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 in New York this week were basically unchanged still trading below their 20 and 100 day moving average hitting 11 month lows this week settling at 77 as supplies are large and demand is low as rumors of China selling cotton reserves which they hold 50% of the world’s supply depressing prices at this time. I have been recommending a short position from 82 and continue to place your stop loss at the 10 day high if you took my advice as I do believe prices are headed down to the 70 level in the next several weeks as the bearish soft commodity markets continue to the downside. The USDA crop report came out today which was pretty neutral as prices continue to decline on weak demand as many of the commodity markets are starting to turn bearish despite the fact of the printing press continuing for some time but it is not helping cotton or any of the other commodities to the upside at this time.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures are unchanged this Friday afternoon currently trading at 18.08 trading below their 20 day and right near their 100 day which stands at 17.74 a pound hitting a 5 week low settling last Friday at 18.25 and as I’ve been recommending in many previous blogs to be short sugar as I think supplies which are huge at this time will continue to pressure this market as the bio diesel market is in a bearish trend just look at soybean oil, corn, and crude oil all continuing to the downside and I do believe this will pressure sugar prices. Sugar has the same problem as many of the other soft commodities have with huge supplies and weakening demand which is not a good mixture if you are bullish and I do believe prices have a very good possibility of going back down retesting recent lows as the commodity markets in general are bearish.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Orange Juice Futures
Orange juice futures for the March contract are up 660 points this Friday afternoon in New York currently trading at 130.30 trading above its 20 & 100 day moving average with a possible bottom being formed at 120 hitting a 3 week high in today’s action as orange juice production was cut by the USDA crop report today. I have been neutral orange juice prices as there really is no trend but if you believe prices are going higher my advice would be to buy a futures contract at today’s price & place a stop below 120 which was most recent low risking around $1,000 dollars per contract but in my opinion the soft commodities are still headed lower and I think orange juice prices will join the group to the downside but the trend at this point is higher.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee futures for the March contract are slightly lower this Friday afternoon trading at 106.25 a pound trading way below its 20 and 100 day moving average hitting a 5 year low as worldwide supplies are huge and nobody is interested in getting long this market at this time and I still do believe prices are headed lower here in the short term, however if prices get down another 10% which would put the March contract around 95 I would start to get long because eventually the supplies will go lower & demand will increase with worldwide population growth and the popularity of coffee increasing which will put a floor under this market but at this point in time I still do believe prices are headed lower. Crop conditions around the world are excellent at this time as the Vietnamese harvest is underway bringing in more supply as pessimism on coffee prices are all-time highs in my opinion as volatility is very low in this market so if you are looking to play the coffee market look at put or call options because the premiums are relatively low limiting your risk to what the option premium costs.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Soybean Futures
The USDA crop report came out stating that the carryover was raised from 150 million bushels to 170 million bushels pegging the crop at 3.25 billion bushels which was construed bullish propping up soybeans in the January contract by 30 cents at 12.94 a bushel. Soybeans have rallied nearly 50 cents since Tuesdays low and in my opinion this report was not that bullish and I think you take advantage of the sharply higher prices and short a futures position or some type of put option strategy. The commodity markets in general still look bearish especially if the U.S dollar continues to climb higher as crop conditions in Brazil are excellent at this time anticipating a record crop coming this spring as today’s rally was short covering in my opinion.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures for the December contract hit a new 3 year low at 4.15 a bushel before the USDA crop report sent prices as high as 4.29 a bushel before settling up $.06 at 4.26 as the USDA stated the actual yield at 160.4 bushels per acre with the actual production at 13.989 billion bushels causing the sharp spike up when the announcement was made on short covering, however I still remain bearish corn and I do think we are headed under $4 come Christmas time. The ending carryover stocks are at 1.887 billion bushels which is higher than the September estimate but below 2 billion also causing a spike up in price as corn is still trading below its 20 and 100 day moving average and still looks weak in my opinion & I’m still suggesting a short futures position or buy put options for the month of December contract limiting your risk to what the premium costs. Remember the fact that next year we will also plant 97 million acres and if we produce another 14 billion crop you’re going to see corn prices below $3 so this is a very serious problem if you are bullish corn as supplies should rise next year especially with another record crop down in Brazil expected.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures in the December contract finished down 4 cents this Friday afternoon at 6.48 a bushel still trending to the downside as the crop report stated the carryover figures of 565 million bushels higher than 561 figure from last month as world ending stocks were slightly higher as well at 178.48 MMT basically a pretty neutral report. Wheat futures are trading below their 20 and 100 day moving average and I do believe that prices are headed under $6 a bushel especially with the fact that corn prices remain extremely weak and this year’s crop is off to an excellent start so look for lower prices ahead by either selling the futures contract or looking at some bear put spreads for the month of March limiting your loss to what the premium costs as the bear markets in the grains will continue in my opinion. We have not received a lot of new fundamental information due to the government shutdown so this was 1st crop report since early September so many traders will start to digest this over the long weekend and realize the fact that supplies are increasing which should continue to pressure prices in the short term.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Gold Futures
Gold futures continued their bearish trend down $24 in the December contract at 1,285 hitting a 5 week low as the U.S dollar continues to rally pressuring gold prices in recent weeks as a possible retest of 1,250 could happen next week in my opinion as money poured back into the stock market once again today and out of the precious metals. Gold is been trading in a 100 dollar range in the last couple of months and I think prices will retest that spike low of around 1,250 if that level is broken you would have to think we can go all way back down the summer lows of 1,180 I would be taking advantage of gold prices at those levels as eventually this market will turn around but right now it’s in a bearish trend. Gold futures are trading under their 20 and 100 day moving average and if you’re looking to sell gold thinking that the market is headed lower I would sell a futures contract placing a stop above the 10 day high or look at bear put spreads for the month of February due to the ample time and limited risk to what the premium costs. If you’re doing option spreads the rule of thumb that I use is the risk/reward must equal 4 times the risk of the option cost so if you spend $1,000 dollars you want to be able to make at least $4,000 or it’s not worth doing in my opinion.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures were down $.35 at 21.31 now retesting the lower end of the trading range with major support at 20.50 in my opinion & it looks like prices might retest that price next week. I still remain bullish silver in the long run and I do believe you should take advantage of sharp declines in silver prices because eventually this market will turn around down the road but at this time prices look vulnerable to the downside. The U.S dollar was sharply higher again today and thats been putting pressure on silver and gold, however I think any rally in the dollar will be short lived as the real story today was money flowing back into the stock market & out of precious metals as the trend in stocks is higher and the trend in the precious metals at this time is lower. If silver prices break 20.50 you would have to think that a possible retest summer lows of around $19 could be hit in and if silver gets to those price levels I would be recommending a buy because I think silver still remains cheap but could get cheaper the short term.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
S&P 500
The S&P 500 reversed yesterday sharp declines to finish up 15 points in the December contract at 1,760 continuing its bullish trend pushing prices higher once again today with a very solid unemployment report stating that the unemployment rate is 7.3% while adding 204,000 jobs pushing prices lower initially and then rallied sharply throughout the trading session as investors are taking advantage of dips in this market at this time. The S&P 500 is still trading above its 20 & 100 day moving average continuing its bullish momentum as corporate earnings have been outstanding looking to propel prices back up contract highs around 1,774 which was hit in yesterday’s trade. The Nasdaq reversed yesterday’s sharp losses rallying 40 points at 3359 and in my opinion I think the cash Nasdaq will break 4000 in November as investors continue to buy dips as the giant bull market remains intact.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Crude Oil Futures
Crude oil futures in the December contract finished up 40 cents to close around $94.50 a barrel reversing some of yesterday’s losses continuing its bearish momentum this week as prices still remain weak in my opinion as the world is awash in crude oil supplies. The U.S dollar hit a 6 week high putting some pressure on crude oil and gas prices recently with the next price target of 91 and if that level is breached look for a possible re test of the April low around $85 to be tested. Crude oil is trading below its 20 and 100 day moving average which tells me this is a strong trend to the downside as the 100 day moving average is almost 10 dollars higher and as my theory states the further away from your moving averages the stronger the trend. If you are interested in getting short the crude oil market I would either sell a futures contract placing your stop above the 10 day high or look at bear put option spreads for the month of March therefore limiting your risks to what the premium costs.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Unleaded gasoline
The December contract was up 500 points reversing yesterday’s 500 point decline to close around 2.55 a gallon hitting 6 month lows this week continuing to trade below its 20 and 100 day moving average as prices remain weak and I do believe prices will head down to 2.30 a gallon in the next of weeks despite the recent pickup in demand as traders construed the monthly unemployment report bullish lifting prices today.
TREND: LOWER
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
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
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
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: (800) 615-7649
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These numbers come as a big surprise. Wall Street was expecting a disastrous number. These numbers show that perhaps our economy is doing far better than we thought.
However, John Crudele with the New York Post writes, "Even with the 204,000 new jobs, the economy is still weak. About 150,000 new jobs are needed each month just to absorb new people entering the workforce. Half a million jobs would represent a strong economy."
What do you think, SodaHeads? Is the surprising number of new jobs a good sign? Are we nearing the end of our economic rut, or are we being fooled? Do these numbers not mean anything in the grand scheme of things? Does much more need to be changed to truly get us out of the rut, or should these numbers prove that as a nation we are perhaps too pessimistic?
"Make no mistake, we are coming out of this economic malaise. The sharp economic rebounds after a recession usually flare out quickly and the Fed has to slam the brakes on. This recovery is slow but will be very long since the business cycle has to complete each phase. The last phase will be the massive CapEx spending spree expanding capacity and consuming resources. It will also see much M&A activity. We still have very little of those animal spirits that sow the seeds for inflation. That means another 3-4 years of market gains are more likely than a market plunge now."
The euro can ultimately only succeed if EU countries agree to a political union, the former head of the US Federal Reserve, Alan Greenspan, said in an interview Sunday.
The single currency "can only be saved via a political union", Greenspan told Welt am Sonntag newspaper.
"I don't believe that a common economic and currency area can function in the long term if it is made up of 17 countries with 17 different social systems," Greenspan said in comments reproduced in German.
"The eurozone needs a complete political union, comprising either all member states or a core Europe. That is the only way the eurozone isn't going to break up," Greenspan told the newspaper.
Asked whether the global financial crisis that erupted in 2008 could happen again, Greenspan replied: "Absolutely. No question."
Greenspan, 87, was chairman of the Federal Reserve between 1987 and 2006. I thank you Firozali A.Mulla DBA
Angela Merkel's conservatives and the Social Democrats (SPD) have struck a deal on the contours of a European banking union under which a body attached to the Ecofin council - not the European Commission - would decide when to close failing banks.
Several sources involved in coalition talks between the parties told Reuters the two camps had also agreed that funds from the European Stability Mechanism (ESM) should not be directly available for winding down financial institutions.
The sources said a number of legal questions still needed to be resolved. But the goal is to sign off on the agreement early next week so that Finance Minister Wolfgang Schaeuble can go to a meeting with his EU colleagues on Thursday with a firm German position on the issue. I thank you FirozaliA.Mulla DBA