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.
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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