Sugar, You Got Me Lovin' You

Sugar is a commodity I have written about from time to time. I like to watch this commodity for several reasons.

First, it is often a lead indicator of inflation.

Second, it is the first instrument I ever traded a very long time ago when I was a Member of the Coffee, Sugar and Cocoa Commodities Exchange in NY.

Third, it moves.

Although it has languished for the last two years, check out 2010-2011 when it rallied from 12 to 38 in just a matter of about 12 months.

Or for our bears, when it proceeded to drop from the apex in 2011 back down to 10.75 (made in August this year.)

The 2018 low is not too far from the 1999 low of 10.36.

That means most likely sugar has once again bottomed. If that is true, what can we expect for this commodity and what it might influence?

In November 1974, sugar futures made a high of 103.83. I checked into the main events of the day.

There was the Watergate scandal (ended in 1974). Democrats made significant gains in the U.S. Congressional midterm elections, as the Republican Party suffered losses over the Watergate scandal.

And, it was the end of the 1973 oil crisis, but the beginning of an energy crisis. Plus, Ali knocked out George Foreman during the Rumble in the Jungle..okay -not much of a sugar influence, but a fun fact nonetheless.

Maybe a coincidence, but I do find the comparisons to the Russian investigation going on now and the Watergate scandal from back then fascinating.

Regardless, today, sugar made a fairly big move up.

The chart on the left is a weekly one, on the right a daily one.

On the weekly chart, sugar futures cleared the 50-week MA and went into a Recuperation phase-needs to close this week out over 12.87.

On the daily chart, sugar futures are in a Bullish phase. Today, there was a capitulation over the 50 DMA with over double the average daily volume.

Furthermore, this move was in the face of firm interest rates and a rising dollar. Meaningful?

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