Buy: Sugar Starting To Look Very Sweet
Sugar has been in one of the ugliest bear markets in recent history. It has fallen to epic lows, not seen since 2010. An over supply from South American countries has flooded the market and is making it almost impossible for U.S. farmers to turn a profit. Just last week, for the first time in what seems like forever, sugar popped higher by about 10%. Over the last few days it has started to trail lower again. Please note the chart below.
Based on the price action in the last week, sugar is now a buy. For easy access, follow the iPath DJ-UBS Sugar Subindex Total Return Sm Index ETN (NYSE: SGG). The SGG is a tracking ETN an easy way to follow the sugar price action. The current pull back off the 10% pop is a classic in-spirit-of bull flag. The price target for a buy is $52.00. This also matches up with the 20 moving average.
Upside potential on the SGG from the $52.00 level is target of $56.50. Should it close below the recent lows of $49.25, a stop out should be used. This is one of the sweetest trade setups I see in the market currently. Enjoy!
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