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For: Wednesday 07-28-2010

Coffee Perking Up Again

The coffee market has recover well after the quick sell off last week. This looks like a simple A-B-C corrective pattern. It was a mild retracement given the magnitude of the last rally. The strength of the reversal off the stop flush still has me expecting more upside potential. We will look to buy call spreads on a move through resistance.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: On a close above 171.00 versus the September futures, buy the 180-200 call spread and sell the 155 put for a debit of 220 points on a limit. Risk 400 points on the trade or the market closing back below `164.00. (>$1500 not including commissions and fees), Look to take profits if the market trades to 180.00.