Commodities

Lumber Commodity Futures Update: Timber Has Fallen

falling lumber futuresOn 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

january 2018 lumber futures chart
Click to enlarge

 

Performance Results

 

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
Profit $44.00 Ticks Gained 440
   
Margin Requirement $1,595.00 Net Profit $4,840.00
   
Percent Gain 203.45%  
Annualized Return 2,441.4%

 

For additional information on Lumber Futures, please refer to the following link: About Lumber

 

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