Cocoa quietly heading to new highs

September 17, 2013 06:34 AM
Market Pulse for Sept. 17

Last week December 2013 Cocoa (NYBOT:CCZ13) opened at $2,555 per tonne and closed the week at $2,601. You can see cocoa has moved up nicely since the July 1 open of $2,170. Looking at the data below from the ICCO we see forecast a supply deficit for 2012/2013. A few weeks ago the ICCO increased the size of the supply deficit from what was earlier forecast. On the monthly chart below you can see the price action during and after these periods of supply deficit.

Check out the bull posture by big money, which started strengthening mid-July, another reason not to get spooked by the daily price action. This past week we see a strengthening bull posture like we have seen week to week since mid-July with Producers adding to net shorts now -83,306 contracts, Managed Money adding to net longs now 63,399 contracts, and even our friends the Swap Dealers added to net longs now 11,169 contracts. While not as active in cocoa and other markets Swap Dealers are pretty much into everything.

If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

Proceed to Page 3 for this week's detailed fundementals...

Technicals

On the daily chart once again we see a strong trending market with ADX at 41.7, watching now for a dropping DI Differential. On the chart you also can see areas where there was a pullback from the ride up that started July 1 as the price action bounced up from $2,150. MACD is riding up nicely above the signal line with a small amount of divergence and Stochastics are in deep overbought territory. Cocoa may be ready for another pullback from the ride up since Sept. 4 from just above $2,400.

Click to enlarge.

On the weekly chart we see a trend with ADX at 36.4 and Stochastics are in deep overbought territory. Look at the weekly price action since July, possibly keeping you in a long term long and not getting spooked by the daily price action.

Have a prosperous trading week.

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