Silver Futures
Silver futures in the September contract settled last Friday in New York at 24.21 while currently trading at 28.50 up over $4 for the trading week hitting a 7-year high as the entire precious metal sector has exploded to the upside. Gold prices hit all-time highs this week helping support silver as prices traded as high as 29.91 in today's session, and if you have been following my previous blogs, you understand that I thought the $30 level could be touched.
I have been recommending a bullish position over the last month from around the 18.61 level, and if you took that trade, continue to place the stop loss under the 2 week low standing at 22.46 as an exit strategy. However, I did have several clients take profits around the $29 level as it all depends on your trading account size and risk tolerance at this time as the volatility is crazy. I think we will start to consolidate over the next couple of weeks, but I still think we are in a bullish secular trend that will last for several years. All the stimulus packages are finally coming to fruition helping push up asset classes, and I do believe the rest of the commodity markets will start to join the party.
Silver prices are trading far above their 20 and 100-day moving average as the trend clearly as to the upside as prices are in extreme overbought conditions, and if you are not involved in this trade, I would sit on the sidelines as the risk/reward is not in your favor.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Platinum Futures
Platinum futures in the October contract ended the week on a sour note down $43 at 970 an ounce after settling last Friday in New York at 918 up over $50 for the trading week as prices hit a fresh contract low in today's trade.
I have been recommending a bullish position from around the 868 level, and if you took that trade, continue to place the stop loss under the 10-day low standing at 894 as an exit strategy. However, the chart structure will not improve for another 4 trading sessions, so you will have to accept monetary risk. The volatility in platinum is extraordinarily high as we had over a $70 trading range today. That situation will remain for months to come, so make sure if you are involved that you risk 2% of your account balance on any given trade as the proper money management technique.
Platinum prices are trading far above their 20 and 100-day moving average as the trend is to the upside as the U.S. dollar continues to hover near a 2 year low, which is a fundamental bullish factor for higher prices are ahead. So stay long as I still think the bullish trend remains intact despite today's sharp sell-off.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
S&P 500 Futures
The S&P 500 in the September contract is trading at 3338, continuing its bullish momentum this week as prices filled the downward gap that was created on February 24th in today's trade. You are witnessing a melt-up in price as people are chasing the market at the current time, afraid that they will miss another leg higher. If you have been following any of my previous blogs, you understand that I have been bullish on the equity market for quite some time, and I do believe prices will break the all-time high that was hit on February 28th at 3396 in the next couple of weeks.
The S&P 500 is trading far above its 20 and 100-day moving average as this trend is strong to the upside. Fundamentally speaking, this market has everything going for it as the Federal Reserve will continue to pump money into the economy, therefore, supporting the precious metals and stock prices, and that's precisely what we are witnessing at this time.
If you are long a futures contract, I would place the stop loss under the 2 week low standing at 3192 as an exit strategy as we await this Friday's monthly unemployment number, which should dictate short-term price action.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
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Cattle Futures
Cattle futures in the October contract is currently trading at 107.05 after settling last Friday in Chicago at 107.87 down slightly for the trading week still right near a 5 month high. Volatility over the last several trading sessions has been minimal. I don't think that situation is going to last much longer as earlier in 2020; we experienced historical volatility as we are just waiting for fresh fundamental news.
I had been recommending a bullish position originally in the August contract from around the 99.80 level while then rolling over into the October around the 106.50 level. If you took the trade place, the stop-loss under the 10-day low at 103.65. However, that stop loss will be raised in 2 trading sessions; therefore, the risk will be reduced. For the bullish momentum to continue, prices have to break the 108.45 level, in my opinion. I am bullish most commodity sectors because the U.S. dollar is hovering right near a 2 year low. I think demand, which has been very weak for the livestock sector, will increase in the coming months.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Lean Hog Futures
Hog futures in the October contract is currently trading higher by 132 points or 2.69% at 50.50 prices hitting a one-week high looking to have bottomed out in my opinion. I'm not involved as my only livestock recommendation is a bullish cattle trade. However, I will be recommending a bullish position if prices break the July 16th high of 52.07 as the chart structure will improve daily; therefore, the monetary risk will be lowered.
If you take a look at the daily chart, a possible Head and Shoulders bottom chart pattern may have developed as that is a predictor of higher prices to come about. However, prices are still trading below their 20 and 100-day moving average, and the downtrend line remains intact, so the trend remains negative.
In my opinion, traders should not invest in choppy markets as this market is very choppy, so wait for the breakout to occur 1st. Therefore, the percentages of a long-term bottom being in place are higher. The volatility at the current time is average, and I don't think that's going to last much longer. Historically speaking, the hog market can experience crazy price swings, especially as we enter the Autumn and Winter season, so look to be a buyer as the downside is limited.
TREND: LOWER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Sugar Futures
Sugar futures in the October contract is ending the week on a sour note down 24 points or 4.85% at 12.70 a pound after settling last Friday in New York at 12.64 up slightly for the week looking for some fresh fundamental news to dictate short-term price action.
One of the main reasons why sugar prices are right near a 5-month high is that there are crop concerns in Thailand. The world's 2nd largest sugar exporter has been a major bullish factor for sugar prices as the Czarnikow Group on July 26th, said that it projects that Thailand's 2020/21 sugar production could drop more than -10% y/y to an 11-year low of 7.4 MMT, well below USDA estimates of 12.9 MMT, due to the worst drought in 4 decades.
Sugar prices are trading above their 20 and 100-day moving average as the trend is to the upside as I have been recommending a bullish position from around the 12.61 level. If you took that trade, continue to place the stop loss under the 2 week low standing at 11.84 as an exit strategy. However, the chart structure will improve tremendously in next week's trade; therefore, the monetary risk will be reduced substantially. At the current time, this is my only soft commodity trade. Still, I do think the commodity sectors across the board will start to climb higher as all of my trade recommendations at the present time are bullish as the U.S dollar hit a 2 year low this week, and that is a positive factor for higher prices so stay long.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
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.
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
Seery Futures
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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.
