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January 14, 2020

I think it is a good question and the right time to ask. Let us examine the LAWG 647 Model and see what it tells us.

We know that as of last Friday March Coffee remained in an uptrend.

We know that it will take a close on Friday at or below $112.85 to reverse the trend to bearish.

We know that ten weeks ago March Coffee entered the Negative equivalency zone and stayed in or near that zone for the next eight weeks.

We know that two weeks ago March Coffee began to correct this situation by dropping over Thirteen dollars from the close of December 27 to January 10.

We know that once a market becomes severely unbalanced (as Coffee did) it can take two to four weeks to become rebalanced.

We know that a market can correct so quickly that for a brief period it can become over balanced.

We know when the market becomes overly rebalanced the Positive Standard Deviation Indicator and the Negative Standard Deviation Indicator can converge. This convergence occurred this morning, Tuesday January 14.

We know that when they converge it may be a good time to look at re-establishing the position consistent with the trend.

I issued a buy recommendation early this morning Tuesday, January 14.

As a friend pointed out to me after I made the initial buy recommendation, Coffee retraced .618 of the October lows to December high, in my opinion Lee this is a good low risk trade.

Keep in mind we both could end up very wrong but for what is worth I did buy March Coffee. Yes, I have some skin in the game here is hoping I dont get skinned.

My name is Lee Gaus and if you would like to see more of our thoughts go to our website There you will also find articles written by my partners Tom Fritz, Steve Erdman. If you have any questions you can reach me at 1-877-304-1369, 312-384-1166, or email me If there is a commodity you would like me to address shoot me an email.

There is significant risk involved in trading futures and/or options on futures. Futures and/or options of futures trading may not be suitable for all investors. Investors should consider these risks and evaluate their suitability based on their financial conditions. Past performance is not indicative of future results.

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About the author

Lee A. Gaus is a forty year veteran of the commodity futures industry.  After graduation from Illinois State University Lee began his professional career with Cargill of Minneapolis and then moved to Archer Daniels Midland of Decatur, Illinois.  After stints in the areas of animal nutrition, soybean processing and grain merchandizing Lee began specializing in commodity futures trading.  After being transferred to Chicago Gaus rose to the position of Senior Vice-President.  In 1992 Gaus was a founding member of EFG Group, and later International Futures Group.  Gaus has always had a deep interest in what appears to be the random movement of numbers.   Today Gaus combines old formulas with formulas of his own design in an attempt to discover fair valuations.  

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