There are many days when watching the grain markets it would be nice to have an espresso maker nearby. It seems minutes go by between price ticks for some contracts, making the day move like cold molasses. Tuesday was one of those days. But with aforementioned espresso maker on hand, I turned to the coffee market looking for a possible jolt.
Alas, coffee turned out to be decaffeinated. As you look at the weekly chart for the December contract, its most striking feature is the breadth of the downtrend that began with the high of $2.7970 (per pound) the week of April 18, 2011 and extends to the low of $1.1395 posted last week. While that sounds exciting, the continued downtrend the last few week's has been similar to watching an ice cube melt, something I actually watched a kid do on my recent flight back from Detroit.
But the weekly chart is also offering hope that the December contract could soon perk up. Similar to the discussion in Monday's blog on Chicago wheat, December coffee looks to be in the process of establishing a bullish crossover by weekly stochastics (bottom study). This means that the faster moving blue line is in position to close the week above the slower moving red line, with both below the oversold level of 20%.
While this is normally a signal that the secondary (intermediate-term) trend is turning up, notice the number of failed bullish crossover signals the contract has created in the not so distant past. This one could prove to be no different, but at least it's something.
And in today's markets, even a cup of decaf coffee is better than nothing.
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