Cocoa Grinds Down

October 20, 2000
Marc Dupee

Cocoa returned to the bottom of a trading range–an area
near record all-time lows– after grindings of cocoa beans fell sharply below
expectations. The lower US grindings showed that cocoa demand is low at a time
of excess supply.Â

Cocoa has traced a technical pattern of declining highs
since spiking in a Turtle Soup Plus One sell signal on October 5. The appearance
of political stability ahead of this weekend’s elections in the world’s largest
producing country, Ivory Coast, and commodity fund money available on the
sidelines for potential additional shorts also hurt the commodity. December
closed 26 lower at 788.

In other softs, coffee
(
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PowerRating) sank nearly 3% after
failing to break above a month-long shelf (resistance area) left last July.
Beneficial rain falling in Brazil helped trigger sell stops and bring the
contract down 2.55 to 84.15.Â

The Naz 100s
(
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PowerRating) continued to be one of the most
exciting market in futures, providing multiple trading opportunities, including
opening range plays, pullbacks and a topping patterns at a round number (3550)correlating
with recent highs/resistance.

SDLI handed in earnings which were essentially quadruple
those from one year ago. The stock rallied as many as 51 points and provided
much of the positive sentiment for the NDZ in Friday’s session.

December T-bonds
(
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PowerRating), from the Momentum-5
List, matched a contract closing high of 100 20/32 for a gain of 12/32. Low
risk entry opportunities were presented using the Off The Blocks
and 1090 Open Methods (from the Futures-Education section).Â Â

Violence in the Middle East captured the attention of
energy traders again, gapping the contact higher, which then followed through. November
crude oil
(
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PowerRating) closed .84 higher at 33.75
as traders did not want to go home short over the weekend with tensions high in
the region that produces one-third of the world’s oil.Â

Natural gas handed in its
worst weekly performance of the current contract to close at a seven-week low.
This is very negative technically and Friday’s action left the November contract
(
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PowerRating)
.014 lower at 4.937.

Euro FX
(
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PowerRating) futures tumbled to test all-time contact lows, making good
on their Implosion-5 List
reading. But the futures appears to have laid in a successful test of the Oct.
18 low, meaning a rebound in Friday’s session from this level could see
additional follow through. Also in the currencies, Swiss francs
(
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PowerRating) from
the Implosion-5 List
sank to near-contract lows, while Momentum-5
List member dollar index futures
(
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PowerRating) rallied to test new contact
highs.Â

In the metals, copper
(
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PowerRating)Â hit
a two-month low and closed at the top of a gap area left unfilled four months ago. With
this bearish formation, the contract is likely to fill the gap down to 85.20.
Demand for copper is forecast by some analysts to contract 10-15% over the next
six months. The industrial metal is also suffering due to perceptions of a
slowing economy. The December contract closed 1.10 lower at 86.20.

A cattle on feed report spurred a rally in December live cattle
(
LCZ0 |
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PowerRating)Â on views that an oversupply of animals has been dried up. The
December contract etched an outside day at a recent high to close up .350 at
69.825.

Cocoa Grinds Down

BUY THE FEAR, SELL THE GREED

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