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.
Gold Futures
Gold futures are right near 3 year lows going out this Friday afternoon at 1,200 an ounce after falling $40 in yesterday’s trade due to the fact that the Federal Reserve announced the beginning of its tapering program of bond purchases which is construed as negative towards goal prices as the money flow continues in the S&P 500 and out of the precious metals as investors see no reason to be long the gold market at this time. Gold futures have dropped $700 from their highs and I do think there’s still a possibility that we could drop another $100 dollars maybe another $150 but eventually this market will bottom out as well as world problems will come back into play, but right now the trend is your friend and in the trend is buying the S&P 500 and selling gold and I think that’s going to continue for the rest of the year as the stock market is hitting all-time highs once again in the S&P 500 and Dow Jones Industrial Average while gold futures finished up $8 today. Many of the commodity markets were higher today due to a relief rally because there is some clarity on what the Federal Reserve will do as gold is trading below its 20 and 100 day moving average with the next major support at 1,180 and if that level is broken I think prices could go to 1,100 gold but gold is very volatile and has big kickbacks of $75 dollars so if you are short this market make sure you have tight stops.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures had a wild trading week finishing up $.20 this Friday afternoon in New York to close around 19.38 ounce basically trading in the $19 range for the entire month of December as the announcement from the Federal Reserve starting its tapering of bond purchases sent silver down $.90 earlier in the week as investors continue to buy the S&P 500 and sell precious metals due to the fact that there are no worldwide problems creating the fear factor causing people to get into the precious metals as investors are putting money into the stock market and out of the bond and precious metal sectors. In my opinion I do believe silver prices could head lower possibly retesting the $18 level but if you’re longer-term investor and you believe economies around the world are improving eventually inflation will come back and I would start to accumulate small positions as I do think down the road silver prices will move higher. The problem with silver currently is that it’s attached to gold which continues to make new lows and that’s putting pressure on silver prices as nobody seems to be bullish gold at this time. Silver futures are trading below their 20 and 100 day moving average which tells you that the trend is lower here in the short term and if you’re looking to pick a bottom in silver my recommendation would be to buy futures contract at today’s price of 19.38 and place your stop below the recent low of 18.97 risking around $.41 or $2,200 if the trend continues to the downside.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean futures are trading above their 20 and 100 day moving average settling last Friday at 13.13 a bushel and going out this afternoon at 13.28 slightly lower for the week still right near 3 month highs and by far has been the strongest complex in the grain market and if you’re looking to buy soybeans and think they are going higher my strategy would be to buy at today’s price of 13.28 placing a stop below the 10 day low at 12.99 risking around $1,500 per contract if you are wrong and soybeans reverse and break support. Weather in Brazil and South America is excellent and they should produce a very good crop, however there is just tremendous demand for soymeal and soybeans which should keep prices strong in the short term. November soybeans are considered the new crop and is trading around 11.70 a bushel so the price is much lower than the front month as traders are expecting another large crop and that is why you see the price differential as November will be the crop that will be planted this spring and if we produce a 3.5 billion crop in soybeans then there’s the possibility of sending grain prices sharply lower in my opinion unless the market develops a drought like it did 2012 and then everything can change quickly.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn Futures--- Corn futures settled last Friday at 4.25 a bushel and going out this Friday afternoon around 4.30 a bushel up about $.05 for the trading week stuck in a 6 week consolidation with very little volatility as prices have traded between 4.20 – 4.40 so expect this trend to continue for quite some time as the real volatility won’t start until springtime. The fact that we know the size of the crop and its Christmas time with slowing volume and volatility so prices will trade in a tight range but my main concern is if farmers here in the United States plant another 97 million acres and the crop turns into another record prices could really drop this time next year remembering the fact in 2010 prices traded as low as 2.90 a bushel so prices could head back down to those levels in my opinion but it will take time. Corn is trading right at its 20 day but below its 100 day moving average as I think this market should be avoided at this time and move on to something that is trending and wait for the corn to breakout below 4.20 or above 4.40 before acting.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures are trading below their 20 and 100 day moving average settling last Friday at 6.28 going out this afternoon at 6.13 a bushel hitting 1 ½ year lows and I’m still recommending a short position in wheat placing your stop above the 10 day high as this trend is strong to the downside and I do think prices will re-test major support at 5.75 in the next couple of weeks. Prices have dropped nearly $.60 in the last 2 weeks as huge supplies worldwide are really going to start affecting the price to the downside in my opinion as I do think there’s a possibility wheat can trade as low as 4.50 come April or May as prices are just way too high in my opinion. We are experiencing excellent weather conditions in the Great Plains and should see another record crop so continue to play this to the short side as I have been recommending in previous blogs look at the March put options as they will limit your risk to what the premium costs.
TREND: LOWER
CHART STRUCTURE: OK
Cotton Futures
Cotton futures are trading above their 20 and 100 day moving average settling basically unchanged for the trading week in the March contract going out at 83.15 right near 8 week highs and if you are long this market I would place my stop at the 10 day low which currently stands at 79.76 minimizing your risk while that stop will be moved up almost on a daily basis. Cotton had a nice rounding bottom and a sharp rally in recent weeks as the bulls clearly have a momentum at this time, however China does have huge supplies and they might sell those supplies onto the market so I do think cotton prices are limited to the upside at this time. The soft commodities have started to rally recently as the giant bear market may have ended in the short term but if cotton prices get up to 86.00 I would be looking at probably tightening up my stop or take my profits and move on.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee futures basically finished the week unchanged in the March contract and are still trading above its 20 day but right at its 100 day moving average which has not happened since the month of July hitting an 8 week high recently consolidating last week’s 1000 point rally. The fundamentals in coffee really have not changed with ample supplies worldwide and low demand at this time but eventually markets bottom or top out & in this case coffee has been in a bear market for nearly 4 years with the next major resistance at 120. I believe coffee prices will probably chop around for quite some time as we go into their volatile season of spring time when a possible freeze could happen in Brazil which increases volatility tremendously but at this point I would still be recommending being long coffee futures placing a stop below the 10 day low minimizing risk in case you are wrong as you want to trade with the short term trend and the trend in coffee currently is up.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar Futures--- Sugar futures are trading below their 20 and 100 day moving average having its 1st back-to-back up day in well over a month settling slightly higher for the week after just having terrible months in November and December to the downside and I still do believe prices are headed lower and I would place my stop if you took my recommendation at 18.32 placing your stop at 16.84 which is the 10 day high locking in profits as I do think prices could go under $.15. Sugar has large supplies and is the only soft commodity that is not rallying currently but the problem was it finished lower on so many consecutive trading sessions so it doesn’t surprise me that you see a pullback in prices here in the last couple of days but I would still take advantage of this rally and possibly add to your positions keeping your stop at the 10 day high on all contracts.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures settled last Friday at 4.25 a bushel and going out this Friday afternoon around 4.30 a bushel up about $.05 for the trading week stuck in a 6 week consolidation with very little volatility as prices have traded between 4.20 – 4.40 so expect this trend to continue for quite some time as the real volatility won’t start until springtime. The fact that we know the size of the crop and its Christmas time with slowing volume and volatility so prices will trade in a tight range but my main concern is if farmers here in the United States plant another 97 million acres and the crop turns into another record prices could really drop this time next year remembering the fact in 2010 prices traded as low as 2.90 a bushel so prices could head back down to those levels in my opinion but it will take time. Corn is trading right at its 20 day but below its 100 day moving average as I think this market should be avoided at this time and move on to something that is trending and wait for the corn to breakout below 4.20 or above 4.40 before acting.
TREND: MIXED
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
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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