Lumber futures have been on fire recently (I know, I couldn’t help myself), closing at 93% Bulls on 07/10/20. That’s the highest sentiment reading for Lumber Futures since they hit 95% Bulls over two years ago on 05/17/18. As always, the question now is what happens next? If the past is any indication, Lumber Bulls should expect more upside from here – let’s take a look at the details.

Since 2006, Lumber Futures closed >90% Bulls while also gaining between 7-9% Bulls over the previous three trading days only 10 other times. Of those 10 instances, Lumber Futures made a higher close each time within five trading days. For traders looking for more upside than a higher close, we should point out that Lumber Futures were higher 90% of the time for an average gain of 4.7% after 13 trading days.

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The first time this signal triggered was on 12/16/10 – before Friday, the last time this signal triggered was on 04/27/18. Both instances saw nice gains over the following weeks – we expect the same now.

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We’re looking to get long below Friday’s close and tighten up the trailing stop after the first profitable opening.

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*UPDATE 7.16.20:

As we expected, Lumber Futures (LB) traded higher following our previous post on 7/12 (listed above). What’s more, it traded up to and beyond our 4.7% profit target. As such, we took off half the position @ $522 booking $3k per contract and are letting the rest run with a trailing stop.

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*UPDATE 7.19.20:

Lumber Futures (LB) continued higher into close Friday as we leave our trailing stop in place.

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