roller Coaters in the northeast quadrant of the US. <G>
>
>
> P.S.
> This is NOT a a trade reccomendation, only my personal opinion from my own
> analisys and charts.
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