The mystery chart from earlier today is the coffee ETN, JO. Congratulations to 12631 member “Earl” for nailing the answer in record time.
The downtrend in coffee and indeed many soft commodities has been breathtaking, for over 2.5 years now–Even looking for a tradable, snapback bear market rally proved to be asking for too much in most of these commodities. Combined with other tailwinds, coffee stocks like DNKN GMCR SBUX have flourished.
The tide, however, eventually turns, even when it seems like this time is different and it never will.
Observing the weekly chart of JO, below, you can see the RSI (top pane of chart) ha refused to crack 30 throughout 2013 even as price kept making new lows in a steep downtrend. This tends to indicate that downside momentum is abating.
If you like to look at assets beaten into oblivion as long-term sources of opportunity, the coffee setup is intriguing, to say the least. If and when we see even a sharp, multi-week tradable rally I expect SBUX especially to get hit, given that it is steeper than DNKN GMCR.
In addition, consider what “superocean9” what to say in the comments section of my previous post:
COFFEE !!! This may be finally be the buy we’ve been waiting for so long. Last week the Brazilians approved price supports. Sentiment is crazy bearish & the seasonal rally should hit now.
P.S. I’m a retired commodity futures broker/trader w/38 yrs. experience. Coffee has been one of my specialties since the late 70′s. I believe that this bottom forming has the potential to be the start of a major bull market in Coffee. My international coffee sources see many bullish fundamentals just ahead. Coffee ?’s – email – [email protected]
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From the original post:
“Try to figure out …
What a snapback rally would imply for other asset classes, if anything.”
Still trying to figure that out, any ideas?
I am quite interested in what “asset classes” you think are a play off of coffee bottoming (if anything, lol)
Was referring to the coffee stocks.
I inherited 200 shares of SBUX that my grandpa had in an etrade account for many years. Would you be looking to sell now near the 52 week highs for this stock or continue to hold until a rally in coffee presents itself? Thanks!
Andy,
Congrats on a big win. SBUX has been a monster and I have been way too early in the game looking for it to pull back. That said, I think tomorrow morning’s presumed gap higher would be a good spot to sell about half of that position.