Morgan Stanley Coffee Report

The market experienced a pullback, settling at 12225 -90 points, following a 775 run (11830-12620) and saw its first lower high and low following a series of 6 higher lows and 5 higher highs.  A range of 220 points proved unexceptional from a flow point of view with the bulk of today’s  paper changing hands amongst specs.  The option trade d’jour was the Feb 120 put which traded 685 times in range of 138-195 while total option volume was 1,756 calls and 2,787 puts.  Although the real was touch weaker there wasn’t any obvious catalyst for today’s softer session. Momentum to the upside faded as short term specs showed a reluctance to pay up as the year winds down in a market where the shelf life of rallies is suspect.  Despite closing in the red, little damage was done from a chart perspective, as we have traded in 305 point range thus far this week and closed above the 9 day moving average and in between the mid and lower Bollinger bands.