Sugar is getting sweeter!

Sugar is getting sweeter!

Call me an unreconstructed doubting Thomas, but I have always questioned the accepted rationale behind the “Good” of Good Friday. Why was it “Good”? After all, this is the day Jesus Christ was crucified, for heaven’s sake.

And this should bring into question a great many more general articles of received wisdom, such as more carbon dioxide makes the earth hotter, and that stocks – and house prices – will always go up.

But as I hope I have shown in these blogs in the past few years, there is much truth in the rather cynical observation that when everyone believes something is true, it is very likely false. It may have been true earlier but in time, new truths emerge to displace the old. That is when most are caught holding the bag.

In financial markets, this translates into: When everyone is bearish/bullish, a major low/top is near. Some explain this rather perverse behaviour in terms of there being few bulls being left when the market has rallied for a long time. Then only small sell orders are likely to produce an out-sized reaction reversing the trend.

Of course, even after a strong run where the bulls vastly out-number the bears, new buying can emerge and push prices even higher. It’s all about prevailing sentiment.

My VIP Traders Club have been swing trading Sugar this year and prices have been zooming northwards as traders are realising that supplies are likely to be tight this year. Last week it reached highs last seen in 2016. That is notable.

If this were a tech share, this news would be all over the MSM with breathless headlines. But I have searched and failed to spot any mention of sugar almost anywhere.

This is no off-the-wall commodity such as Carbon Emissions. After all, everyone on the planet consumes this commodity (avg annual per person consumption is over 20 kg) but very few trade it. Pity (for them).

Many would say they know nothing about trading it or the economics of it. They are more comfortable with an obscure AI start-up I guess (take a look at Inc).

Because this commodity attracts very little attention outside of the trade, most traders have missed this exceptional action.

To me a chart is a chart is a chart and that’s where I start to find my inspiration. My aim is to try to find low risk swing trades that last for days/weeks and sometime months.

Sugar is one of the most actively traded commodities and is fully worthy of the attention of all serious traders – especially those wo employ a professional trading strategy. (Incidentally, this is not the only ‘hidden’ commodity setup with high profit potential)

This is the long term monthly chart and has several notable features. First, the price has swung from the ATH in 2011 at 36 cents per lb to the low in April 2020 at 9 cents per lb. That swing is equivalent to a Dow move off its ATH at 36,950 to a low at 9,240.

Dow traders will recognise that a move down to four figures from the current 33,550 would be staggering – and very welcome, of course! But the equivalent move certainly occurred in sugar. So with that kind of profit potential, why aren’t more traders interested in sugar?

The second notable feature is the wave pattern off the 9 cent low three years ago. I have drawn a reasonable trendline off the 2016 high and in recent weeks, the market has taken off leaving it far behind. Action looks impulsive and Elliott wave theory suggests it has a long way to ascend in the current third wave.

And here is fellow tropical commodity – Cocoa which is sporting a very similar chart pattern

It has carved out a very impressive 12-year old wedge and one of the features of a wedge is that when the market decides to break out, the move is usually very powerful – and the older the wedge, the stronger and longer the break. My first major target is the ‘b’ wave high at $3500.

Note the large swings from the highs to lows that offer great profit potential for serious traders using a professional swing trading strategy.

So this bullish outlook for cocoa puts it on a par with my sugar forecast – much much higher. So after years in the doldrums, what is going on with the tropical commodities?

And is the same happening for the other major tropical commodity – Coffee? We are trading it in the VIP Traders Club.

Could it be that after years of poor returns for farmers (especially cocoa from West Africa) they have been abandoning their cocoa plantations?

This is in accordance with the traditional commodity cycle where low prices lead to deficit production and then to a scramble for scarcer supplies leading to higher prices.

And the growing demand for chocolate from China – from a very low base – could ignite cocoa prices this year.

Yes, the tropicals are hot! And well worth traders’ attention.

Commodities are back on the march – how can an investor profit?

Last weekend, OPEC+ made the shock announcement they would be cutting oil production by 1 million bbd. When markets opened in Asia on the Monday, they gapped higher by $4 – a very substantial move

It then spent all week digesting that shock and have pushed up to the pink resistance bar and if they succeed in breaking through this coming week, as I suspect, my long-standing targets heave into view.

Energy prices play a major role in setting commodity indexes and there are several ETF shares in this space including the Invesco Bloomberg Commodity ETF

The rally off the 2020 Corona Crash low was impressive and the decline off the 2022 high appears a clear three down on a mom div. I see a excellent swing trade ahead.

With crude oil looking positive along with gold and others, my outlook for this ETF is likewise very positive. We hold this share for Pro Shares members.



Are you prepared for the economic devastation to come? Interest rates are rising and we are only one more bank/hedge fund/insurance company/commercial property outfit failure away to kick off this next stage. Already, US small/medium size company bankruptcies are rising alarmingly. And now oil prices are advancing again to put upward pressure on cost inflation for corporations and the consumer.

I am guiding VIP Traders Club members through the treacherous swings in markets today. Come join us!



Apple advances to a high but now on shaky ground

Big Tech has been flying in recent weeks as it has lead the charge of the uber-exuberant Nasdaq. The promise of Artificial Intelligence has grabbed the attention of risk-taking investors with dreams of riches — but how to monetise it on a grand scale?

But these FAANG+ Big Techs are the few generals leading the charge up the hill. I highlighted the chip-maker NVIDIA last week.

One day last week I noted to VIP Traders Club members the alarming statistic that since the start of the year, only eight components of the S&P 500 are up – the other 492 are all down on the year.

Think about that – is it more likely the 492 laggards will climb the hill to catch up with the eight generals standing nervously at the top, or more likely the generals will be forced back down the hill as they see they are totally exposed to attacks?

Thus, is it possible this mania for the latest Big Thing is the final buying climax of the entire multi-decade bull market?

The US indexes made their ATHs a little over a year ago and have spent that time in overall decline with major pull-backs. This has been utterly frustrating to we bears but is entirely in keeping with the custom of bear markets to slowly roll over in fits and starts. Then suddenly, the big break occurs and it’s straight down for days/weeks.

So are we close to such a reversal in mighty Apple?

I have added the Rate Of Change (ROC) index below and it has moved up to the level where previous highs were made. In addition, our reliable Momentum oscillator has likewise moved up to a similar level. And shares are close to touching the upper tramline resistance. Hmm.

So the odds very much favour a reversal soon. It is trading currently at $165 and only a push above the previous high at $178 would amend my stance. And if it does reverse soon, that will drag the whole US market down with it and kick off another wave 3 down.

So how is the Net Zero push going? On a Slope of Hope!

Western governments – and now apparently the Chinese – are ramping up their push to Net Zero by pinning their hopes on replacements for all fossil fuels with hydrogen a main contender.

So how to produce this gas at sufficient scale? The leading ‘green’ method is to use hydrolysis to separate oxygen and hydrogen from water using ‘renewable’ electricity from wind and solar farms.

I recall this experiment from Chemistry lessons at school and it was great fun igniting the hydrogen which produced huge explosive claps that shook us all up. That experience taught me to be very very wary of this gas as a fuel.

Of course, for many reasons this scheme to replace NatGas is doomed except on a very small scale – and rational investors seem to agree with me. Here is one popular Hydrogen Economy ETF:

Right off the bat from the launch in 2021, the shares have descended the Slope of Hope and already are off 50% or so. And my Elliott wave labels point to another large leg down in a fifth wave ahead to new lows.

And just today we learn that in the UK alone, the cost of upgrading energy certificates to the required government-mandated standard for commercial property such as retail outlets, offices and others is likely to be in the region of £90 Billion. This is to make them lettable by 2030.

With cost-of-living pressure on shoppers, retail is already facing mounting pressure on profits and tis added cost would put many landlords in danger of going under. There will be a glut of properties coming to market to depress prices further in a crash. That would be exacerbated by rising interest rates, of course.

This will put many property bonds also in danger of defaulting and big hits to finance companies. This Net Zero madness may well be the camel that breaks the back of the UK economy. Watch this space.

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