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.
Cotton Futures-- Cotton futures for the December contract settled last Friday at 87.18 finishing down nearly 400 points this week with all the damage being done on Mondays trade as the tropical storm which was expected to possibly hurt the cotton crop pushing prices higher but the storm amounted to very little sending prices on Monday down 300 points as harvest continues here in the United States with poor chart structure at this time. The trend in cotton now is to the downside trading below its 20 & 100 day moving average; however the 10 day high is too far away right now so I’m advising traders to sit on the sidelines and wait for some better chart structure to develop as the commodity markets have turned negative in my opinion. The grain market continues to weaken and that also could put some pressure on cotton prices in the short term. TREND: LOWER –CHART STRUCTURE: TERRIBLE
Orange Juice Futures-- Orange juice futures for the January contract have basically been going nowhere for several weeks trading at 126.50 while still trading below its 20 and 100 day moving average and if prices break the 126 level I would be advising traders to be short a futures contract placing a stop above the 10 day high minimizing the risk if the trend does change as production has been lowered due to greening disease but that has already been factored into the price. The commodity markets in general have been very negative in recent weeks and I suspect that orange juice prices are headed lower but I want to see a confirmation close below 126 before entering on the short side. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Coffee Futures-- The coffee market which I’ve talked about previously in many blogs continues to move sideways in a nonvolatile trading action up 200 points for the trading week trading at 116.60 a pound up 200 points in the December contract this Friday afternoon, however it is right at its 20 day but still below its 100 day moving average as the Vietnamese harvest is only a couple weeks away which could put harvest pressure on prices again with the possibility of going down to 100 in my opinion. There is very little interest in coffee at this time and I’ve been trading for over 20 years and I can’t remember such a nonvolatile market as coffee generally is one of the most volatile markets in the world, however with huge supplies globally and excellent weather across the globe this market still looks weak hitting another 4 1/2 year low this week and a very bearish trade on Thursday when prices were up 300 points and then settled lower meaning traders are taking advantage of any higher prices to sell but keep an eye on this market I still think if you’re longer-term trader buying coffee if prices reach 100 could pay you off in the long run. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Sugar Futures-- Sugar futures continue to move higher up another 21 points at 18.91 & I’ve been recommending to buy sugar for quite some time as the market continues trading far above its 20 & 100 day moving average as heavy rains in Brazil have possibly hurt the crop propping prices up in recently. This has been a terrific trade as the Real has strengthened against the U.S dollar pushing prices higher and at this point in time I am recommending taking profits in sugar as I don’t know how much higher prices can go & to sit on the sidelines and see what develops. I’ve been recommending buying sugar futures in the low 16s & now prices are near 19 overdone to the upside in my opinion but I’m not recommending a short position but if you took my advice I would be taking profits now. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Cocoa Futures-- Cocoa futures continue to move higher trading far above its 20 and 100 day moving average hitting a one year high going out last Friday at 2611 in the December contract & settling today at 2747 as the drought in West Africa has hurt the production while we enter the holiday season. Cocoa has several things going for it with low supplies & huge demand and that’s what want to see if your bullish and I do think prices could head up to 3000 as the Christmas holiday brings in a lot of buyers for chocolate and if your long this market it does have outstanding chart structure so make sure you place your stop loss at the 10 day low either protecting profits or minimizing your risk. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
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Soybean Futures-- Soybean futures for the November contract are down $.20 at 12.67 retesting recent lows and if 12.63 is broken I would be recommending to sell a futures contract placing the stop loss above the 10 day high at 13.05 risking around $2,000 in case the trend changes and you are wrong on the trade. Goldman Sachs came out this week stating that supplies are rising quickly and said that soybeans could hit multi year lows while harvest pressure in my opinion is starting to come into play as excellent weather here in the Midwest is allowing farmers to get into the fields as a general decline in commodity prices has been happening in recent days also with global supplies expanding rapidly. Soybeans in my opinion very vulnerable at these prices and the problem with soybeans at this time is South America should produce another record crop and next year the U.S will plant fencepost the fencepost & this could put some major pressure in this market for quite some time. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Corn Futures-- Corn futures for the December contract were down another $.05 finishing lower for the 2nd consecutive day at 4.33 as harvest pressure is really hurting corn prices at this time as farmers are bringing in 14 billion bushels which is a record crop & as I’ve been stating in many previous blogs I am extremely bearish corn prices and I do think $4 a bushel is a reality come Christmas time and with 98 million acres planted next year I think corn has a very good chance of trading below $3 as global inventories are huge and rising. As of last Monday 22% of the corn crop had been harvested and this is just the beginning with outstanding weather recently I would think this Monday to be about 40% complete and I do think with harvest lasting 6 more weeks prices could continue to head to $4 as there is just too big of a supply coming in on a daily basis. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Crude Oil Futures—Crude oil futures for the November contract are flirting with 4 month lows finishing lower by $1.10 at 101.90 this Friday afternoon in New York as global supplies are high while demand remains weak pressuring prices in recent months. Crude oil is trading below its 20 day and right at its 100 day moving average and I’m still recommending traders to sell the futures contract and place a stop at the 10 day high which stands at 104.38 and I think there is a chance of crude oil dropping quickly possibly down to the $90 price level as the geo political news is bearish with Syria a distant memory. I love trades that have a great risk/reward scenario and crude oil can pay you off big time if you are right on the trade while the risk at the 10 day high at the time of my recommendation earlier in the week was only $500.
Cattle Futures--- Feeder cattle prices this week in Chicago continue to hit all-time high prices once again in the November contract up 110 points at 169.20 a pound as corn prices are sharply lower propping up cattle prices continuing its bullish trend towards all-time high prices & in my opinion they could continue to move higher with small herds historically with the possibility of trading between 180 – 190 as I stated in many previous blogs. Feeder cattle on the daily chart has excellent chart structure as volatility has slowed down due to the fact of the government shutdown delaying many critical USDA reports and now is allowing you to place your stop below the 10 day low at 163.85 which is only about 550 points away. In my opinion markets that hit all-time high prices generally continue just look at the S&P 500 this year which has climbed substantially higher than the old all-time highs & the same thing could in happen feeder cattle prices.
I was in the grocery stores this past weekend & a T-bone steak was on sale for $20 a pound which is very expensive in my opinion especially if you have a family of 5 like I do and I’m wondering when will people stop paying those prices and start buying chicken or pork instead of buying 5 steaks totaling $100 I chose the chicken at $3.29 a pound & the whole meal cost $16 & I think a lot of people understand where I’m coming from. Why would I spend $100 and cook it myself I might as well have gone to a restaurant if I’m going to spend that kind of money but spending $16 feeding the whole family on delicious chicken was the right thing to do & I think consumers will follow especially when prices really skyrocket in short term. Live cattle futures are trading above their 20 & 100 day moving average hitting a 9 month high today in the December contract trading at 132.40 a pound still quite a distance from its all-time high which was hit on December 17th at 137.50 and I do think prices have a realistic chance of retesting that level in the coming weeks following the coattails of the feeder cattle market. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Where Should You Place Your Stops? Identifying where stops exist in the market is an important lesson to learn because placing a correct stop loss that will improve your trading tremendously over the course of time. Nobody knows for sure where stops are located, however I have learned a couple of things over my 20 year career and I have a general idea where stops are placed and why. Buy stops are generally placed above the 10 day high as well as above contract highs as the bulls generally are buying more and the short selling are getting stopped out. Sell stops are usually placed at the 10 day low as well as below contract lows which means the shorts are adding to their position and the longs are getting stopped out as they figure they are wrong. The other common places to have stops are at certain moving averages such as the 20 or 100 day moving average where traders think either the trend is turning bullish or the market is starting to break down. Placing stops to close or not at important price levels can get very frustrating because the market can stop you out and then go the direction that you thought leaving you behind and out of the market. Placing stops is one of the most important aspects of trading in my opinion.
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
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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. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.
Michael Seery, President
Phone # (800) 615-7649