• Kenneth Koh

Sugar is Cheap - 3 reasons to go long in August 2017

The Sugar Trade is in – based on market analysis. For someone that eats almost no sugar, I'm definitely interested in it now. Zombies are strange like that.

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Reason 1: In the last 10 years, comparable weekly MACD (momentum) turn and cross over signals at least a possible ~+15% retracement. The investigation begins.

Reason 2: Last 4 times the cycle statistical indicator (non-technical - chart below, 2nd panel) hit a statistical bottom boundary, it resulted in a good trade 3 of those times.

Reason 3: To corroborate, commercial sugar users have gone net positive on their hedging activities for the first time since mid-2015. The mid-2015 positive net hedging levels pre-empted big cycle shift of ~+100% after a period of consolidation.

Reason 4: Seasonality shows that September is a good month. Last 5 years, the price has closed higher 100% of the time. Even when you extend seasonality to 20 years, the expectation is still positive.

Popular ETFs: CANE and SGG.

Short term technical target: $0.16 (+15%) – Mean Reversion - quite likely.

Long term technical target: $0.20+ (40%+) – if we are lucky and this is the start of new major cycle retracement.

A possible idea is to go for the $0.16 target, take some profit to defray risk and see how it goes from there. Note that the daily MACD is on a short down cycle. You might want to wait a little before going in. However, September and October look to be good months and as long as the weekly MACD has still crossed up, it's a good bet.

Cheers! Don't forget to treat me to some coffee with a little SUGAR.

* Someone told me today that if the trade works out, I am literally her sugar-daddy.

Update: A favorable fundamental look at the price of sugar popped up just 3 days after my report. Check it out here - https://seekingalpha.com/article/4093187-state-sugar.

Disclaimer: This site has been designed for informational and educational purposes only and does not constitute an offer to sell nor a solicitation of an offer to buy any security which may be referenced upon the site. Please consult your own financial adviser to determine what trade is appropriate for you. See our full disclaimer here.

** The author of this post has a long position in SGG.

#sugar #retracement #sentiment #COT #commitmentoftraders #technicalanalysis #ETF #SSG #CANE

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