On November 1, 2017, I posted a bearish article on Lumber Futures. My rationale for shorting lumber was based on an overextended bullish technical breakout and vulnerability to historical levels of resistance. Besides that, trees simply don’t grow to the sky (no pun intended).
At the time prices were @ $467.50 and as of today have since declined 44 points or -9.4% to $423.50. This represents slightly more than a 38.2% retracement of of its bullish run which began in late August-2017. There is a strong probability that the retracement could continue to the 61.8% level, which is @ $404. As Lumber’s January-2018 contract has demonstrated some signs of support @ the 50% retracement level or $417, I think it is somewhat prudent to close this position and lock in profits. (Due to the high amount of leverage used in trading commodity futures, the returns on this trade were far greater than the percentage price change reflected above. See chart and trade performance results below for further details.)
January-2018 Lumber Futures as of November-29-2017
|Jan-2018 Lumber Contract|
|Sell (Nov-1-2017)||$467.50||Tick Size||$0.10|
|Buy to Cover (Nov-29-2017)||$423.50||Tick Value||$11.00|
|Margin Requirement||$1,595.00||Net Profit||$4,840.00|
For additional information on Lumber Futures, please refer to the following link: About Lumber
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