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COMMODITY
REVIEW AND OUTLOOK
195 Route 6A,
Suite 6, Orleans, Massachusetts
(October 16, 1997)
COCOA: SHORT TERM–Rumors that a report is about to be issued
that will show a healthy and bountiful Ivory Coast crop encouraged
liquidation in the cocoa market. As I've pointed out before, there
is a distinct possibility that coca has anticipated too much too
soon. Recent rainfall in West Africa has taken a lot of wind out of
the bullish cocoa sails. On the other hand, concerns remain that
the dry weather would harm the cocoa has provided
support.
RESISTANCE–December resistance lies near 1650-1660,
1690's, 1720's, 1739, near 1750-1760, and
1777.
SUPPORT–Support remains near 1611, 1606, and 1585-
1570, and 1530 or so.
RECOMMENDATION–The chart is becoming
negative, and suggest a two-sided approach for now. Aggressive
buyers might buy December cocoa in the 1630's-1640's with stops of
30-50 points or under 1610 or 1570, and/or sell a rally to the 1670
area with stops of 30-50 points or over 1681 or 1737. Look for a
potential break to 1610, possibly lower. More conservative traders
should hold out for a break to perhaps the 1600-1610 area. Use
stops under 1570. Objective is open. Option traders might buy
December or March calls on this dip.
M. Steven
Morgan
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