We are seeing Cocoa, Live Cattle and Lean Hog futures making record new highs – see the Weekly charts below. What goes up must come down, and prices usually come down faster than they go up, so we will be looking to short all 3 of these markets as soon as a 123 top has formed. Stay tuned!
We have been long High Grade Copper futures since April 24 (see our Copper posts here: InstantCommodityTrader.com/blog/category/copper) and our 310 strike price Call option for the July 2014 contract month expired on 6/25 (yesterday) at which time we exercised our option and are now long High Grade Copper futures from 310.
We put in a stop-loss order to our broker to sell our contact at 309 if prices fall below the support level of 3.0985 (see Daily chart below). Since we are long from 310, we would only lose $250 if prices go that low (in addition to the premium we paid for the 310 Call option back in April). If prices continue rising, we will gradually move our stop-loss up to lock in profits.
Cocoa futures hit a new multiyear high today. The July contract month hit 3138. Over the next few days we will wait to see if a 123 Top Formation gels and then we’ll short the Cocoa market. The 50% Retracement Level on the Sept. Daily Cocoa chart (see below) is 2990, and on the Weekly Cocoa chart (see below) is 2592. There is huge downside profit potential in this trade, especially since the last 2 times we shorted Cocoa prices kept rising. Third time’s the charm!
Today, Sept. Coffee futures touched as low as 174.8 (at the time of this post), and they had reached as low as 173.25 last Wed. 5/28. We have been short Sept. Coffee futures from 180.0 with our Sept. Put option (1800 strike price) we bought for $4435 back on 5/9 (see previous post: Short Coffee Today After Drop Below Support). As shown in the Daily Coffee chart below, prices are very close to the 50% Retracement level of 170.4, now for the second time since last Wed. Yes, prices could continue to drop and even surpass the 50% Retracement level. However, today we sold our Put option for $6,341.
That gives us $1906 profit and 43% ROI in LESS THAN 1 MONTH!