We’ve asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.
Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.
Currency Futures--- Currency futures had a very solid week against the U.S dollar with the Euro currency trading higher for the 5th consecutive trading session hitting an 8 month high trading far above its 20 and 100 day moving average with the next resistance at 134 currently trading at 1.3175 up another 87 point continuing its bullish momentum despite the problems in Europe people are feeling more confident about the fact that the European problems might be over at least in the short term. The Dollar Index has been lower 3 out of the last 4 trading sessions down this Friday afternoon by about 40 points trading far below 20 &100 day moving average which is always a bearish indicator in my opinion hitting an 8 week low with the next major support at 79.20 and then major support at the contract low which was hit on September 14th of this year at 78.95 on fears that the government is going to continue to print money here in the United States which is pressuring the dollar against all the foreign currencies in recent weeks. If you look at the Canadian dollar, Australian dollar, and the Mexican Peso they are all moving higher against the dollar while the Mexican Peso is actually making contract highs but the only currency that is not gaining on the U.S dollar is the Japanese Yen which continues to fall out of bed due to the fact that the Japanese government wants a lower Japanese yen although today finishing slightly higher but made new contract lows 5 straight trading sessions currently trading at 11995 and looking to continue its bearish momentum possibly down the 105 level in my opinion over the next couple of months. At this point in time the trend is simply higher in the foreign currencies and I’m advising traders to get short the U.S dollar because of the fact that we have 4 more years of easy monetary policies with the Obama administration which should hurt the U.S dollar over the course of time. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Precious Metal Futures-- The precious metals had a wild trading week with extreme volatility especially in silver, however this Friday afternoon was relatively quiet with gold basically unchanged the February contract settling right around 1, 697 an ounce with major support around 1,680 and stopping some of the bleeding that occurred yesterday finishing $25 dollars lower on the fact that of the old saying “buy the rumor and sell the fact “ which was quantitative easing easy happening and traders sold off the metals when the announcement came out toppling silver down almost the $1.50 yesterday and lower once again today by $.07 looking very weak on the daily chart 32.29 right at 4 week low. Palladium futures for the March contract are up another $11 today right at contract highs on the fact that there is solid demand for Palladium, platinum and the rest of the metals, however at this point traders are selling silver and gold before the end of the year possibly taking profits. In my opinion I still believe that silver & gold are headed higher with easy monetary policy that will be in place for 4 more years it’s difficult to think that bear markets will happen in these commodities, however you have to realize you must place a stop loss trying to minimize monetary risk just in case you are wrong. Copper futures were sharply lower as well yesterday however they remain the strongest metal with Palladium to the upside finishing higher by 200 points again to close at 3.675 a pound right near recent highs all due to the fact that the housing market seems to have bottomed and construction activity is starting to pick up which is very bullish the copper market. In my opinion I believe that the fiscal cliff is resolved in the next couple weeks I think silver and gold and the rest of the precious metals will reap the benefits and shoot higher due to the fact that the cloud overhanging in the next couple weeks will be lifted and I believe investors will be putting money back to work especially with markets that have been beaten-down such as the silver market. TREND: MIXED –CHART STRUCTURE: EXCELLENT
Grain Futures--The grain futures in Chicago this week were mixed with wheat breaking out of a 19 week consolidation currently trading at 8.15 in the March up higher by 7 cents for the trading session, however down around 40 cents for the trading week with the USDA increasing ending stocks ending on May 31st to 754 million bushels up from 704 million bushels also increasing world stocks by 3% and as I’ve stated in many previous blogs I am extremely bearish the wheat market and its broken out of a 19 week consolidation with all the heavy large funds today jumping in on the short side and I’m recommending to be short the wheat and I do believe we can head all the way back on 7.50 very quickly. Corn futures for the March contract are also higher today by 8 cents closing right around 7.29 breaking 6 consecutive down days and what looks to me like a bear market is starting in corn following the wheat to the downside and if the corn market does break 7.13 which is the 13 week low you could see corn plummet down to 6.50 very quickly just like the wheat has done in the last two days dropping nearly $.50 on the breakout to the downside. Corn stocks stayed the same at 647 million bushels; however corn export were the smallest in the marketing year at 7.8 million bushels which tells you demand is slowing even as prices have come down which makes you think the prices probably have to come down even further from these levels. Soybean futures for the March contract were sharply higher up 16 cents a bushel basically breaking out to a 7 week high and not trading in sympathy with the rest of the grain market trading at 14.88 with the USDA kept the carryover at 130 million bushels while stating that demand for soybean oil and meal is very strong increasing exports and in my opinion as I’ve stated in many previous blogs I am bullish the soybean complex and very bearish the wheat complex at this point while neutral on corn until it breaks out in one direction, but at this point I’m still recommending a short position in wheat and a long position in soybeans remembering to always use a risk management system to try and prevent excessive losses when you are wrong. TREND: HIGHER IN SOYBEANS---LOWER—CORN & WHEAT –CHART STRUCTURE: EXCELLENT
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor.
Cotton Futures--- Cotton futures have broken out to the upside in the March contract up another 55 points today closing at 75.45 after gaining over 100 points this week breaking out of the recent trading range now looking to possibly head towards contract highs around $.78 off of this week’s USDA crop report which raised exports while lowering carryover from 5.80 million bales to 5.40 million bales also lowering last year’s production by 1% and in my opinion this report could send prices higher in the next couple of weeks as the demand is starting to come back into this product at these lower levels. The disparity between grain prices and cotton prices is the highest I have ever seen meaning a couple of things are going to have to happen with the possibility of the grain market selling off sharply which is currently happening in wheat and corn while cotton remains at this value or cotton is going to have to rally sharply to catch up to the grains as we enter the spring season as farmers decide on what crop is more profitable to grow. Cotton futures are trading above their 20 and 100 day moving average hitting a fresh 7 week high on renewed optimism about demand coming from China and Asia propelling large speculators to jump into the market on the upside as we’ve broken major resistance and now have a possibility of hitting highs before Christmas. Volatility in cotton is extremely low at this point meaning if you’re looking to get into this market you might want to look at the call options because they are relatively cheap due to the fact that volatility is right near historic low which allows you to purchase the premium while remembering when you buy an option you only risk what the premium costs. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Sugar Futures--- Volatility in the sugar market this week was very high with prices dropping around 90 points for the trading week with yesterday’s low hitting 18.31 a pound before rallying this Friday afternoon up about 46 points currently settling right around 19.01 hitting fresh contract lows in yesterday’s trade continuing to hit new 2 year lows and in my opinion I think today was just a profit taking session with traders booking in recent profits, however the trend in sugar is still lower at this point in time and I’m still advising traders short this market placing a stop above the recent 10 day high therefore minimizing risk if there is a turnaround in price. Many of the soft commodities including sugar and coffee are hitting new lows on concerns of slowing demand and the fact that the fiscal cliff has not been resolved as traders are liquidating positions before the New Year. Many of the commodity markets have been selling off in recent weeks and I still do believe at one point when the announcement is made that the fiscal cliff has been resolved I think you will see a relief rally in stock and commodity markets around the world, however I do not think they will come up with resolution until just a couple of days before the new year ends. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Coffee Futures--- Coffee futures this week continue their bearish momentum closing down nearly 1000 points for the trading week hitting a fresh 2 ½ year low currently trading in the March contract of 143.75 basically unchanged this Friday afternoon and finishing lower for the last 5 trading sessions. Concerns of overabundant supply coming out Central America and Brazil pressuring prices with lows we have not seen in quite a while and demand for this product is very low at this point in time, however you have to look at the longer picture sometimes in the commodity markets and coffee prices in my opinion probably are headed down to the 135 a pound area but if you’re a long term investor I do believe these could be very attractive prices here in the very near future. Coffee and sugar that trading basically hand-in-hand hitting contract lows every single day this week and if you look on the daily chart in my opinion it does not look like a low has been formed in either commodities trading sharply below 20 and 100 day moving average which in my opinion is always a bearish indicator. I do believe that the fiscal cliff resolution does happen and I think you will see a relief rally in coffee and sugar and many of the other commodities as well because speculators and investors willing to put the money to work once again. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cocoa Futures-- Cocoa futures in New York this afternoon were very quiet finishing around unchanged in the March contract but earlier in the week shot higher by 64 points currently trading at 2432 right at 20 and 100 day moving average with a possible head and shoulders bottom on the daily charts closing right near session highs. The cocoa has an interesting chart with major support at 2322 and major resistance at 2550 and has been trading in a sideways pattern for over 2 months but if you look very closely the last couple of days may have formed the 2nd shoulder on the daily chart but only time will tell to see if I’m correct but at this point I think I would take a shot at the long side making sure you put a stop below the recent low risking around $1,000 dollars per contract. The soft markets were pretty mixed today with cotton, orange juice and cocoa all slightly higher on the trading session but coffee continues to trade lower. The cocoa market can become very volatile if there is any disruptions out of the Ivory Coast where cocoa is produced and harvested that generally sends prices up quickly, however at this point in time there is very little tension which is causing prices to grind lower and sideways for a long period of time, however the start of the cocoa bull market might be underway. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Orange Juice--- Orange juice futures skyrocketed this week in New York once again continuing their bullish momentum finishing higher for the 5th consecutive trading session and up over 1200 points this week finishing at 138.35 in the March contract finishing up another 90 points hitting an 8 month high trading far above its 20 and 100 day moving average remembering that the trend is your friend in the commodity markets on renewed optimism about demand and traders are placing the frost premium in the price at this point just in case of crop damage this winter. Orange juice futures are higher this past week on double the average volume which tells you this bullish move has legs and could head higher and as I’ve stated in many previous blogs I do believe that orange juice could head back up to the 170 – 200 level where we were just 1 year ago remembering the tremendous selloff that occurred last summer and then sideways action for many months and now are starting to breakout to the upside and if there is a winter frost in Florida prices could shoot up very quickly to the upside. The next major resistance in the March orange juice contract is 145 – 150 and if those levels are breached I suspect a big run possibly up to the 200 level by mid-January in my opinion. TREND: HIGHER–CHART STRUCTURE: EXCELLENT
What Does Risk Management Mean To You? I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from. For example if a customer has $100,000 account in my opinion on any given trade he or she should risk 2% – 3% of the account value meaning if you are wrong the worst-case scenario is still a $97,000 remaining balance, however what I always see is traders risking ridiculous amounts of money and instead of the 3% stop loss will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar account could dwindle down to nothing very quickly and I’ve seen it many times throughout my career. What many traders forget to realize is they might have 4 or 5 commodity positions on and if you have too many contracts on all at the same time and all of those trades go against you which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from and your still in the game. If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor.
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor.
Michael Seery, President
Seery Futures
Twitter–@seeryfutures
Phone # (800) 615-7649
