Sugar Futures
Sugar futures in the March contract settled last Friday in New York at 12.73 a pound while currently trading at 12.74 unchanged for the trading week, continuing it's extremely low volatility.
I have been recommending two bullish positions with an average price of 12.67, and if you took that trade, continue to place the stop loss under the 10-day low, which now stands at 12.46. For Monday's trade, that will be raised to 12.51 as the chart structure is outstanding at the current time because prices have been stuck in the mud.
Sugar is still trading slightly above its 20 and 100-day moving average as the trend remains higher as we need some fresh news to dictate short-term price action as the Brazilian Real has hit a 4 year low against the U.S dollar as that has a negative influence on prices.
The next major level of resistance stands at the 13.00 area. I will be looking at adding more contracts at that level because the stop-loss is so tight; therefore, the risk/reward is in your favor, so stay long.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
Orange Juice Futures
Orange juice futures in the January contract settled last Friday at 100.50 while currently trading at 99.00 down about 150 points for the week as prices are still stuck in a tight four-week consolidation.
I will be recommending a bullish position if prices break the 101.65 level while then placing the stop loss under the contract low, which was hit on October 30th at 96.10 as the risk would be around $850 per contract plus slippage and commission.
We are starting to enter the very volatile winter season for orange juice prices as a possible frost could hit Florida, sending prices sharply higher. That situation has occurred in the past as I do think we are in a bottoming-out pattern as the downside is limited.
Volatility at the current time remains low as I don't think that the situation is going to last much longer as the weather conditions remain ideal. Still, it is a long growing season, so look to play this to the upside.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
Rice Futures
Rice futures in the January contract settled last Friday in Chicago at 11.89 while currently trading at 12.23 up about $0.34 for the trading week as prices are right near a five-week high. I had been recommending a bearish position from around the 11.82 level, getting stopped out around 12.10 earlier in the week while I'm sitting on the sidelines waiting for another trend to develop.
Rice prices are now trading above their 20 and 100-day moving average as the trend has turned higher. However, the chart structure is terrible therefor, the risk/reward is not in your favor as prices rallied straight up over the last week.
The volatility has finally come back to life in this historically volatile commodity as my only grain recommendation is a bearish soybean trade, which continues to grind lower daily.
TREND: HIGHER - MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING
Mexican Peso Futures
The Mexican Peso in the December contract settled last Friday at 5186 while currently trading at 5138 down about 50 points for the trading week, continuing its bearish momentum.
I have been recommending a bearish position from around the 5145 level and if you took that trade, continue to place the stop loss above the October 28th high of 52.19 as an exit strategy as the chart structure is outstanding at the current time therefor the risk/reward is in your favor.
The Peso is trading below its 20-day but still above its 100-day moving average, which stands at the 5080 level as that also stands as major support as I still believe lower prices are ahead. If you did not take the original recommendation, I would still recommend it at today's price level as the risk would be around $400 per contract plus slippage and commission which is favorable towards smaller trading accounts.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow 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 allowing you to place a stop loss 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 as I 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 loss.
Soybean Futures
Soybean futures in the January contract settled last Friday in Chicago at 9.18 a bushel while currently trading at 8.99 down about $0.19 for the trading week hitting a two month low continuing its bearish momentum to the downside.
I have been recommending a bearish trade from around the 9.23 level, and if you took that trade continue to place the stop-loss above the 10-day high, which stands at 9.23 as an exit strategy as no trade agreement with China continues to put pressure on prices in the short-term.
Volatility at the current time remains low as soybeans historically speaking can have large price swings daily. But this is acting in the traditional bearish manner grinding lower every week with the next major level of support around the 8.80 level as there is still room to run to the downside.
Soybean prices are trading lower for the 3rd consecutive session as increased acres in Argentina are pushing prices lower coupled with the fact that Brazil could produce another record crop in 2020. Carryover levels are at historic highs, so stay short this market as prices look to head lower, in my opinion.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
Cotton Futures
Cotton futures in the March contract settled last Friday in New York at 66.69 while currently trading at 64.00 down about 270 points for the week as prices have now hit a five-week low.
I have been recommending a bearish position from around the 65.00 level, and if you took that trade, continue to place the stop loss at 67.13. However, the chart structure will improve in next week's trade; therefore, the monetary risk will be lowered. Cotton prices are trading under their 20-day but still slightly above its 100-day moving average, which also stands at major support around the 63.00 level as I think that area will be touched in next week's trade.
One of the main problems for cotton is the fact that we can't come up with a trade agreement with China as they are the number one importer of U.S cotton in the world, and until that situation is cemented, look for lower prices ahead.
My only other soft commodity recommendation is a bullish sugar trade. I do think cotton prices have topped out in the short-term, so continue to play this to the downside while placing the proper stop loss-making sure that you risk only 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
Live Cattle Futures
Live cattle futures in the February contract settled last Friday in Chicago at 124.97 while currently at 123.55, ending the week on a sour note down about 150 points for the trading week as prices are hovering right near a three-week low.
Cattle prices have rallied about 20% from their September 9th low as that's how far prices have rallied. But it looks to be stalling out, in my opinion. I will be looking at a possible short position in next week's trade while placing the stop loss above the contract high, which is hit on November 12th at 125.77, however, I will wait for a 4-week low before entering so be patient and keep a close eye on this market.
Cattle prices are trading under their 20-day moving average for the 1st time in months, but still far above their 100-day moving average as that tells you how much this market has rallied, especially compared to hog prices as cattle looks expensive in my opinion.
I think the upside is limited as the risk/reward is to the downside as the volatility in cattle remains high. So, if you do get involved, make sure you risk 2% of your account balance on any given trade as the proper money management technique.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
S&P 500 Futures
The S&P 500 in the December contract settled last Friday in Chicago at 3118 while currently trading at 3111 down about 7 points for the trading week, breaking a four-week winning streak.
I have been recommending a bullish position from around the 3006 level, and if you took that trade, the stop loss has now been raised to 3074 as the chart structure will also improve in next week's trade. Therefore, monetary risk will be reduced. For the bullish momentum to continue, prices have to break the November 19th high of 3132 in my opinion as earnings season has been very solid, coupled with the fact that we are entering the holiday markets, which generally push prices higher.
Expectations for an outstanding Christmas season are predicted as the U.S economy is by far the strongest in the world, with historically low unemployment and an excellent stock market helping fuel the economy. So stay long as I still think the 3200 level is realistic to come year-end. The S&P 500 is trading far above its 20 and 100-day moving average as this is the strongest trend to the upside out of all commodity sectors as we continually grind higher weekly despite this recent setback.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
Trading Theory
If you follow this rule you will have a chance of being successful over time, if you don't follow this rule, you will be sure to lose your money quickly. This rule is simple Do Not OVERTRADE EVER for this is an easy way to lose all your capital quickly.
My definition of over trading is risking too much money on any given trade, for example, if you are trading a $100,000 account, and you place a gold trade today you should limit your loses to 2% of the account value which in this case is $2,000 which allows you to be wrong on many trades and still be around to play another day.
In futures and options trading, you will have losing trades that is for certain, so make sure you manage those losses and move on to another trade.
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Michael Seery, President
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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.
