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Noel Campbell At every seminar I travel to these days, if the topic of Sugar is raised, somebody always remembers the articles where I outlined the upcoming completion of some key, major time cycles. The most important of all being the 30-year cycle, which is extremely important in soft commodities. Soybeans proved that last year with an amazing rally. Well, I think a few have become skeptical of the likelihood of this big rally in Sugar ever occurring – but not me. One key virtue that needs to be developed in a trader, if it does not already exist, is that of patience. When trading on 30-year cycles, perhaps a little more patience than the ordinary.
The big underlying fundamental that I believe could trigger an irrational rally in the price of Sugar is the rising price of Oil. Oil has continued to move higher and shows no definite signs of a top just yet. The thing about commodity futures is that their highs, are very often spike highs, and get way overbought. I'd say Oil has a way to go before the market is completely overcooked and the exuberance has peaked. That all goes well for the Sugar rally to yet be complete.
There was a rising wedge pattern forming in Sugar a few months back that looked like it could be the signal that a big move was ready to go. However, the caveat to that was to be careful, as the market was still struggling to clearly break through some very strong resistance from old tops. Chart 1 shows the most recent market action in relation to those tops and it is time to get the word out on the street - those tops have been broken!
Chart 1
click chart for more detail
A word of warning for those planning on trading in Sugar futures, or any commodity futures, is that they can be tricky little devils. By that I mean you can see very short, but sharp reactions that clean out a lot of the longer term positions, before returning to resume the main trend. A great way to trade the long pull on commodities, that I like to employ at times, is through using 2 and 3 Day Swing Charts and an appropriate trailing stop. The other thing is, when sitting on nice profits around the key seasonal times, be sure to tighten up the stops. Also when first entering a trade you cannot afford to use big, broad stops or enter too late in the seasons of the previous range on the weekly chart.
One thing for those who harness the power of Time by Degrees and Seasonal time, is to take a note of how the first significant higher bottom during this last rally from the April low, was early in May – right on our seasonal date. It would be worth watching time periods from this low, as well as the April low and keeping an eye out for a turn in the market around early August. The ideal situation here would be the market shaping up for a low on the weekly swing chart around early August. There are some extremely profitable times ahead for those geared up to trade Sugar and the skills developed to trade it with safety!
Until next week......
Noel Campbell
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