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.
Precious Metal Futures-- The precious metals this week traded in a very tight trading range which is very unusual because these are volatile commodities with gold trading in a 3 week range as exchange traded products were reduced for the 17th consecutive week pressuring prices once again, however this Friday prices rallied about $9 at 1,387 ounce in the August contract. Prices for the week were up very slightly but my opinion I still believe prices are headed lower in gold at this point in time especially with a pessimistic commodity market and very weak dollar which has not propelled prices higher and that has been very concerning if you are bullish because once the dollar starts to rally again you could see some heavy pressure in the gold market coming weeks. Silver futures are still trading below their 20 & 100 day moving average with great chart structure settling last Friday at 21.74 an ounce settling right around $22 this Friday afternoon up slightly for the week but still right near 2 ½ year lows and I’m still recommending a short position due to the fact of terrific chart structure allowing you place a stop at 10 day high which is at 21.75 currently risking around $750 per contract if you trading the mini contract. Copper futures which I’ve been recommending a short position for quite some time is trading below their 20 and 100 day moving average with a major triple top at 3.42 hitting a 5 week low this week settling last Friday at 3.27 going out this week right around 3.20 and in my opinion I believe we will break the next major support at 3.05 and had back into the high 280s – 290 level. Stockpiles are rising in copper also demand is starting slowdown with weakness across the board in China and in Europe and I do believe prices are headed lower in the precious metals just make sure you place a stop loss trying to minimize your monetary risk in case the trend does change. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Grain Futures-- The grain market had a volatile trading week with soybeans in the November contract which is considered the new crop still trading above its 20 and 100 day moving average settling last Friday at 13.30 going out this Friday right around 12.98 as weather is improving here in the Midwest while the USDA report came out this week which I will show at the bottom of this blog basically showing that we have a 265 million bushel carry over projection at the end of the year which is a an ample supply especially when you’re talking about $13 soybeans. If you have a record crop this year of around 3.4 billion plus a bloated carryover in my opinion I believe that the highs in soybeans are currently happening and I think a short position is warranted with a stop above the contract high which is 13.33 risking around $1,700 on a 5,000 bushel contract. This market has poor chart structure as we rallied sharply off the spring floods but I do believe that a short position is warranted especially with such a tight stop minimizing your risk in case the trend does continue to the upside because this is a counter trend trade which I very rarely recommend. Corn futures for the December contract which is considered the new crop trading below their 20 and 100 day moving average in a slight downtrend settling last Friday at 5.58 going out this week at 5.32 all due to a bearish report & improving weather in the Midwest as there really is no trend because prices have been going sideways for nearly 4 months between 5.10 – 5.70 but I still think prices are headed much lower as we enter the critical summer months. Wheat futures for the July contract are trading below their 20 and 100 day moving average right near a 3 month low finishing lower by about $.05 this Friday at 6.80 still stuck in a 13 week consolidation looking to breakout below the April 1st lows of 6.65 continuing their bearish trend and in my opinion if that level is broken I would be recommending a short position across the board in wheat placing a stop below above the 10 day high minimizing your risk in case of a false breakout happening. TREND: LOWER –HIGHER--SOYBEANS–CHART STRUCTURE: EXCELLENT
Corn 2012-13:
Imports +25
Ethanol +50
Exports -50
Food & Ind. +15
Supply +25 Demand +15 = stocks +10 at 769 mb.
Corn 2013-14:
Beg stocks +10
Acres unchanged
Yield down 1.5 bpa to 156.5
Production -135
Feed Use -125
Ethanol +50
Supply -125 Demand -75 = stocks -55 at 1,949 mb.
Beans 2012-13:
Imports +5
Crush +25
Exports -20
Supply +5 Demand +5 = stocks unchanged at 125 mb.
Beans 2013-14:
Beg stocks unchanged
Supply unchanged
Demand unchanged
Stocks unchanged at 265 mb.
Wheat 2012-13:
Exports -15
Ending stocks +15 at 946 mb.
Wheat 2013-14:
Beg stocks +15
Acres unchanged
Yield +.5 bpa to 44.6
Production +23 mb.
Exports +50
Supply +39 Demand +50 = stocks down 11 at 659 mb.
Energy Futures---The energy futures were higher across the board but off of session highs as the stock market is near session lows pushing several of the commodity markets lower for the trading session while crude oil finished up $1.10 at 97.85 a barrel still trading right near recent highs of the trading range but I’m becoming more bearish this sector because the longer prices stay up at these levels without moving higher improves the odd that a top might be in place.
The chart structure in crude oil is excellent at this point in time while it generally follows the S&P 500 due to the fact that the higher the stock market goes the higher the demand for gasoline in theory, however higher interest rates might be here to stay as the Federal Reserve might be running out of bullets to continue to prop up the economy. Heating oil futures for the July contract are breaking out of a 10 week consolidation moving above major resistance at 2.95 a gallon settling at 2.96 a gallon and I’m still somewhat pessimistic about heating oil as we enter the summer months demand should start to slow. Unleaded gasoline futures which I’ve written about in many blogs and I stated that I was bullish during with the demand season which improving chart structure with prices still around 2.8950 a gallon hitting a 3 month high, however I am generally a trend follower but I still believe that crude oil is getting very toppy up at these levels and there could be a steep decline in the next couple weeks with many of the other commodity sectors across the board including the stock market which has been in a bullish run for 4 years. The reason commodity prices are headed lower isn’t because the dollar is headed lower which generally is a bullish fundamental factor but the fact that interest rates continue to climb on a daily basis spooking investors thinking that the free money is finally ending which is a pessimistic indicator towards many commodities including the oil sector which has not been affected at this point but in my opinion could be very soon. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Cotton Futures--- Cotton futures for the December contract which is considered the new crop which is currently planted hit a false 3 ½ month low a couple weeks ago around 82 and now has skyrocketed in the last 2 weeks due to the USDA stating that ending stocks of 2.6 million bales were below estimate figures and now a drought in Texas is hurting the crop which is trading at 89.10 hitting a new 1 year high after settling last Friday at 85.10 up 400 points this week. I recommended a short position a couple weeks ago when it broke 3 ½ month lows but as I state in other previous blogs I put a stop at the 10 day high getting stopped out quickly and have been on the sideline for quite some time and that is the reason why you have to place stops because you never fully know where the market can go ,however with very little chart structure at this point in time I’m still advising traders to sit on the sidelines and wait for a better chart pattern to develop. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Sugar Futures--- Sugar futures had one of their better days in quite some time up 57 points in the July contract at 16.78 hitting a 2 week high breaking through its 20 day moving average and I suspect there could be buy stops up around this area which could propel prices even higher in the short term. Last week sugar in the July contract settled at 16.43 up about 40 points for the trading week with outstanding chart structure so if you’re looking to get into this market on the long side my recommendation would be to buy a futures contract and place your stop below the contract low risking around $500 per contract. That is why I talk about chart structure so often because the better the chart structure the lower the risk in my opinion because it allows you to place extremely tight stops trying to pick a bottom or top. At this point in time there are ample supplies of sugar as Brazil is bringing in a record crop keeping a lid on prices at this point in time, however if you look at unleaded gasoline hitting new 8 week highs today that might start to prop up sugar prices here in the short term, however prices are still right near a 3 year lows. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Coffee Futures-- Coffee futures are lower once again this Friday afternoon at 123.80 in the July contract as it looks to be a record crop down in Brazil as there is no frost or possible damaging freeze at this point in time pushing prices to new 3 year lows with the next major support at 110 – 120 after settling last Friday at 127 down around another 500 points for the week. Coffee futures for the July contract are trading below their 20 and 100 day moving average and looks to head lower in my opinion with very good chart structure as we enter the seasonal lows generally that are produced in coffee at harvest time. I still suspect prices could get down to the 110 level but that it is a good long-term investment in my opinion but at this point time the trend is lower and I think lower prices are ahead. The U.S dollar has been selling off pretty dramatically in recent weeks and that has not affected coffee prices to the upside because several years ago when the dollar would drop 400 points in a couple weeks coffee prices would rally dramatically and that tells me that there is such an oversupply in this market making it hard to rally. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cocoa Futures-- Cocoa futures were down for the 2nd consecutive day this week finishing down around 100 points in the last 2 trading days right at its 20 day moving average but still trading above its 100 day moving average after settling last Friday at 2364 going out this Friday at 2240 down over 120 points as pessimism about many of the commodity markets is continuing to push prices lower. At this point in time there is no trend in cocoa prices have been going up and down with very little chart structure but at this point in time I’m advising traders to sit on the sidelines and wait for a better trend or chart pattern to develop. The U.S dollar has major influences on cocoa prices and when the British Pound continued to make new highs last week cocoa prices followed now that the British Pound has sold off a little cocoa prices are down as well and the one thing you don’t want to do as a trader is to be stuck in a sideways choppy channel and that’s exactly what is developing here so be patient and look at other markets for now. TREND: SIDEWAYS –CHART STRUCTURE: EXCELLENT
What do I mean when I talk about chart structure and why do I think it is so important when deciding to enter or exit a trade? I define chart structure as a slow and grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market and allowing you to place a stop loss with will be relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure but markets that continue to trend like the current soybean complex allowing for you to place close stops as it continues to fall dramatically. I always like to place my stops at 10 day highs or 10 day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loses.
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
