After three solid years of consolidation, No. 11 Sugar futures (symbol: SB) appears poised for a rally. Sugar prices peaked in Feb11 at $0.3608/lb, falling 61% to $0.1407/lb in Jan14. A rally looks probable given the following observations:
- prices have traversed and held above the long-run downtrend line from the Feb11 high
- volatility has moderated back to levels witnessed prior to the major bull market
- strong volume pushed prices higher over the last several weeks
- stochastics are in an oversold position
Admittedly, it would also be a nice setup to have the RSI confirm a buy signal.
First level of resistance lies just above the $0.20/lb level. Failure to trade higher probably means we take a look at $0.13/lb.
Murphy & Co’s No.11 Sugar model is currently short. To learn more about Murphy & Co’s position models, visit http://murphycofutures.com/position-models/.