Cocoa Futures (ICE Futures US.CC) are dropping like a rock, and small traders and large speculators have finally taken notice as both switched positions from net long to net short last week. EventEdge indicates that the rock has not hit bottom yet, and there is still room to go.
Q: How has NBT.CC responded to Small Traders switching their position to net short while Large Speculators are 'Extremely Short', meaning their net position is within 10% of the shortest they've been looking back over the last 52 weekly reports?
A: According to the 14 previous occurrences of this event omitting any repeat occurrences within 10 trading days, EventEdge indicates that ICE Futures US cocoa has shown a strong bearish edge that peaks 40 trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Monday, Oct. 27, 2008) is Tuesday, Dec. 23, 2008.
Cocoa declines in 93% of the cases (13 of 14) by an average of 9.8% relative to the close on the event date. The average of the one rally is 4.2%. The overall return of the 14 cases is -8.8%, which, based on the close on the event date (1956), provides a target price of 1784.
To see this in EventEdge® click here.
Mickey Schoenhals is an analyst with Markethistory.com.
