Whatever Happened to That Coffee Rally?
- Posted by Greg Harmon
- on March 6th, 2013
In January I wrote that Coffee May Be Perking Up as there were signs of a potential bottom. It seemed then worth a small starter position. It did continue to move higher, a whole 3 cents higher, before reversing and making a new lower low. Last week we got another signal that a turn around may be happening. A bull flag on the daily (chart below) before Monday’s break higher. That move ended up being decaffeinated as it printed a bearish engulfing candle Tuesday, ending back below
the flag. The other indicators, Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) also reversed and are pointing lower. That move off of the 78.6% retracement mentioned in January stalled right at the down trending 20 week Simple Moving Average (SMA) on the weekly chart and is now consolidating in a bear flag under that 78.6% level. No signs of a move
higher are present now on this timeframe. Maybe if we had just ignored the shorter time frames and looked at the monthly chart all would have been much clearer. This picture shows the drop out of the rising channel continuing with just a slight consolidation at the 61.8% retracement of the long rise from 2002. But the volume is increasing. Yes the angle of the RSI is becoming less steep as it approaches the technically oversold area and the MACD histogram is improving, with the signal line
is still heading lower close to extreme readings. There might yet be a reversal but this longer view suggests it could still be months off. So grab another cup of coffee and take a peek at the chart from time to time, but keep your money in your account for now.
Join the Dragonfly Capital Views Premium Membership
Sign up here to get deeper analysis and nearly 50 trade ideas every week.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
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)
- Top Trade Ideas for the Week of September 2, 2014: The Rest
- Top Trade Ideas for the Week of September 2, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 2, 2014: The Best
- Should Trading and Investing Really Not be Fun?
- SPY Trends and Influencers: Monthly Edition August into September 2014
- SPY Trends and Influencers August 30, 2014
- Macro Month in Review/Preview August into September 2014
- Macro Week in Review/Preview August 29, 2014
- Premium Earnings 8-29-14
- Stocks and Bonds Rising Together – Its Not So Strange