Bullish Momentum Continues For Futures

S&P 500 Futures

The S&P 500 in the March futures contract is currently trading at 3332 after settling last Friday in Chicago at 3325 continuing its bullish momentum to the upside despite fears of the Coronavirus spreading affecting global growth.

The S&P 500 is trading higher for the 3rd consecutive session, hitting another all-time high this week, and if you are long a futures contract place the stop loss under the 2 week low which now stands at 3260. The chart structure will improve next week, therefore, lowering risk as this gravy train continues to the upside as earnings have been very solid.

I see absolutely no reason to try to pick a top and get short this market. If you have been following any of my previous blogs, you understand that I think 2020 will be a good year for the stock market as January is off to an excellent start, up about 4%.

The S&P 500 is trading far above its 20 and 100-day moving average as this is one of the strongest trends to the upside. That is why trading with the path of least resistance is the most successful way to trade over time as picking tops or bottoms is extremely difficult and fruitless, in my opinion.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Platinum Futures

Platinum futures in the April contract are ending the week on a positive note up $10 at 1,017 after settling last Friday at 1,024 in New York down slightly for the trading week still consolidating the recent run-up that we have experienced over the previous couple of months.

I have been recommending a bullish position around the 974 level, and if you took that trade, the stop loss stands at 967 as an exit strategy. However, in Monday's trade, that will be raised to 969 as the chart structure will improve daily next week as the monetary risk will also be lowered.

At the current time, this is my only precious metal recommendation as I was stopped out of copper earlier in the week as many of the commodity markets are experiencing weakness due to the Coronavirus possibly spreading significantly. Still, only time will tell to see if that develops.

For the bullish momentum to continue, prices have to break the January 16th high of 1,046, in my opinion, and if that does occur, I think prices could run-up to the $1,100 rather quickly. Prices are still trading above their 20 and 100-day moving average as the trend remains to the upside, so stay long as the risk/reward is still in your favor.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

10-Year Note Futures

The 10-year note in the March contract settled last Friday in Chicago at 129/01 while currently trading at 130/06, hitting a 3-month high all on concerns that the Coronavirus is spreading throughout the world causing havoc.

I have been recommending a bullish position from around the 129/17 level, and if you took that trade, continue to place the stop loss under the 10-day low, which now stands at 128/25 as the chart structure will also improve daily, therefore, the monetary risk will be lowered. The yield at the current time stands around the 1.77% level.

I still think there is significant room to run as there is so much uncertainty politically speaking, and now a with a pandemic scare, I will be looking at adding more contracts to the upside once the risk/reward becomes more in your favor. I see no reason to be short as money flows are coming out of the stock market for the 1st time in months and into the bond market.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Cotton Futures

Cotton futures in the March contract settled last Friday in New York at 71.25 while currently trading at 69.70. I had been recommending a bullish position from the 66.60 level getting stopped out earlier in the trading week at 69.05 as it is time to move on and become neutral.

At the current time, prices are right near a two week low as most sectors across the board are lower due to the Coronavirus, which has developed and could end up being a substantial problem worldwide. However, I have experienced many of these as they seem to fizzle very quickly as I'm not that concerned. At the current time prices are trading right at their 20 day but still above their 100 day moving average as the trend is neutral to mixed as I still believe higher prices are ahead, but I will wait for the chart structure to improve, therefore, the risk/reward will be more in your favor to enter into a bullish position as I think we'll see some choppy action in the coming weeks ahead.

At the current time, I do not have any recommendations out of the soft commodities as coffee prices continue to go lower. I'm looking at a possible bullish sugar position to the upside in the coming days ahead, so sit on the sidelines before entering into a bullish or bearish position, which is not prudent at this time.

TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

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 March contract is ending the week on a sour note trading lower by 4 cents at 3.90 a bushel after settling last Friday in Chicago at 3.89, basically unchanged for the week. However, prices did hit an 11 week high in yesterday's trade.

I have been recommending a bullish position from around the 3.87 level while adding more contracts yesterday at 3.93 as the average price now stands at 3.90, and if you took those trades, continue to place the stop loss at 3.76 as an exit strategy.

Volatility is starting to come to life, which is a good thing to see. I still think corn prices could bust that $4 level, especially if demand can come back into this market, and with all the trade agreements finally cemented, I think that situation will occur in the next several months.

Private estimates are around 94 million acres to be planted in 2020, which could produce an excellent crop, but it is a long growing season as spring planting is still about three months away. Corn prices are now trading above their 20 and 100-day moving average as the trend is slightly higher as the total risk on this trade now stands around $1,400 on both contracts combined plus slippage and commission.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY INCREASING

Soybean Futures

Soybean futures in the March contract settled last Friday at 9.29 a bushel while currently trading at 9.05 lower for the 4th consecutive session as prices are trading right at a 6-week low. I am currently not involved.

However, I do think there's a possibility that prices will test the contract low, which was hit on September 9th at 8.79 in the coming days ahead. Prices continue to climb even though we have made trade agreements with China, Canada, and Mexico, but in the short-term, prices remain on the defensive.

Soybeans are trading under their 20 and 100-day moving average as the trend is to the downside. I think we are range-bound until spring planting occurs, which is still several months away as I do think demand for the entire grain market will start to increase substantially, but it will take a couple more months before that occurs.

Weather conditions in Brazil are ideal, and it looks like another record crop will be produced. That is a fundamental bearish factor for bean prices as harvest pressure will begin in late February as I am advising clients to avoid this market at the current time.

TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Wheat Futures

Wheat futures in the March contract settled last Friday in Chicago at 5.70 a bushel while currently trading at 5.74 up slightly for the trading week. Prices are still hovering right near a 17-month high. If you are long a futures contract, I would place the stop loss under the 10-day low, which stands at 5.55 as an exit strategy.

However, the chart structure will improve daily, therefore, your monetary risk will be lowered. For the bullish momentum to continue, prices have to break the January 22nd high of 5.92, in my opinion. If you take a look at the daily chart, the uptrend line remains intact as I'm certainly not recommending any type of bearish position as this is the strongest grain.

Wheat prices are trading above their 20 and 100-day moving average as this trend has been strong over the last couple of months. I have a bullish corn position that broke out to new highs in yesterday's trade, so stay long and continue to place the proper stop loss as there is a possibility that prices will test the $6 level soon.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Live Cattle Futures

Cattle futures are trading lower for the 4th consecutive session after settling last Friday in Chicago at 127.25 while currently trading at 124.20.

I have been recommending a bearish position from around the 124.50 level, and if you took that trade, continue to place the stop loss at 128.55 as an exit strategy as the risk is around $1,600 per contract plus slippage and commission.

Cattle prices have now hit a 3-month low breaking out of a tight 11-week consolidation pattern as I do believe the risk/reward is in your favor to go short. If the risk is too much for your trading account, wait for a rally, therefore, lowering the monetary risk as the next major level of support is down at the 120 level.

At the current time, this is my only livestock recommendation as I've been keeping a close eye on this market over the last month or so waiting for a breakout to occur, and that did happen in yesterday's trade as the volatility should start to expand as well.

TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING