April 14, 2020
EVEN VEGANS LIKE COCOA
It may not be my favorite market but over time I have found the Cocoa market to very interesting and at times worthy of a serious trading look. It can have some pretty exciting price movements that seem to explode, both higher and lower. I think that may be because the various international fundamental factors. Before we go any further I again provide key points that you may need inunderstanding my model and therefore the analysis. If you have read them before you can skip down to where I discuss Cocoa.
All my comments are my OPINION and that OPINION is based on my long term in-house model that I dubbed LAWG 647. The prices I use in my model are week ending prices, usually Friday.
To help you better understand my opinions please be mindful of the following.
FUNDAMENTALS
In general day to day the Cocoa market is impacted by aninteresting variety of fundamental factors. Since most of the world Cocoa is consumed outside of the Cocoa growing area international factors play a greater role in Cocoa values than perhaps other commodities. The fundamentals that are presently impacting Cocoa:
THE LAWG 647 MODEL
What to do?
Once a market enters Positive Equivalency under the old normal it was not unusual for that market to work back to a balanced situation. In the old normal this usually took three to five weeks to achieve. This does not happen all at once, and could be a bumpy ride. It is not unusual to see said commodity slip back close to Positive Equivalency before working higher again. I think the Cocoa market is trying to determine if it will slip back close to Positive Equivalency or will continue to work back to being in balance. Ergo be I am suggesting one be patient when looking to buy.
So where to Buy?
Once again I enlisted the thoughts of my partner Steve Erdman who is also an Inside Futures contributors.
Steve Erdman 2252
Lee Gaus 2230
My name is Lee Gaus and if you would like to see more of our thoughts go to our website ifgfutures.com. There you will also find articles written by my partners Tom Fritz, Steve Erdman. If you have any questions you can reach me at 1-877-304-1369, 312-384-1166, or email me atlleegaus@efggrp.com. If there is a commodity you would like me to address don’t be shy shoot me an email.
There is significant risk involved in trading futures and/or options on futures. Futures and/or options of futures trading may not be suitable for all investors. Investors should consider these risks and evaluate their suitability based on their financial conditions. Past performance is not indicative of future results.