Massive Coffee Spill
- Posted by Greg Harmon
- on June 15th, 2012
Coffee is important to me. I drink Starbucks ($SBUX) Sumatra everyday. If I do not get it I am left feeling unfulfilled. Not a coffee snob, I will drink other other flavors or brands. They just do not do it for me. Espresso in Europe can substitute, but hey I barely leave the house anymore. So I follow coffee prices. Not because it impacts the cost of my monthly 4 pound order at Starbucks (it does not) but because the price is inversely correlated to the price if coffee stocks. Not everyday but over time. It is like a game. If I can work the correlation to gain on the price of coffee stock it feels like my coffee is free. Two months ago the price of coffee looked like it might be settling when I wrote Coffee May Really Be Bottoming Now. Since then the bottom has not been found and now looks like it may be a long way from the bottom. Below the monthly chart for coffee ($KC_F, $JO)) shows the next level of support lower at 61.8% Fibonacci at 1.44, another 6.5% lower. But it is just
breaking out if the long uptrending channel to the downside. The target of the channel break brings it to zero, so forget that. But the double top suggest a move back to 0.42 is not out of the question. With support at 1.29 and 1.03 followed by 0.92 well before that level there is no clear picture of where it will stop yet. The Relative Strength Index (RSI) continues to move lower and the Moving Average Convergence Divergence (MACD) indicator continues to grow more negative. A trend is a good thing, and this one is not ready to stop.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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