Coffee may be set up for a long trade. Here's why:

last week the September coffee made a new contract low. By the end of the week the market reversed and took out the previous week's high for the first time in a month. This created an outside reversal up on the weekly chart and shows a change in the trend direction. Also, the 9-day Moving Average closed back above the 18-day Moving Average for the first time in nearly two months. This indicates that the momentum has shifted to the up side. According to the recent Commitment of Traders data, commercial interests are holding the biggest net long position that they have had since September of 2004 while large traders are holding their biggest net short position since then. A low risk trade on the long side may be warranted. If the coffee market can keep it's recent gains traders may have the opportunity to add to long positions on a weekly basis.

Coffee - Place an order to buy a September coffee futures contract @ 102.50 or better good thru Friday, July 7th. Also, place an open protective sell stop at 100.00. The risk on this trade is approximately $937.50 per contract, plus commissions.

Sugar may be set up for a long trade. Here's why:

October sugar hit a multi-week high this week. Last week the 9-day Moving Average closed back above the 18-day Moving Average for the first time since early May. This indicates that the momentum is now bullish. According to the recent Commitment of Traders data, commercial interests are holding the smallest net short position that they have had in a year. At the same time large traders are holding the smallest net short position since then. A low risk trade on the long side may be warranted. As long as sugar prices continue to increase traders should be looking for the opportunity to get long and even add to positions.

Sugar - Place an order to buy an October sugar futures contract @ 16.50 or better good thru Friday, July 7th. Also, place an open protective sell stop at 16.12. The risk on this trade is approximately $425.60 per contract, plus commissions.

Cocoa may be set up for a long trade. Here's why:

September cocoa hit a fifteen month high this week. It has made higher weekly highs for three out of the last four weeks and higher weekly lows for four consecutive weeks. For the last five weeks September cocoa has closed higher than the previous week's close. The July cocoa contract is now trading at a much higher price than the September contract. This puts the market in "backwardation" and should be construed as a bullish development for cocoa. Also, the spread between the September and December contract has been tightening in favor of the September contract. This indicates an increase in demand. It seems that this market is in a robust up trend. If the price pattern of higher highs and higher lows continues cocoa bulls may be rewarded with generous profits. This pattern may also allow for the use of tight sell stops to created a favorable risk/reward trade on the long side. We will look to add positions along the way.

Cocoa - Place an order to buy a September cocoa futures contract @ $1,670 or better good thru Friday, July 7th. Also, place an open protective sell stop at $1,625. The risk on this trade is approximately $450 per contract, plus commissions.

Disclaimer: There is risk of loss in all commodity trading. The data contained are believed to be reliable, but have not been independently verified by Pearce Financial. Accordingly, such data cannot be guaranteed as to reliability, accuracy, or completeness, and as such are subject to change without notice. Pearce Financial will not be responsible for any indirect, compensatory, or consequential damages, including loss of profits which may result from reliance on this data. Pearce Financial and/or its Principals and employees may or may not follow strictly any or all of the trading recommendations contained herein. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

© 2006 Pearce Financial, LLC
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