Lauren Jones
Lauren Jones

Opportunities on Banks and Sugar

There’s been so much action across the markets in recent times it’s hard to choose what to write about. Let’s start with my old favourite the CBA, and then an update the Sugar Futures activity.

CBA has been trending up strongly over the past year and the pullback we were watching for in early-January lasted only three days, indicating there was still more upside to come. Then, in late-January, the market halted and if you have been following the Safety in the Market Discussion Forum, you might have noticed that I mentioned the possibility of using the Breaking of Multiple Bar Chart Tops rule, straight out of the Number One Trading Plan, if the market moved up from there.

There were two possible entries. The first came on 4 February and following this rule you would have entered early in the session, then spent the next few days worrying as the market closed on its low! There was an ABC long entry on 6 February, but this day also closed on its low. Several more days followed with highs around the same level and it was not until the 12th that the market finally had a close above these highs. Phew!

CBA Daily Bar Chart with Recent Action

click chart to enlarge

Chart 1 above illustrates the gap up today (early trading on Wednesday, 13 February) after the announcement that CBA will pay $1.34 per share interim dividend. Note this is an incomplete bar. With CBA going ex-dividend on 18 February, there are a few possible scenarios.

Firstly, CBA might continue strongly until the ex-dividend date before slight pullback, which will just form a point C, before the market resumes its uptrend. Alternatively, if we have time and price clusters at this level, we could possibly see an island reversal form and a gap back down on the ex-dividend date. It would pay to review the harmony around a similar scenario that occurred in February, 2011. I will set that for your homework and, as always, I’ll be happy to discuss it further on the Forum.

I will just throw one more chart into the mix for CBA - a weekly chart which measures the moves since the All-Time-High in 2007. Interesting, yes?

Chart 2: CBA Weekly Bar Chart with Weekly Timeframes

click chart to enlarge


Sugar is in an interesting position. We have been watching these contracting ranges and waiting for the February seasonal date. When a double bottom appeared this week, I thought that might be it. Check out Chart 3. However, last night we had a strong reversal. Not enough to take out the bottoms but enough for me to question the double bottom and be ready with a reversal below them.

Chart 3: Sugar with Possible Double Bottom

click chart to enlarge

I have been saying for some time that on the much bigger picture we have lower tops and equal or slightly lower bottoms, which is a sign of a weakening market, though sugar is also pulling up around a 50% level. I was prepared for it to move either way but nothing has happened yet.

Platinum students who attended Gann Mastery with me late last year also know I was watching the February seasonal date for a turn on sugar and whilst I’m not making a call either way just yet, I want to draw your attention to some Time by Degrees harmony with the Point B between the double bottoms, as shown in Chart 4:

Chart 4: Sugar with Time by Degrees Harmony

click chart to enlarge

There’s plenty to trade at the moment and making sure you fully understand some of the basic entry rules from the Number One Trading Plan will help you get a piece of the action. Stay alert on your own few markets and you should be smiling.

It’s the Journey

Lauren Jones