Trader Note

The market is always right (Time it right).

2017-11-13 Week

Asia Scalp. Bitcoin - Segwit2x &CME. Sugar. See: EVENTS

This Week

There are no major market data releases this week. Normally this may indicate slow markets, but it is also a time when a single fat-finger order can drive prices lower. Traders expecting a slow week will put on chop trades that are oversized, and have to jump out when a big price move occurs. This can cause markets to have some decent sized price swings with no obvious underlying reason. So keep your stops in place this week, but chop away.

  

Scalp Opportunity

Thursday saw a wobbler in Asian trade as Japanese markets took a dip. Australian markets missed the action as it occurred late in the day. However, Australian markets are often used as a hedge to for Japan trade because of proximity and ease of access. For Friday trade, Australian markets may follow suit in this wobbler, meaning that price swings may provide some good scalp opportunities.

US banks will be closed on Friday for Vetrans' Day, but markets remain open. Traders may take the opportunity for a long weekend, so expect that Friday volumes in the USA will be lower. Any significant moves in EU and Asian trade may translate into some larger price swings in the USA when volumes are lower.

Don't turn a scalp into a position. Look for a good exit before the weekend.

  

Bitcoin

Volatility is high in Bitcoin because the code split, Segwit2x, has been delayed by the power players in the space. Many speculators went into Bitcoin on the hopes of profiting from the split, taking their cues from the earlier split into Bitcoin Cash and Bitcoin Extended. However, this code update has merely been delayed for now. So the market is looking to see if speculators will exit these positions, taking profits, and re-enter at lower prices as the market dips.

There is also demand on the buy-side as traders digest what CBOE contracts will look like to market. Such a contract will allow big players to trade Bitcoin without violating their reporting requirements. This contract will likely be cash settled and NOT actually have control of any Bitcoins. As a futures contract, it will also likely be the price level pointed to by media and trading firms to set their prices. This opens up the space to the same manipulations that the gold market has endured for years. So it remains to be seen if actual market price has any relation to paper future Bitcoin price. It also remains to be seen if the HFTs will be bashing the futures contract to manipulate the physical price (actual price) spreads.

Speculation in the future of Bitcoin is currently high, and that always means higher price moves if only in the near term. Such speculation always drops off on a dip when the media news cycle starts banging about lack of transparency and government intervention. This may mean larger price swings in the near term.

Current price action looks like the Bitcoin price is setting up for a dip into the weekend. Low order volumes could also see massive price swings. This may allow for an excellent scalping opportunity with orders on the low and high sides of price spike range. So look for a chop in the weekend and early in the week.

  

Sugar

Sugar price has moved higher, but there is weakness at current levels. The market is still a good short opportunity when trading options with a longer expiration date (loss limit set by value price).

Brazil is the big player in this space. With their sugar exports expected to rise this season, this will have a downward push on price.

Changes to EU sugar tariffs means that more sugar will be leaving the EU this year, produced with the EU farm subsidy grants.

Demand for sugar is relatively stable year to year. However, China tariffs may lower Chinese buying this year. This means that lower sugar demand this year may cause a larger price drop than would be expected in a normal harvest season.

Australian sugar harvest is nearly complete. The current crush was in line with previous years. Estimates were slightly lower than last year, but the harvest seems to be higher than these low expectations. So no major moves by the Australian supply are expected.

A recent dip in the Australian Dollar to the US Dollar has made Australian sugar more competitive on the international market. Expectations are that the Australian dollar will continue lower, which means that this sugar harvest will help to move price action lower in the near term.

So it is still a good time to sell sugar futures.

The Sugar and Sweetener Outlook Report for November 2017 comes out this Thursday. This may give markets an indication of oversupply for existing demand. It will add trading volume to market, as well.

October 2017 Sugar report here:

https://www.ers.usda.gov/publications/pub-details/?pubid=85468

Recent WASDE report here:

https://www.usda.gov/oce/commodity/wasde/latest.pdf

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