Time For The Softs

I began talking about buying the softs 10 days ago.  In real time, bottoms never look like bottoms.  In real time..... at that moment, it just looks like it is going lower.  Back in August, did cocoa look like a bottom?  No, it looked a lot like cocoa looks today.   Some of the traders I am working with have bought into the softs but most have not.  I am still getting a lot of interest in pressing stock, metals and energy trades but virtually none for the softs.  Cocoa even has a double bottom yet nobody is asking me about buying cocoa.

Sentiment readings on cocoa have reached extreme oversold levels.  

Seasonally speaking, March and April are good times to own Cocoa.

Moore's recommends buying cotton in March and in April.

Cotton is another soft that shows tremendous potential.  The cotton industry already has large exports on the books.  It just had a swing low Monday.  Like cocoa, cotton looks to me to be bottoming now.  The chart is not as compelling as the cocoa chart but there are other qualities I like

Cotton sentiment is at extreme levels here at 19. This is even more extreme than cocoa. Extreme bearish sentiment levels fuel strong rallies.  With so few sellers left, there is not much left in the tank for the bears.

Seasonally speaking, cotton usually has good returns in March and April.

Sugar is another soft commodity that looks to have made a double bottom.  This looks sweet!

​Of the three, I would prefer to see the optix on sugar a bit lower.

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The bottom line here is that we don't need to chase assets that have already popped off their lows.  The edge we have in this method of trading is that we can be bullish when everybody else is bearish.  This is not as sexy to trade as stocks, gold or oil but this group has limited downside and a lot of upside potential.  When it comes to trading, patience is what will pay in the long run.