S&P 500 Futures
The S&P 500 in the September contract settled last Friday in Chicago at 2919 while currently trading at 2875 down about 45 points for the trading week experiencing incredibly high volatility as that situation is going to become more violent in the coming months.
I'm not involved, and I'm advising clients to avoid this market as it is like flipping a coin daily with no trend insight as there are better markets with a lot less risk at the current time.
The S&P 500 is trading below its 20 and 100-day moving average as the trend is to the downside as August historically speaking and be very shaky and that is precisely what's occurring. I will wait for the chart structure to improve, which could take several more weeks.
Bond markets across the world are spooking the equity market as there are now 12 countries with a negative interest rate as the 10-year note which I do have a bullish recommendation which is currently yielding 1.50% and looks to go much lower in my opinion. However, eventually, this will be bullish stock prices, but at the current time, the bond market might be telling you that a recession is around the bend.
I am bearish most of the commodity markets except for the precious metals as weak demand continues to hamper prices.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
10-Year Note Futures
The 10-year note in the September contract is trading down six ticks at 130 /24 continuing its bullish momentum despite today as prices are at a 3 year high. I have been recommending a bullish position from the 128 /00 level, and if you took that trade, the stop loss now stands at 128/27 as the chart structure will turn outstanding in next week's trade, therefore, the monetary risk will be lowered.
There is so much uncertainty in the world at this time especially with the tension brewing between China and Hong Kong, and if that comes to violence, you're going to see the bond market sharply higher in my opinion.
The yield at the current time is 1.53% and if you have been following any of my previous blogs, you understand that I think we can go all the way down to the 1% level as I see no reason to be short the bond market as it is the strongest trend to the upside at present.
Gold prices are also higher once again in today's trade as bonds and gold are used as a flight to quality and I still think there's room to run so stay long as I will be looking at adding more contracts on any price retracement as the risk/reward will be more in your favor next week.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Crude Oil Futures
Crude oil in the September contract settled last Friday in New York at 54.50 a barrel while now trading at 54.60
unchanged for the trading week experiencing extremely high volatility following the stock market up and down daily.
At the current time I am not involved in the energy sector as this market remains extremely choppy as prices hit a contract low last week and then rallied $7 after that so sit on the sidelines and wait for the volatility to be lowered as the risk/reward has to improve before taking a bullish or bearish trade.
At the current time prices are trading below their 20 and 100 day moving average as the trend is lower and the downtrend line remains intact on a daily basis, however fundamentally speaking crude oil prices also have negative carryover from Wednesday's weekly EIA report where crude oil inventories unexpectedly rose +1.58 million barrels more than expectations of -2.25 million.
In my opinion I think lower prices are ahead for most commodity sectors except for the precious metals with no trade deal with China and the fact that we have 12 countries worldwide that have negative interest rates it looks to me that demand will continue to shrink, however, be patient as sometimes doing nothing is the best thing to do and that is the case at this time.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Palladium Futures
Palladium futures in the September contract settled last Friday at 1,419 while currently trading at 1,445 up about $26 for the trading week as prices are right near a 2 week high.
Palladium prices have been bouncing off the 1,400 level over the last couple of weeks as I had a bullish recommendation a couple of months back which worked out very well as I'm keeping a close eye on another bullish position developing as the chart structure has turned outstanding due to the lower volatility.
I will wait for a 4 week high to develop as we will still not be involved for at least a couple more weeks, but it looks to me that higher prices are ahead even though we are trading right at their 20 and 100-day moving average as the trend is mixed.
A double top occurred at the 1,600 level on July 11th as this market fundamentally speaking is bullish with low carryover levels and strong demand, but I'm not willing to stick my toe in the water just yet as being patient is the best thing to do in my opinion.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW
Coffee Futures
Coffee futures in the December contract are trading lower by 185 points at 96.20 a pound as prices are still hovering right near a 14-year low looking to retest major support around the 95 level which was touched on multiple occasions in May only to rally every single time.
I am not involved as I'm sitting on the sidelines waiting for a bottom to occur, however fundamentally speaking coffee supplies are on the rise and continue to undercut coffee prices after the International Coffee Organization (ICO) last Monday raised its global 2018/19 coffee surplus estimate to 3.92 mln bags from a July estimate of a 3.11 million bag surplus.
The Columbian Coffee Growers Federation reported last Monday that July coffee production in Columbia the world's 2nd biggest arabica producer jumped +25% y/y to 1.3 million bags. Coffee prices are trading under their 20 and 100 day moving average telling you that the trend is to the downside as the chart structure is poor as I'm advising clients to avoid this market at this time as the commodities, in general, remain week due to a recession developing in Europe and no trade agreement with China.
I see no reason to be a buyer at this time even though the Brazilian harvest is about 95% complete as that is a fundamental bullish factor going forward seasonably speaking.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE
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 December contract is ending the week on a positive note up $0.05 at 3.76, however prices settled last Friday in Chicago at 4.17 down about $0.43 or 10% for the trading week as prices are right near a 4 month low. Corn prices reacted very negatively off of the USDA crop report which was released on Monday showing that we might produce almost 14 billion bushels which was quite a shock while also raising carry over levels by 600 million as fundamentally speaking this market remains on the defensive.
In my opinion, that was a shocking report as they stated that there was no damage done by the floods. I disagree with that; the main problem is that there is extremely weak demand for corn, and ethanol, and that is what's keeping a lid on prices.
Corn finally filled the price gap that was created on May 14th at 3.80 this week as I had been recommending a bullish position from the 4.00 level getting stopped out at the 3.80 level as I think it's time to move on and look at other markets that are beginning to trend.
Corn prices are now trading under their 20 and 100-day moving average as the trend is to the downside, however, I will not take a short position as my only recommendation at the current time out of the grain market is a bearish wheat trade which continues its negative momentum.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Wheat Futures
Wheat futures in the September contract settled last Friday in Chicago at 4.99 a bushel while currently trading at 4.69 down about $0.30 for the trading week hitting a 3 month low. Prices reacted negatively off of Monday's crop report as fundamentally speaking this market remains on the defensive with ample supplies and excellent weather conditions as I have been recommending a bearish position from the 5.04 level and if you took the trade continue to place the stop loss on a hard basis only at 5.07 as an exit strategy.
Come next week's trade we will have to roll over into the December contract due to expiration which is just around the bend as I still think prices will retest the May 13th contract low of 4.27 as the whole grain market remains bearish in my opinion.
Wheat prices are trading under their 20 and 100-day moving average as the trend is to the downside as the large money managed funds are short as well as they still believe lower prices are ahead with the next major level of support around the 4.60 area which I think will be tested in next week's trade so stay short and continue to place the proper stop loss as I still think lower prices are ahead.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE
Sugar Futures
Sugar futures in the October contract settled last Friday in New York at 11.86 a pound while currently trading at 11.64 down about 22 points for the trading week continuing its bearish momentum as a descending triangle chart pattern has developed which predicts lower prices.
I am not involved in this market as it has been very choppy as I don't have any recommendations in the soft commodities at the current time, but they all remain weak in my opinion so sit on the sidelines. Sugar prices are trading under their 20 and 100-day moving average as the trend is lower, and if you look at the daily chart, the downtrend line also remains intact as the volatility has come to a crawl over the last several weeks.
Fundamentally speaking an increase in monsoon rain in India is negative for sugar prices after India's Meteorological Department last Thursday said India's July monsoon rains were 298.4 mm up 4.6% more than the long-term average coupled with weak worldwide demand.
Sugar prices can follow crude oil which hit a contract low in last week's trade as sugar is used is biodiesel so look at other markets with better potential so be patient as a longer-term bottom might be taking place, but there is no reason to buy at this time.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW
Orange Juice Futures
Orange juice futures in the September contract settled last Friday in New York at 102.30 while currently trading at 99.00 down about 300 points for the trading week still hovering right near a 4 month low.
I have been recommending a bearish position from around the 98.50 level and if you took that trade continue to place the stop loss above the August 7th high of 103.20 as an exit strategy as the chart structure is outstanding due to the low volatility.
This trade has been very stubborn as we continually go sideways even though we have broken out of an 8-week consolidation as there is very little fresh fundamental news to put volatility back into this market.
At the current time this is my only soft commodity recommendation as ideal growing conditions in the State of Florida and the country of Brazil continue to hamper prices in the short-term as traders are keeping a close eye on the 7/10 day weather forecast to see if any hurricanes enter the Atlantic ocean as that could cause damage to the orange crop in Florida.
For the bearish momentum to continue, we have to break the August 5th low of 95.85, and if that does occur, I think the bearish trend could accelerate to the downside.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
Trading Theory
What Are Descending Triangles? CHART PATTERNS---Descending triangles are a very popular chart pattern among traders because it clearly shows that the demand for an asset is weakening, and when the price breaks below the lower support, it is a clear cation that downside momentum is likely to continue or become stronger.
Descending triangles allow technical traders to make substantial profits over a brief period.
Most traders look to initiate a short position following a high volume breakdown from lower trend line support in a descending triangle chart pattern. In general, the price target for the chart pattern is equal to the entry price minus the vertical height between the two trend lines at the time of the breakdown.
The upper trend line resistance also serves as a stop loss level for traders to limit their potential losses. A descending triangle is the bearish counterpart of an ascending triangle which is one of the most reliable bullish chart patterns used by technical analysts.
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.
