Silver Futures
Silver futures in the July contract settled last Friday in New York at 25.87 an ounce while currently trading at 27.48 up over $0.60 for the week, continuing its bullish momentum as prices are near a 2 1/2 month high.
I have been recommending a bullish position from around the 25.85 level, and if you took that trade, continue to place the stop loss under the two-week low standing at 25.74 on a closing basis only as the proper exit strategy. The next major level of resistance stands at the 28.00 / 28.25 level as that could be broken in next week's trade, and if that does occur, I think we will test the 30 level soon.
I also have a bullish platinum recommendation, and I think gold and copper will continue to move higher as I see no reason to be short this sector. The U.S dollar has hit a two-month low this week as that is a bullish factor towards silver coupled with the fact that the 10-year note has hit a two-month low in yield at 1.53% as this market fundamentally and technically speaking has everything going for it, so stay long.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Copper Futures
Copper futures in the July contract is trading higher for the 3rd consecutive session, up another 1260 points or 2.75% at 4.7285 a pound, hitting an all-time high this week as this gravy train continues its bullish momentum.
I'm not involved, but if you have been following my previous blogs, you understand that I've been bullish copper for quite some time as I thought the 4.00 level would be broken months ago. It did occur, and now I think the 5.00 level is in the card as this market is incredibly strong as I see absolutely no reason to pick a top and sell.
Copper prices are trading far above their 20 and 100-day moving average. This trend is incredibly strong to the upside as there are massive shortages due to the Coronavirus situation over the last year or so. It is affecting many different sectors, including copper. The volatility remains high, and that situation is not going to change. It will become even more violent, especially if we cross the 5.00 level in the coming weeks ahead, as this probably is the strongest trend out of all commodities at the current time. If you are long a futures contract, continue to place the stop loss under the 10-day low standing at 4.41 on a closing basis as the proper exit strategy.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Platinum Futures
Platinum futures in the July contract is currently trading at 1,254 an ounce after settling last Friday in New York at 1,205, up about $50 for the week as prices are right near a 3 month high.
I am now recommending a bullish position while placing the stop loss under the March 5th low of 1,115 as the risk is around $7,000 per contract plus slippage and commission. However, the chart structure will improve later next week; therefore, the monetary risk will be reduced tremendously.
Platinum prices look to move much higher, in my opinion, as historically speaking, they still look cheap. The entire precious metals sector looks to continue another leg higher in the coming months ahead, and I see no reason to be short anything.
I also have a bullish silver recommendation that continues to move higher as prices are trading above their 20 and 100-day moving average, telling you that the trend is to the upside. This year has some of the strongest trends I've experienced in quite some time.
The next major level of resistance stands at the 1,275 level. If that is broken then, prices could trade up for the 1,500 area in the coming months ahead as there a significant room to run, especially if the U.S. dollar continues its bearish momentum coupled with the fact that interest rates remain historically low as the 10-year note is yielding 1.50%.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Natural Gas Futures
Natural gas futures in the June contract is currently trading lower by 2 points at 2.91 after settling last Friday in New York at 2.93, basically unchanged for the week having trouble breaking the critical 3.00 level in my opinion.
I have been recommending a bullish position from around the 2.66 level and if you took that trade, continue to place the stop loss on a closing basis only under the 10-day low of 2.73 as an exit strategy.
The chart structure is outstanding; therefore, the risk/reward remains in your favor. However, for the bullish momentum to continue, prices have to break the 3.00 area, and then I will be looking at adding more contracts to the upside as that could happen in next week's trade, so be nimble and look to be a buyer. The entire energy sector continues its bullish momentum, and I don't think that situation is going to end anytime soon.
I think crude oil prices will go significantly higher throughout 2021 due to the Biden administration's war against fossil fuels. I see no reason to short any commodity. Fundamentally speaking, prices moved lower on forecasts for above-average temperatures to return to the U.S. after the middle of this month. Maxar on Thursday said that below-normal temperatures are expected in the eastern half of the U.S., with above-normal temperatures for the West and Southwest from May 11-15. However, above-normal temperatures are then expected for most of the U.S. from May 16-20.
Weakness in domestic demand is also bearish for prices as nat-gas demand in the lower 48 U.S. states on Thursday fell -10% y/y to 56.6 bcf.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH
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Wheat Futures
Wheat futures in the July contract is trading higher by 2 cents at 7.54 a bushel after settling last Friday in Chicago at 7.34, up about $0.20 for the week as prices have now hit an 8 year high.
I have been recommending a bullish position from the 6.65 level and if you took that trade, continue to place the stop loss under the 10-day low on a closing basis only at 7.11 as the proper exit strategy. The chart structure will not improve for another eight trading sessions; therefore, you will have to accept monetary risk. The volatility continues to escalate the higher the price goes, and that situation will not end for months to come.
Wheat prices are trading far above their 20 and 100-day moving average as the trend is strong to the upside as the whole grain market continues its bullish momentum this week as it does not look like a top has been formed at this point. The next major level of resistance stands at the 8.00 area, and if that is broken, you could see a significant rally in the coming weeks ahead, so stay long as I see no reason to be short wheat or any commodity or any asset class at this time.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Rice Futures
Rice futures in the July contract is currently trading at 14.42 after settling last Friday in Chicago at 13.69 as prices have hit a fresh one year high, continuing its bullish momentum. I still think it still looks cheap especially compared to the rest of the commodity markets, including corn and soybeans.
I have been recommending a bullish position from around the 13.60 level. If you took that trade, the stop loss has now been raised to 13.38 as an exit strategy on a closing basis only as the chart structure is outstanding; therefore, the risk/reward remains in your favor.
Rice prices are trading above their 20 and 100-day moving average as the trend remains strong to the upside. The next major level of resistance is standing at the 15.00 area, which could be touched next week as there could be significant room to run in this commodity in the coming months ahead. Remember, rice is the most eaten commodity globally and can experience tremendous price swings due to drought or flood or, in this case, strong demand, so stay long as I see no reason to be a seller.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Coffee Futures
Coffee futures in the July contract settled this Friday in New York at 152.90 a pound as prices are hovering right near a 4 1/2 year high.
I have been recommending a bullish position from around the 126 level, which at the time was a counter-trend trade that has worked out well, and if you took that recommendation, continue to place the stop-loss under the 10-day low standing at 25.74. The volatility is starting to pick up tremendously the higher the price goes, and I still think there's a chance that prices could hit the 200 level, especially if adverse weather conditions persist, as I witnessed in 2014.
I have many bullish recommendations in the soft commodity sector, and I see no reason to be short, so continue to be a buyer and take advantage of further weakness as there is room to run. Coffee saw strength after the International Coffee Organization (ICO) cut its 2020/21 global coffee production estimate to 169.633 mln bags from a previous estimate of 171.896 mln bags and cut its global 2020/21 coffee surplus estimate to +3.286 mln bags from a prior forecast of +5.258 mln bags.
Fund buying is also propelling coffee prices higher on concern excessive dryness in Brazil may curb coffee yields. Somar Meteorologia reported Monday that rain last week in Minas Gerais, Brazil's largest arabica growing region, measured 0.2 mm, or only 2% of the historical average. That measurable rain is unlikely through May 25.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Sugar Futures
Sugar futures in the July contract settled last Friday in New York at 16.98 a pound while currently trading at 17.53, hitting a fresh contract high this week, continuing its bullish momentum. The entire soft commodity sector remains in a longer-term secular bullish trend.
I have been recommending a bullish position from around the 17.10 level. If you took that trade, continue to place the stop loss under the 16.93 as an exit strategy on a closing basis only, which is an important aspect to remember. Sugar prices are trading far above their 20 and 100-day moving average as the trend is to the upside as this commodity continues to ride the coattails of crude oil higher weekly. I see no reason to be short. I will be looking at adding more contracts once the risk/reward becomes more in your favor, possibly next week, as I still think the $20 level will be breached.
Fundamentally speaking, prices are seeing support from the dry conditions in Brazil, which will curb sugar yields. Maxar said that Brazil's Center-South, the country's largest sugar-growing region, is expected to see dry weather through May 9 with limited rains over the next ten days. Last Thursday, Czarnikow said rain in Brazil's Center-South region from October thru March was 36% below average, the biggest drought in more than a decade.
Sao Paulo, which makes up 68% of Brazil's total cane production, has seen the driest weather in 20 years in five of the six months through March, and yield losses could be as high as 20% in some areas, according to Somar. Also, Wilmar International, on April 19, said that because of prolonged dryness, Brazil's 2021/22 cane crop "may barely reach" 530 MMT, down -12% y/y and the lowest in a decade.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOWH
Orange Juice Futures
Orange juice futures in the July contract finished higher by 235 points at 113.35, breaking a nine-day losing streak earlier this week as this by far is the weakest member out of the soft commodity sector.
I have been recommending a bullish position over the last month or so from around the 110 level, and if you took that trade, continue to place the stop loss at 99.00 on a closing basis only as the proper exit strategy.
There is very little fresh fundamental news to dictate short-term price action as this strictly has been a technical trade. Seasonably speaking, this is a very quiet time for orange juice prices. At the current time, I also have bullish recommendations in coffee, cotton, cocoa, and sugar as most of this sector is at multi-year highs, but orange juice has been unable to join the party.
Juice prices are trading below their 20 and 100-day moving average as the trend remains to the downside while also remaining a counter-trend recommendation. Still, I believe the downside is very limited as the risk/reward remains in your favor to the upside to stay long.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
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
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