Taking Profit in Coffee Futures

We were long March 2014 Coffee from 112.95 with a target of 148 (the 50% retracement level) – see our previous post “We Are Long Coffee as of 12/13 When Prices Broke Above 112.90” – and now March 2014 Coffee Futures have reached 125.  The current Cash Price is 132.64 so instead of trying to ride this all the way up to 148 we have sold our March 2014 Coffee Futures contract at 125 with a profit of $4518.75 (125 – 112.95 = 12.50 points x $375/point).

That’s 265% ROI on our initial $1705 margin invested!

Soybean Oil Futures Forms 1-2-3 Bottom

See our previous post – “New Multiyear Low in Soybean Oil – Watch for 1-2-3 Bottom” where we noted a new multiyear low was reached and we were waiting for a 1-2-3 bottom to form.

Looking at the Daily Soybean Oil Futures chart below, we have a potential 1-2-3 bottom and now we will wait for prices to break above the #2 point of 38.30 before initiating a trade to go long in Soybean Oil Futures.  On the Daily chart, a 50% Retracement is 41.54 and on the Weekly chart (see below) the 50% Retracement is 47.41, both giving us plenty of upside profit potential.  Stay tuned.

Daily Soybean Oil - March 2014Weekly Soybean Oil

Silver Moving in Sideways Channel

As can be seen in the Daily Silver Futures chart below, Silver has been moving sideways since early December.   The low end of this channel is 18.72 (on Dec. 31) and the high side is 20.48 (on Dec. 11).

We will go long when prices break above the high side and short silver if prices break below the low end (we anticipate prices to go up, not down, but we can trade it either way).  We will watch Silver Futures carefully to see how prices go to determine if we go long or short.  The longer this sideways channel goes, the more up or down it will go when prices do finally break thru the channel.  Stay tuned.

Daily Silver - March 2014

Going Long Gold on Breakout

Gold Futures made a new 12-month low back on 12/31/13 at $1181.40 and proceeded to form a 1-2-3 bottom over the next several days (see Daily Gold chart below).  This past Friday (1/10/14) Gold broke above the #2 point of 1247.7.  We bought an April 2014 Gold Call option at a strike price of 1265 for $2,930.00 (3 strike prices out of the money).   This option expires on March 21.

On the Daily Chart, the 50% Retracement is $1271.85, but on the Weekly Chart, the 50% Retracement is $1488.40.

Daily Gold - Feb 2014Weekly Gold

Natural Gas Breaks Through 50% Retracement to the Downside

We have been watching the new high in Natural Gas futures (see our post New 12-month High in Natural Gas Futures) and waited for a 1-2-3 top to form, which it did over the next several trading days.  See the Daily Natural Gas chart below.

When the 1-2-3 top formation completed, we put a Sell order to short March 2014 Natural Gas futures when prices broke below the #2 point of 4.18.  The 50% Retracement level (according to the Daily chart below) is at 4.01 which it surpassed yesterday, 1/9/14, when it closed at 3.977.  As of today, 1/10/14, prices have dipped even more to as low as 3.936 at the time of this post.   We look at the Weekly Natural Gas chart to anticipate a new 50% Retracement level to see how much more downside profit potential this trade has.  According to the Weekly Natural Gas chart below, the 50% Retracement level is 3.8395.

We bought a 405 Put option (~3 strike prices out of the money) when prices broke through the #2 point at 4.18 2 days ago (1/8/14) for $1250.00.   Today our 405 Put option is worth $2350.00 (at the time of this post).  Since prices went as low as 3.936 today before bouncing back up and there isn’t that much downside left in this trade, we decided to sell our 405 Put option and take the profit.

We profited $1100 on this trade shorting the Natural Gas futures market using a Put option in 2 days for a 188% profit.


Daily Natural Gas March 2014

Weekly Natural Gas 1-10-14

Live Cattle Makes New Multiyear High

We had been watching the Live Cattle Futures market after seeing a 1-2-3 top formation develop over the period of a few weeks.  Now, Live Cattle Futures have hit a record high (see Daily Live Cattle chart below).  The fundamentals for Live Cattle are that ranchers have far less heads of cattle than historically because the demand for beef has dropped.  Therefore, they have shrunk their herds to accommodate market demand.  This is driving the price of Live Cattle Futures to new highs.  But prices won’t rise forever, and now that a new historic high in Live Cattle Futures has been reached, we will look for a new 1-2-3 top formation over the next several days/weeks.

Daily Live Cattle - 12-31 Feb 2014