Copper Futures Continue Bullish Momentum

Copper Futures

Copper futures in the March contract settled last Friday in New York at 2.8135 a pound while currently trading at 2.8455 up over 300 points for the trading week continuing its bullish momentum. The housing market is on fire at the current time following the U.S. economy, which continues to accelerate to the upside.

I am keeping a close eye on a bullish position as I'm currently not involved. Still, I'm certainly not recommending any type of bearish position as that would be counter-trend trading, which is very dangerous over time. However, if you are long a futures contract, I would continue to place the stop loss under the 10-day low standing at 2.76 as an exit strategy.

If you have been following any of my previous blogs, you understand that I'm very bullish the U.S. economy, as that will be a bullish factor for copper prices ahead. I will take advantage of any price to buy in next week's trade, therefore, taking advantage of lower prices while also lowering the monetary risk, so keep a close eye on this market. I think prices could crack the 3.00 level in the coming weeks ahead as the risk/reward would be in your favor if that situation occurred.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Platinum Futures

Another wild trading session in platinum as prices are up another $23 an ounce at 1,024 after settling last Friday in New York at 986 up about $38 for the trading week as prices are right at a two year high. The precious metal sector is higher across the board once again, continuing its bullish momentum.

I have been recommending a bullish trade from around the 974 level, and if you took that trade, continue to place the stop loss at 952 as an exit strategy. However, the chart structure will improve in 3 trading sessions, therefore, the monetary risk will be reduced. For the bullish momentum to continue, prices have to break yesterday's high of 1,046, and if that does occur, I think we will head up to the 1,100 level rather quickly as there is significant room to run to the upside. Prices still look cheap, especially compared to gold.

Platinum prices are trading far above their 20 and 100-day moving average as this trend is getting stronger weekly as the volatility certainly has expanded tremendously. I don't think that the situation is going to change anytime soon, so stay long.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

10-Year Note Futures

The 10-year note in the March contract settled last Friday at129/02 last Friday in Chicago while currently trading at the same price unchanged for the trading week. Volatility has come to a crawl as all of the interest remains in the U.S. equity market, which continues its bullish momentum to the upside.

I will be recommending a bullish trade if prices close above the 129/14 level while then placing the stop loss under the multi-month low of 129.27 as an exit strategy as the risk would be around $1,600 per contract plus slippage and commission. The chart structure at the current time is excellent as we continually bounce off the 128 level over the last 6 months. Prices are still trading above their 20-day but below their 100-day moving average, which tells you that the trend is mixed, so be patient and look for the trade to develop before entering into a bearish or bullish position.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

S&P 500 Futures

The S&P 500 in the March contract settled last Friday in Chicago at 3264 while currently trading at 3324 up about 60 points for the trading week and is now higher by about 4% in 2020. If you have been following any of my previous blogs, you understand that I think there will be significant stock gains this year as the U.S. economy is the envy of the world.

If you are long, a futures contract continue to place the stop loss under the January 8th low of 3181 as an exit strategy. However, in next week's trade, that will be raised significantly to the 3257 level as the chart structure will turn outstanding. Fundamentally speaking, optimism about the global economy has improved after Wednesday's signing of the phase-one of the US-China trade deal. The deal leaves in place the bulk of U.S. tariffs on Chinese goods, but included Chinese promises to buy at least $200 billion of extra U.S goods over the next 2 years and also included improved IP and technology-transfer protections for U.S. companies operating in China.

The Senate's approval also sparked trade optimism on Thursday of the USMCA agreement, which could spark new business investment now that the long-term rules are set for North America.

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

What is going on in the corn market? We have now seen back-to-back 10 cent moves to the downside and upside as I have been recommending a bullish position from the 3.87 level. We are currently trading at the same price even though we traded as low as 3.76 in yesterday's trade.

If you took the original recommendation, I am still involved while continuing to place the stop loss at the 3.76 level on a closing basis as we were right at that price yesterday. I took the chance as I was very surprised to see why prices were sharply lower, and I'm also surprised to see why prices are sharply higher today. I will be looking at adding more contracts to the upside if we break the January 2nd high of 3.92. Volatility certainly has expanded tremendously as we had come to crawl over the last several weeks as that is a terrific thing to witness, in my opinion, so continue to play this to the upside as I think the downside is minimal.

This is my only grain recommendation, as I am also keeping a close eye on the soybean meal market. I think that is also in a bottoming out pattern as trade agreements with China, Mexico, and Canada are a fundamental bullish factor going forward. However, that will take some time to develop. Still, I do think a long-term bottom is in place.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Cotton Futures

Cotton futures in the March contract settled last Friday in New York at 71.31 while currently trading at 71.08 down slightly for the week as prices broke a three-day losing streak in today's action.

I have been recommending a bullish position from around the 66.60 level, and if you took that trade, continue to place the stop loss under the two-week low, which stands at 69.05 as an exit strategy. However, in next week's trade, the stop will be raised, therefore, the monetary risk will also be lowered. The chart structure is outstanding at the current time.

Cotton prices are trading above their 20 and 100-day moving average as the trend remains to the upside. This is my only soft commodity recommendation, as I still believe, as I've written about in many previous blogs that the 75 level will be touched in the coming weeks ahead. Fundamentally speaking, the trade agreements that have been finalized this week with China, Mexico, and Canada are fundamental bullish factors for higher prices ahead. I still think this trade has some room to run, so stay long.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Sugar Futures

Sugar futures in the March contract reversed earlier gains now trading higher by 2 points at 14.45 a pound. Still, I am looking at a possible bullish position if prices breakdown to the 14 level as the risk/reward is not in your favor to take a bullish position, in my opinion.

If you take a look at the 10-day low, which stands at the 13.20 level as the risk would be around $1,700 plus slippage and commission, which I think is too much for this commodity, so be patient as I believe we are overdue for a selloff.

Sugar prices are trading above their 20 and 100 day moving average as that tells you the trend is to the upside as I'm certainly not recommending any bearish position.

Fundamentally speaking, sugar prices have rallied sharply over the past week while posting a new 2-year high today on the outlook for smaller global sugar supplies. Unica on Tuesday reported that Brazil's Center-South sugar production in the second half of December plunged -82.4% y/y to 13,000 MT versus 73,000 MT in the same period last year. However, 2019/20 Center-South sugar production through Dec is up +0.53% y/y at 26.481 MMT.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE