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Sell Sugar 2012-10-04

Today I put in an order to sell sugar, my position has been flattened. I am not going short, I merely sold my existing position. I am still to bullish on the daily perspective to seriously consider shorting sugar. Also, my fundamental data has not given me any indication to make such a consideration, yet.

Exit order occurred at 8:48, my time, at a price of 21.72. I never did add to my position, so it was only my original position entered at 19.89 on Sept 20, 2012. In the end, I profited 1.80 points, roughly, after commission, per contract. That's roughly a little over $2000, per contract, in exactly two weeks! I am quite satisfied.

I am still bullish on sugar, and I will be looking for a new long entry quite soon. I suspect this is just a small correction, which is why I do not want to short sell right now. The reason I don't just stay in my trade with my stop, is that I kept my stop loose so as not to get stopped out prematurely on this trade. I don't want to fiddle with my stop, and I had an opportunity to exit on what I thought was a good highish price, for right now.

Seeing what I believe to be a temporary top before a small correction leaves the open question "Just exactly how small will the correction be?". Well, I don't really want to find out if it will be large or small. I'd rather wait and see for myself, from the sidelines, and then re-enter at my leisure if I feel it is appropriate.

Let us look at a 60 minute futures chart for March 2013 sugar and see the reasoning behind my sell sugar exit.

sell sugar
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What we are seeing here is an MACD divergence. Prices are making highs, but the MACD is diverging downwards. This tell me to watch out for a downward movement. I want to protect the profits of my successful trade, and this signal affords me a good opportunity. I have already made a good profit.

Indicated by a yellow box is the price range where I expect a re-entry signal may occur. I don't expect this to happen this week, as it is Thursday right now. However, I would expect it to occur next week, if at all.

If I wasn't so bullish on sugar right now, this would be what a short sell signal would look like. In fact, I probably could short this product right now for a 0.50 to 1.00 move, but at this point I'd rather be prudent and cautious than aggressive. I believe any correction will be minimal and short lived, so I'd rather just wait for a new long entry signal.

In other markets, I'm still waiting for gold to correct to the moving average I have set on my weekly charts. I am still passively watching the US dollar index. And I almost shorted natural gas late last night. I had woken up with the plan of shorting it today, after the EIA report. However, I have changed my mind and I will continue to watch NG on the sidelines for a "nicer" signal to develop for a short term trade, either long or short.

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