Gold Futures
Gold futures in the April contract is trading higher for the 3rd consecutive session after settling last Friday in New York at 1,578 an ounce while currently trading at 1,591 as prices are right near a 7 year high.
At the current time, I'm not involved, but I do believe higher prices are ahead as there is so much uncertainty about the Coronavirus. If that situation becomes worse, you will see massive money flows continue to enter the bond and gold market. If you are long a futures contract, I would place the stop loss under the 10-day low standing at 1,552 as an exit strategy as prices are trading above their 20 and 100-day moving average telling you that the trend is to the upside.
In my opinion, I believe prices will test the January 8th high of 1,619, possibly in next week's trade. I see no reason to be short gold at this time. Volatility is average, and I think it could start to expand tremendously to the upside, especially if the Coronavirus continues to spread as quickly as it has as. Nobody understands how bad this situation can become, as that will continue to support gold prices in the short-term.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Platinum Futures
Platinum futures in the April contract settled last Friday in New York at 1,010 an ounce while currently trading at 963. I had been recommending a bullish position over the last month from around the 974 level as it is time to exit as prices are right near a three week low.
I do not have any precious metal recommendations. However, I do think gold prices are headed higher. Still, I will wait for the risk/reward to become more in your favor to enter into a bullish position as I'm a little disappointed in platinum as it reacted negatively off of the Coronavirus news not positively, which is surprising in my opinion. Platinum prices are now trading under their 20-day but still above their 100-day moving average as the trend is mixed. However, I will not take a short position as I think the downside is very limited. I will be looking at another bullish position in the coming weeks ahead once the chart structure improves, but at this time, I have become neutral.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH
10-Year Note Futures
The 10-year note in the March contract settled last Friday in Chicago at 130/09 while currently trading at 131/17, continuing it's bullish momentum as the U.S. stock market is sharply lower this afternoon sending money flows into the bond sector.
I have been recommending a bullish position from around the 129/18 level, and if you took the trade, the stop loss now stands at 129/03 as the chart structure will improve daily, therefore, the monetary risk will also be reduced. The yield at the current time stands at 1.52%.
I think that could head down to 1.30% due to the Coronavirus becoming a major worldwide problem and I don't believe that the situation is going to end anytime soon. The 10-year note is trading far above its 20 and 100-day moving average, telling you that the trend is to the upside as prices are right near a 4 1/2 month high with the next major level of resistance standing at the 132 area. There is a lot of panic at the current time because if this virus becomes worse, the bond market will be used as a flight to quality as then prices could go substantially higher, so stay long.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
S&P 500 Futures
The S&P 500 in the March contract is ending the week on a sour note down 38 points or 1.16% currently trading at 3251 after settling last Friday in Chicago at 3293 down over 40 points for the trading week as prices are right near a three week low.
At the current time, I am not involved. Still, I believe the equity markets will post positive gains. However, prices look to head a little lower as there is so much uncertainty about the Coronavirus spreading throughout the world and very quickly pushing prices lower in the short-term. I'm advising clients to avoid this market at the current time and wait for the volatility to settle down and get more clarity on this virus problem that we are currently witnessing as who knows how bad this situation will become.
The S&P 500 is now trading below its 20-day but still above their 100-day moving average as the trend is mixed. However, earnings have been outstanding as Amazon is up about $170 today on excellent numbers coupled with the fact that Microsoft also hit another all-time high this week as the problem here is the Coronavirus, not the economy.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH
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.
Oat Futures
Oat futures in the March contract is currently trading lower by 2 cents at 3.03 a bushel as I have not talked about this commodity for quite some time. Still, it looks like a topping out pattern might be developing as I'm looking at a possible short position in the coming days ahead.
Prices are trading right at their 20-day but still above their 100-day moving average as prices look expensive, in my opinion. They topped out on November 25th at 3.29 while bottoming out on December 26th at 2.83 as we're in a consolidation pattern over the last several weeks.
At the current time, I am not involved. Still, I am looking at a possible short position in the coming weeks ahead as the entire agricultural markets look weak due to the Coronavirus, which is spreading hysteria over the last couple of weeks, and it doesn't seem to end anytime soon. It seems to me that a risk-off trade is at hand, so look to play this to the downside, but be patient and wait for the actual breakout to occur.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
Soybean Futures
Soybean futures in the March contract are trading lower for the 3rd consecutive session, all on concerns about the Coronavirus curtailing demand for U.S. soybeans. I'm kicking myself for not being short as the break out occurred on January 15th around the 9.28 level, and if you are short, stay short, in my opinion.
I have talked about in many previous blogs I thought that prices could test the September 9th contract low of 8.79, and that did occur as prices are now trading at 8.74. I think the 8.50 level is in the cards until the uncertainty about this virus comes to a climax as the commodity markets look vulnerable in the coming weeks ahead.
Anything associated with China at the current time is weak. If you look at the hog market, which is down once again today, coupled with the fact that the stock market continues to go lower as well as there is a risk-off situation at the current time and I see no reason to be bullish soybeans.
Prices are trading far below their 20 and 100-day moving average as prices have dropped about $0.60 over the last two weeks even though we do have trade agreements. However, this virus situation is troublesome as the trend is strong to the downside, as trading with the path of least resistance is the way to go over time.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE
Cattle Futures
Cattle futures in the April contract settled last Friday in Chicago at 124.30 while currently trading at 119.80 lower for the 5th consecutive session down about 450 points for the trading week hitting a 4-month low as the agricultural market remains weak due to the Coronavirus causing major concern throughout the world.
I have been recommending a bearish position from the 124.50 level, and if you took that trade, the stop-loss now stands at 127.47 as the chart structure will improve in next week's trade, therefore, lowering the monetary risk. Volatility at the current time remains high as the hog market has fallen out of bed over the last couple of days.
I'm not involved in that market, but I did think lower prices were ahead. Cattle prices are trading far below their 20 and 100-day moving average as the trend remains to the downside as I believe there is a chance prices could head down to the 110 level in the coming weeks ahead as prices still look expensive in my opinion, so stay short.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Wheat Futures
Wheat futures in the March contract settled last Friday in Chicago at 5.73 while currently trading at 5.64 a bushel down about $0.17 for the trading week as prices are right near a three week low.
I do not have any grain recommendations as I exited corn yesterday as the whole sector looks weak due to the Coronavirus possibly slowing down demand for many agricultural products. As the phase 1 deal with China could be in jeopardy because their economy is going to be severely hurt by this situation.
Wheat prices have traded lower seven out of the last eight trading sessions now below its 20-day but still above its 100-day moving average, and if you take a look at the daily chart, the uptrend line has finally been broken as it looks to me lower prices are ahead.
I will wait for the chart structure to improve; therefore, the risk/reward would be more in your favor to take a short position as seasonably speaking, we are entering the vulnerable part of the year for wheat prices. So keep a close eye on this market as we could be involved possibly in next week's trade. Prices topped out on January 22nd at 5.92 as weather conditions have improved in the Great Plains part of the United States as demand is the main culprit here. Until we receive more clarity on the Coronavirus, I see no reason to be long.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Trading Theory
Trade with the short term trend, as the saying goes in futures trading, the trend is your friend. Still, sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade.
If it were up to me, I would continue to buy strength and sell weakness because, in the long run, commodity trading is about percentages of success in the long run. If you go with the path of least resistance more often than not, you will have the probabilities of success on your side.
I define a trend as a commodity hitting a 20-day high or low as a trendy market if the market is in a consolidation stay away from it and find something that is trending.up or down and go in that direction remembering the money management rules of 2% maximum loss if you are wrong.
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
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: 630-408-3325
ms****@se**********.com
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.
