Sugar Cane Fairy?

[Edited to add content]  Flipping through futures charts this evening [looking for longs] I stumbled across Sugar futures coming close to the apex of a flag [target of $79].  Sure enough, the sugar ETF SGG is flagging and although  these are typically continuation patterns, that doesn’t mean you should buy now b4 the break – here’s why.  First of all I don’t endorse watching the news during trading hours [I’m a music or AMC person myself] or trading based on small news-related price swings.  Such movements can fail and price reverts back to the direction of the original trend increasing your chances to be left with a loser.  More importantly, however, is that flagging patterns formed over a long period of time are very often created due to mounting tension on important sector news such as earnings or, in this case, a crop report.  Just recall the Duke brothers from 1983s Trading Places when  Billy Ray Valentine and Winthorpe eventually destroy Randolph and Mortimer Duke who had bet heavily on the orange juice report.   The Bulls/Bears argue back-n-forth over which direction the price should go until ultimately the crop report comes out and wham, one of the two parties is run over [this is why you don’t trade such setups until they breakout or breakdown unless you have the stomach for large losses].  A quick  WSJ news search revealed that not only is the sugar cane crop in India in question right now due to a lack of rain, but there is also a fairly-heated debate taking place in the country as Parliament argues over higher state-fixed sugar cane prices for farmers.  Obviously seasonality has much to do with this trade and who has time to sit and watch the news reports so alerts and triggers are your tools to catch the move for future profits.  Maybe an alert for an increase in volume or a close above the 100d would be sufficient but in either case, sugar’s certainly one to keep an eye one.  Best of luck 😉

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s