Weekly Futures Recap With Mike Seery

Hog Futures

Hog futures in the February contract settled last Friday in Chicago at 67.55 while currently trading at 69.60. I am now recommending a bullish position while placing the stop-loss below the contract low and low yearly standing at the August 5th low of 63.67 as the risk is around $2,500 per contract plus slippage and commission.

The United States and China agreed on a phase one trade agreement, which certainly should pick up demand for pork. China has lost 250 million hogs due to the swine flu as that is why you see hog prices trade higher over the last 2 consecutive sessions and historically speaking, prices look very cheap.

Hog prices are trading above their 20-day but still under their 100-day moving average, which stands around the 72.40 level as prices have been depressed for quite some time because we've had no agreement with China. Still, that situation has changed as I think the risk/reward is in your favor to take a bullish position. I think the 65 level will hold so play this to the upside while making sure that you risk 2% of your account balance on any given trade as the proper risk management strategy.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Live Cattle Futures

Live cattle futures in the February contract is sharply higher this Friday afternoon in Chicago up 250 points at 127.60, hitting a fresh contract high. Prices are reacting strongly because of the phase 1 trade agreement with China as most agricultural markets are higher across the board as that is an extremely bullish fundamental factor for higher prices ahead.

I have been looking at a bearish position over the last several weeks, thinking that prices had topped out. However, the tide has turned as I believe a bottom in the grain market, and the hog market has also occurred, so look to play the commodities to the upside as I think 2020 could be a very bullish year. Cattle prices are trading far above their 20 and 100-day moving average as the trend is to the upside with the next level of resistance at the 130 level as that is why you wait for a breakout to occur before jumping the gun as there's no reason to be short at this time.

This week has been a terrific week for President Trump as the USMCA, phase 1 China agreement, and the fact that Brexit now is going to occur as there will be a trade deal with the United Kingdom as all of this is very bullish the agricultural markets.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

Cotton Futures

Cotton futures in the March contract is currently trading at 66.60 as prices have now traded to a 5 month high. I am now recommending a bullish position while placing the stop loss under the November 21st low of 63.70 as the risk is $1,600 per contract plus slippage and commission. Cotton prices settled last Friday in New York at 66.00 up about 80 points for the week on optimism that a U.S. trade agreement with China could be finalized today. That would be a very bullish fundamental factor towards prices as China is the number one importer of U.S. cotton.

Prices are trading above their 20 and 100 day moving average as the trend has turned to the upside as the chart structure is outstanding at the current time as the volatility is also starting to increase. My only other soft commodity recommendation is a bullish sugar trade, which continues to grind higher daily. The entire agricultural market across the board looks to have bottomed out, in my opinion, as they have been depressed by the lack of a trade agreement, but that seems to be behind us, so play this to the upside.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: INCREASING

Sugar Futures

Sugar futures have now traded higher 7 out of the last 8 trading sessions settling last Friday in New York at 13.18 a pound while currently trading at 13.65 up about 47 points for the trading week hitting a 5 1/2 month high. I have been recommending 3 bullish trades with an average price of 12.79. If you took that trade continue to place the stop loss under the 10-day low, which stands at 12.74 as an exit strategy. However, in Monday's trade, that would be raised to 12.88 as the chart structural is excellent due to the low volatility.

Fundamentally speaking, sugar prices have moved steadily higher over the past 7 weeks as the outlook for smaller global supplies has spurred fund buying of sugar futures. Tuesday's WASDE report was bullish for sugar as the USDA cut its total U.S. 2019/20 sugar production estimate by -3.8% to 8.28 NMT from last month's estimate of 8.61 MMT.

Sugar prices are trading far above their 20 and 100-day moving average, telling you that the trend is to the upside with the next major level of resistance between 13.80 / 14.00. I think that could be tested next week as sugar is now riding the coattails of crude oil to the upside as that commodity is near a 3 month high as sugar is also used as biodiesel, so stay long.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
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.

Corn Futures

Corn futures in the March contract settled last Friday in Chicago at 3.76 a bushel while currently trading at 3.80 up about 4 cents for the week. Prices look to have bottomed out as the United States and China have cemented the phase 1 trade agreement, which is very bullish the entire agricultural sector.

I will be looking at a bullish position if prices close above the 3.85 level as that area was touched briefly today only to sell off while then placing the stop loss under the September 9th low of 3.65 as the risk would be $1,000 per contract plus slippage and commission. The chart structure is outstanding due to the low volatility as prices are trading above their 20-day, but still below their 100-day moving average, which also stands at major resistance at 3.91. However, fundamentally speaking, this market has changed as we also have passed the USMCA trade agreement with Canada and Mexico as that is a very bullish fundamental factor for corn prices as I do think the long-term bottom is at hand.

Corn prices are right near a 4 week high as the risk/reward is in your favor, and if we crack the 3.85 level, I think that could happen next week, so look to play this to the upside as the downside is minimal in my opinion.

TREND: HIGHER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Soybean Futures

Soybean futures in the January contract have now traded higher 8 out of the last 9 trading sessions settling last Friday in Chicago at 8.89 a bushel while currently trading at 9.05 near a 4 week high. I have been recommending a bearish position from around the 9.23 level, getting stopped out earlier in the week around the 9.03 area as I am now waiting for the chart structure to improve. However, I do believe a long-term bottom is at hand as a possible double bottom around the 8.65 level may have occurred.

The Phase 1 trade agreement with China was solidified today, and that is an extremely bullish fundamental factor for soybean prices as we enter the 2020 growing season. I think the agricultural market across the board will experience bullish rallies over the next 12 months as the downside is minimal now that that agreement has been cemented.

Soybean prices are trading above their 20-day but right at their 100-day moving average as the chart structure is poor. I will wait for the risk/reward to improve before entering into a bullish position. Still, I will not go short at these depressed levels as trade agreements with Mexico, Canada, China, and now possibly the U.K. will solidify prices. I think the giant bearish trends that we have experienced over the last several years ended today.

TREND: HIGHER - MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Palladium Futures

Palladium futures in the March contract is trading higher by another $37 or 1.97% currently at 1,952 after settling last Friday at 1,846 up about $105 for the trading week and now has traded higher for 15 straight sessions which is remarkable. It looks like a phase one trade deal with China could be written in stone, and that is bullish all commodity prices as most markets are higher today on that news.

If you have been following any of my previous blogs, you understand that I thought 2,000 was a real possibility, and that could be tested in next week's trade. There is no resistance at this time because we are at all-time highs as this market remains strong as I see absolutely no reason to be short.

Palladium prices are trading far above their 20 and 100-day moving average as this is the strongest trend to the upside that has been relentless over the last month. If you are long, a futures contract, continue to stay long while placing the stop loss under the 10-day low, which currently stands at 1,808 as an exit strategy. However, the chart structure will improve daily; therefore, the monetary risk will be reduced.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH