We’ve asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.
Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.
Gold Futures
Gold futures in the April contract rallied about $25 this week to close right near session highs this Friday afternoon in New York up $10 an ounce at 1,326 an ounce developing outstanding chart structure as I am still recommending long positions in gold as I think higher prices are ahead so place your stop at the 10 day low of about 1,262 an ounce which is still quite a distance away but this chart looks very solid to me & that stop will be raised next week just like it will in silver. It’s amazing what a couple of months can do as in 2013 everybody was bearish gold including myself and now in 2014 the tide turned to the upside. I’m recommending a long position because as a trader you must be able to flip-flop on your decisions because of the commodity markets can change very quickly so you must go with the trend and currently the trend is higher. Gold futures are trading above their 20 and 100 day moving average with a nice rounding bottom that occurred late December 2013 as the next major resistance is at 1,360 after that prices could retest 1,400 as it seems like investors are coming in on any weakness thinking that prices are still cheap even at these overbought levels.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Silver Futures
Silver futures ended up about $.40 for the week in New York closing in the May contract at about 21.93 finishing higher by about $.20 this Friday afternoon continuing its bullish trend and if you’ve been reading any my previous blogs I been extremely bullish silver as I think this is a special situation to the upside after a major breakout of an 11 week consolidation & I’m highly recommending a long position in this market with either some type of bull call option spread or an outright futures contract but I do believe higher prices are ahead. I would place my stop loss if you took my original recommendation in the March contract at 20.67 around 19.75 which is the 10 day low and still quite a distance away meaning could would give back all of your profits and the trade would actually become a loser if you are using that price, however that stop will be moved up basically on a daily basis here in the next week as I think $23 could be tested in the next couple of days as the commodity markets certainly have caught fire and I think there’s more to go on the upside across the board. Silver futures are trading above their 20 and 100 day moving average now telling you that the trend is getting stronger to the upside as gold futures continue to hit 3 ½ month highs helping push silver prices higher as well as the whole sector has now turned bullish and as a commodity trader you want to find the trend and go with the path of least resistance and that is higher in my opinion at least here in the short term.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Soybean Futures
Soybean futures in the November contract which is considered the new crop and will be harvested this fall finished up about $.15 for the trading week hitting a 7 week high as the trend certainly has changed to the upside partially due to the fact of the drought which is occurring in central Brazil pushing soybean prices up currently. Traders are awaiting the March 10th USDA planting report as weather will start to now be a concern in the grain market as we enter spring and there’s quite a bit of flooding and moisture in the Midwest, so it will be interesting to see how many corn acres & soybean acres will actually be affected as the estimates are lower than last year currently. Soybean futures are trading above their 20 and 100 day moving average and if you’re looking to get into this market I would still continue to buy even at today’s prices placing your stop below the 10 day low which is at 11.10 risking around $.40 which is $2,000 per contract as the next major level of resistance is at 11.75 and I think there’s a possibility that will be tested next week as the commodity markets certainly look like they have bottomed and want to go higher.
Soybean meal in the May contract hit another contract high this week and that has been pushing soybean prices up as the demand for soymeal still very strong despite near record high prices and that I think that is starting to push corn prices up as well as the spread between the 2 feed ingredients is too wide in my opinion.
Soybean oil Futures---Soy oil futures in the December contract hit a 7 week high this week in Chicago as the whole soybean complex has turned bullish on weather concerns in South America. The chart structure is excellent and if you think prices are headed higher I would keep the trading philosophy simple and buy a futures contract at today’s price and place my stop loss at the 2 week low of 39.00 risking around 1,000 per contract but the trend is currently higher so look to be a buyer in the short term.
TREND: HIGHER
CHART STRUCTURE: SOLID
Cotton Futures
Corn futures in the December contract which is considered the new crop and will be harvested this year finished higher by about $.06 for the trading week in Chicago right at major resistance at 4.70 settling at 4.66 a bushel as the trend has turned higher as well. Corn futures traded higher 4 out of the last 5 trading sessions and now is trading above its 20 and 100 day moving average which is not happened in many months as this was a bear trend for quite some time but now the tide has turned and I still recommend if you’re looking to get in on the upside in corn and think a possible bottom has been created by a futures contract at today’s price of 4.66 putting the stop loss at the 10 day low of around 4.52 a bushel risking around $.14 cents or $700 per contract as the chart has outstanding chart structure allowing you to place a tight stop loss helping to minimize your risk in case you are wrong. Traders are awaiting the March 10th USDA crop report as this weather in the Midwest any around the country has been but very cold and extremely wet and that has some traders concerned that this is going to be very volatile weather year as planting is right around the corner as were starting to enter Spring. Estimates of the planting for this year’s crop is around 92 million acres compared to 95 million acres last year so that’s also been supporting prices and if you get a weather market like we did in 2012 prices can move sharply higher just like what’s happening in coffee.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Coffee Futures
Coffee Futures-- Coffee futures in the May contract rallied 3000 points this week closing right near contract highs at 170 a pound all due to the fact of a major drought in central Brazil which is the largest grower of coffee in the world sending prices up about 60% in the year 2014 and I’m still recommending if your long this market to continue to stay long as I think 2.00 is coming relatively soon and could happen on Monday especially if no rain happens over the weekend. Volatility is very high in this market currently so if that scares you look at the July bull call option spreads limiting your risk to what the premium costs allowing you to live through these daily fluctuations as this volatility should continue for months to come. Coffee futures are trading far above their 20 & 100 day moving average with awful chart structure currently, however if you are long a futures contract I would place my stop below the 10 day low which is around 135 a pound which is quite a distance away, however this stop will be raised on a daily basis and will become relatively tight in the next 5 days. When you trade the commodity markets you want to let your winners run and get out of your losers relatively quickly and this is the perfect example of one market like coffee that can make your entire year.
TREND: HIGHER
CHART STRUCTURE: AWFUL
Lean Hog Futures
Lean hog futures in the April contract finished right on session highs this Friday afternoon in Chicago closing up 155 points at 99.40 a pound hitting new contract highs and I have been recommending to be long the hog market for quite some time. I hope you been listening to my previous blogs as this market in my opinion still looks to go higher as my 1st level of resistance is at 100 but I do believe you could hit 105 by next week as demand is very strong currently and this market an excellent chart structure as prices broke out at 92.25 about 4 weeks ago and continue to move higher, so move your stop up accordingly. If you took my original recommendation in late January to buy the hogs when prices hit a 4 week high I would place my 10 day stop right now at 93.50 a pound & start to move up next week booking in profits but I’m still advising to stay long as I think higher prices are ahead. Hog prices are trading far above their 20 and 100 day moving average tells you this trend is strong as the whole idea in commodity trading is to find the strongest trends and go in that direction.
TREND: HIGHER
CHART STRUCTURE: WEAKENING
Orange Juice Futures
Orange juice futures this week basically finished unchanged still in a tight consolidation between 138 – 148 unable to break through to the upside despite the fact of the drought in Brazil which could cause some crop production cuts in orange juice but this market is not rallying like coffee or sugar. Orange juice futures are trading above their 20 and 100 day moving average and if you’re looking to get long this market my recommendation would be to buy a futures contract at today’s price of 146 placing my stop loss at 138 risking around $1,200 per contract as the chart has outstanding chart structure as I do think the trend is higher at this time it just hasn’t quite broken out. I do not like to trade consolidations as I was very patient in the silver market waiting to buy it after it broke out at 11 week channel and the same thing in orange juice so my recommendation would be to buy at 149.50 then place your stop below the 10 day low minimizing risk in case the trend does change as traders are awaiting the March USDA crop report in a couple of weeks which could show some dramatic changes.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Cotton Futures
Cotton futures are trading slightly above their 20 day and sharply above their 100 day moving average finishing down slightly for the trading week basically consolidating the recent run-up in from prices while only 3 months ago prices were just trading at 78.00 & have rallied about 1000 points all due to solid demand and the fact that the commodity markets seemed to have turned bullish. I’ve been recommending a long position in cotton for some time and I would still place my stop below the 10 day low which is 87.30 in the May contract which is only about 100 points from when I’m writing this article, as prices might be topping out so don’t risk a whole lot more money so book your profits at that level. Cotton prices basically are still at the same level they were a month ago as traders are awaiting March’s USDA crop report which should propel prices here in the short term. The commodity markets as a whole are reminding me of late 2010 when everything just went higher and remember the fact that all the money printing throughout the world will eventually cause inflation it’s just a matter of when.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the May contract are trading above their 20 and 100 day moving average which has not happened in sometime rocketing higher this week by about 105 points hitting a 10 week high at 17.07 and I’m recommending a long position when prices broke out above 16.58 in Wednesday’s trade placing your stop below the 10 day low which is around 15.50 and I continue to remain bullish. If the drought in Brazil continues for 3 – 5 more weeks you could see a real price movement in sugar and coffee as the trend certainly has changed as I was bearish this market for very long time and this is why you must use an exit strategy as the 10 day high as the offset was at 15.51 and on that day I was upset that we got stopped out because I didn’t believe the rally, however now look at what has developed as a bull market has suddenly sprung about due to weather problems, so now you must be nimble and get long this market in my opinion. The commodity markets in general seem to have turned around as the U.S dollar is right near 7 week lows and I like trading where the risk reward/situation is in your favor.
TREND: HIGHER
CHART STRUCTURE: SOLID
Wheat Futures
Wheat futures finished the week up about $.12 in the May contract as profit taking came in this Friday afternoon finishing down about $.06 at 6.05 a bushel right near 7 week highs and prices now have rallied over $.50 in the month of February all basically blamed on short covering as large had funds cut their short positions dramatically. Many of the commodity markets also rallied including the entire grain sector as a short term bottom looks to be in the wheat market currently, however, I’m not convinced that were in a bull market in wheat as I have more confidence in corn and in soybeans, however the trend is higher and you must be a trend follower so if you’re looking to get long this market I would buy contract at today’s prices at 6.05 placing my stop below the 10 day low of about 5.70 risking $.35 or around $1,800 per contract.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Oat Futures
I’ve been following the grain market for quite some time and the oat market has always intrigued me because sometimes it’s correlated to wheat and corn and continues to move higher finishing up about 40 cents in the May contract this week trading at 4.65 a bushel which is a very high price historically for oats and I think that’s been supporting corn and wheat prices currently as the bull markets may have begun. Wheat futures are trading above their 20 day but they are still below their 100 day moving average which tells you how far prices declined in the last 3 months despite a 50 cent rally prices have not crossed the 100 day moving average, however the tide has turned in the grain market so look to be a buyer rather than the seller.
There are many different theories about how long does a meaningful consolidation have to last before you enter a trade on the breakout to the up or downside. In my opinion I always want to see a consolidation that lasts at least 8 or more weeks before I would consider entering. The reason that I want a longer consolidation is to try and avoid a bunch of false breakouts such as a 10 or 15 day consolidations which happen all the time, so I am trying to put the odds in my favor by trading the breakout of at least 8 weeks or more and the longer such as a 11 or 13 week consolidation the better. At this present time silver is in a major consolidation.
What do I mean when I talk about chart structure and why do I think it is so important when deciding to enter or exit a trade? I define chart structure as a slow and 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 and allowing you to place a stop loss with will be 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 but markets that continue to trend like the current soybean complex allowing for you to place close stops as it continues to fall dramatically. I always 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 loses.
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
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.
Michael Seery, President
Seery Futures
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Twitter–@seeryfutures
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