Diary of a Financier

That Sugar Fix

In Capital Markets on Wed 22 Feb 2012 at 17:39

Here’s a quick elaboration on an earlier StockTwits note on raw Sugar (SB/):

Accumulating $SGG on this breakout of symmetrical triangle, confirmed by shorter-term bull continuation channel. $SB_F 3 hours ago

I scored a few points playing the Sugar ETN (SGG) in 4q2010.  I decided to revisit the soft commodity this weekend, and I like the potential. These are the technical mechanics I’m looking at…

I saw the development of an analogue to 2011’s Sugar contracts.  I chose not to pursue the bearish recommendation of that analogue, because a classic bull Head & Shoulders pattern showed support just beneath the $80 right shoulder:

SGG- Analogue to 2011 was broken by breakout rally in December.

I waited, and today Sugar has confirmed its bullish resolve.  You’ll notice a symmetrical triangle that Sugar rallied out of this week.  Despite the ambiguous pattern, the move wasn’t surprising, since SGG is captive under a shorter-term bull continuation channel:

SGG- daily fractal at resistance of a bull continuation channel within a larger symmetrical triangle, buy at support or on breakout.

When I noticed intraday fractals bubbling with the futures curve in backwardation (ETN anti-decay), I started accumulating shares of SGG this afternoon, after which SGG broke-out to close above everything: 200DMA and trendline resistance.

I’ll add to the position as the trade develops.  I expect big numbers out of this…

–Romeo (hattip Peter Brandt)

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