72
AUGUST GIVES
COFFEE A LIFT
Coffee has increased in popularity on an interna-
tional scale in the last few decades. Most con-
sumption had been from the United States, parts
of Europe, and Canada. Many Europeans have
switched from tea to coffee, and with the intro-
duction in late 2005 of Starbucks coffee in
Europe and in Asia, more and more people are
consuming “Vente Lattés.
Demand is improving, especially for higher
grade and quality coffee. With increasing global
consumption habits, if there are threats of supply
disruptions or production declines for higher
grade coffee, the futures market can be prone to
extreme price moves.
Coffee typically tends to start a seasonal bot-
toming process before distributors begin buying
ahead of anticipated demand in the upcoming cold
winter months. This is the time to cover the best
seasonal trade short position from May on or about
August 9. It is also a time to look for a short term
trade opportunity from the buy side. Traders
should look to enter a new long position on or
about August 16 and hold this position until about
September 2. This trade usually falls right around
Labor Day. However, this was not the case in 2009,
but once again we would like to point out that if
one uses technical indicators to help time your
entry, it may have kept traders from entering this
trade until early September or from entering at all.
This trade has worked 24 times in the last
36 years, for a success rate of 66.7%. The
chart below shows the way the market traded in
2009–2010 along with Green Mountain Coffee
Roasters (GMCR) as well as the 36-year average
seasonal trading pattern. See pages 133–138 for
additional correlated trades.
ENTRY EXIT PROFIT/
YEAR DATE CLOSE DATE CLOSE LOSS
1974 8/16 56.25 9/05 55.60 –$244
1975 8/18 85.73 9/05 81.35 –1,643
1976 8/17 153.75 9/03 153.85 37
1977 8/16 193.50 9/02 183.81
–3,634
1978 8/16 128.50 9/05 150.38 8,205
1979 8/16 195.50 9/05 208.09 4,721
1980 8/18 154.16 9/05 135.34
–7,058
1981 8/18 114.57 9/04 107.29 –2,730
1982 8/17 125.70 9/03 126.95 469
1983 8/16 129.45 9/02 130.37 345
1984 8/16 142.25 9/05 144.80 956
1985 8/16 138.70 9/05 136.75
–731
1986 8/18 180.93 9/05 203.32 8,396
1987 8/18 106.25 9/04 116.80 3,956
1988 8/16 120.69 9/02 123.17 930
1989 8/16 79.26 9/05 83.45 1,571
1990 8/16 98.20 9/05 103.70 2,063
1991 8/16 82.75 9/05 90.20 2,794
1992 8/18 53.20 9/04 54.50 487
1993 8/17 74.00 9/03 76.25 844
1994 8/16 197.00 9/02 209.90 4,838
1995 8/16 146.35 9/05 149.10 1,031
1996 8/16 111.55 9/05 111.60 19
1997 8/18 162.95 9/05 188.85 9,713
1998 8/18 113.00 9/04 112.85
–56
1999 8/17 92.40 9/03 92.30 –38
2000 8/16 82.90 9/05 78.50 –1,650
2001 8/16 52.85 9/05 52.10 –281
2002 8/16 50.35 9/05 56.70 2,381
2003 8/18 62.25 9/05 66.35 1,538
2004 8/17 72.45 9/03 72.20
–94
2005 8/16 101.45 9/02 103.05 600
2006 8/16 108.60 9/05 110.30 638
2007 8/16 115.25 9/05 116.05 300
2008 8/18 137.95 9/05 142.65 1,763
2009 8/18 128.25 9/04 124.10
–1,556
36-Year Gain $38,880
AUGUST LONG COFFEE (DECEMBER)
TRADING DAY: 12—HOLD: 13 DAYS
Chart courtesy TradeNavigator.com
COFFEE (KC) BARS AND GREEN MOUNTAIN COFFEE ROASTERS (GMCR) CLOSES
(WEEKLY DATA JANUARY 2009–MAY 2010)
Coffee Seasonal Pattern since 1973
c01_CTA_2011_pgs_12-119_c01_cta_2011_pgs_12-119 7/21/10 2:03 PM Page 72
MONDAY
25
TUESDAY
26
WEDNESDAY
27
THURSDAY
28
FRIDAY
29
SATURDAY
30
SUNDAY
31
People become attached to their burdens sometimes more than the burdens are attached to them.
— George Bernard Shaw (Irish dramatist, 1856–1950)
Technology has no respect for tradition.
— Peter C. Lee (Merchants’ Exchange CEO, quoted in Stocks, Futures & Options magazine, May 2003)
All the features and achievements of modern civilization are, directly or indirectly, the products of the capitalist process.
— Joseph A. Schumpeter (Austrian-American economist, Theory of Economic Development, 1883–1950)
To achieve satisfactory investment results is easier than most people realize.
The typical individual investor has a great advantage over the large institutions.
— Benjamin Graham (Economist, investor, Securities Analysis 1934, The Intelligent Investor 1949, 1894–1976)
The heights by great men reached and kept, were not attained by sudden flight,
but they, while their companions slept, were toiling upward in the night.
— Henry Wadsworth Longfellow (Educator and poet, 1807–1882)
Start Long Natural Gas(X)—60.0% Accuracy Since 1990—End Oct. 21—Page 68
End Short S&P 500(U) (Jul. 15)
Start Short Cocoa(Z)—67.6% Accuracy Since 1973—End Nov. 3—Page 127
End Short Soybeans(U) (Jun. 7)
JULY
OE:
NG(Q), HG(Q), GC(Q)
LT:
NG(Q), HG(N), SI(N)
FN:
NG(Q)
FN:
HG(Q), GC(Q), S(Q)
c01_CTA_2011_pgs_12-119_c01_cta_2011_pgs_12-119 7/21/10 2:03 PM Page 73

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