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.
Energy Futures--- The energy futures had a wild trading week with heating oil the big story after breaking out from 3.10 a gallon a couple weeks back hitting a 3 ½ month high and as I had advised buying the 3 ½ month breakout to the upside now up another 400 points today at 3.2425 in the March contract a gallon hitting an 11 month high up around 800 points for the trading week due to the fact of a big storm hitting New England. Crude oil futures were slightly lower this Friday afternoon down around $2 for the trading week with major resistance at $98 and major support at $95 still stuck in a sideways channel after consolidating after hitting 4 month highs and still trading above its 20 and 100 day moving average. Unleaded gasoline which is been the strongest in the energy sector trading far above its 20 and 100 day moving average consolidating for the week basically trading unchanged this Friday afternoon finishing up over 500 points still at 1 year highs on the fact that demand around the world is increasing tremendously pushing prices up as stock markets are also improving around the world increasing optimism. In my opinion I have been bullish the energy sector as a whole and I still continue to see higher prices but 1 commodity that makes me a little nervous is unleaded gasoline it might be due for a consolidation here for a couple of weeks before making the next leg up, however I still think prices are going higher due to the fact that we are going to have huge Mideast tensions between Israel and Iran in the in the future pushing prices up the levels we haven’t seen since 2008. If you’re looking to get involved in trading the energy sector which is very volatile an extremely risky and might not be suitable for every investor, however if you’re looking at purchasing calls or doing bull call spreads that limit your risk to what the premium costs therefore you can sleep at night which can be more suitable for some investors and smaller trading accounts. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Precious Metal Futures-- The precious metals were mixed this week with gold trading in a very tight range basically finishing unchanged for the trading week 1, 671 an ounce in the April contract still trading below its 20 and 100 day moving averages while remaining in a sideways pattern the last 6 weeks with major resistance in the April contract is at 1, 687 while major support is at 1, 653 and one of these days we will develop a trend and as I’ve stated in many previous blogs I am bullish gold and the rest the precious metals but there really is no trend in sight. Silver futures are trading right at its 20 day moving average but below its 100 day moving average which stands at 32.47 an ounce after settling last Friday at 31.95 finishing down on the week by about $.50 with major resistance at 32.00 and major support at 30.78 this market is starting to consolidate over the last month or so and I am looking for a major breakout to the upside possibly getting back in the low 40s in the next couple of months in my opinion. Copper futures remain very strong due to the fact that the S&P 500 is hitting new 5 year highs again today showing continuing improvement while economies around the world and the U.S housing market starting to move to the upside once again propping up demand for copper right near 4 month high with the next major resistance at 380 – 385 continuing its bullish grind move higher with excellent chart structure. Platinum futures are higher once again today in early trade only to sell off 5 dollars in the April contract at 1, 716 hitting a new contract high for the week with concerns of possible shortages throughout the world causing possible spikes in prices during the year while palladium prices are hitting new contract highs once again up about $3 at 752 continuing its bullish market on the fact that the car industry has bounced back tremendously which is spurring demand for platinum and palladium. As I’ve stated in many previous blogs I am bullish the entire sector so I’m advising traders to be long all of the precious metals remembering always place a stop in case you are wrong trying to minimize your monetary losses and risk but at this point I still think the trends are higher and I think demand is going to stay robust especially with easy monetary policies around the world occurring. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Orange Juice Futures--- Orange juice futures in New York this week traded in an extremely tight trading range still right at 5 week highs trading higher by nearly 150 points this Friday afternoon at 122.75 still trading above its 20 and 100 day moving average continuing its short-term bullish trend. Orange juice still has major support at 110 and major resistance at this week’s high of 124 with chart structure improving on a daily basis settling last Friday at 121.75 basically up 200 points or around $300 profit or loss per contract for the trading week and in my opinion as I’ve written in previous blogs I do think that orange juice prices can move higher going into spring and the summer months despite the fact that sugar and coffee which are both soft commodities hit new 2 ½ year lows today but it did not have any negative affect on orange juice prices this week. Harvest is showing good progress and we should have ample supply on the market here in the short term but I believe that the market has already digested all the negative fundamental news so we are possibly in a sideways to higher pattern in the short term. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Coffee Futures--- Coffee futures hit a fresh 2 1/2 year low this week and are now 40% from their highs that were just hit last year on 2/9/12 at 235.80 down for the 5th consecutive trading session in early trade before rallying on the close to finish higher by 80 points at 141.65 after settling last Friday at 148 closing over 600 points lower for the trading week. Coffee is still trading far below its 20 and 100 day moving average with excellent chart structure allowing you place tight stops in case you are wrong on the trade minimizing risk and at this point when contract lows are broken you have to think that the trend will continue with the possibility of coffee prices going as low as 130 here in the next couple of weeks due to the fact of a large harvest in Central America and Brazil putting pressure on prices in the short term. The rumors of rust on the leaves and trees in Central America possibly affecting 30% of the crop next year is not supporting the price at this time because that is strictly speculation and it has not actually happened so prices in the short term still look reasonably weak. I have been wrong on the coffee market because I thought we possibly bottomed in the last couple of weeks but sometimes you just have to admit you are wrong and you get out minimizing risk and at this point the trend is to the downside. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Sugar Futures-- Sugar futures in New York hit fresh 2 1/2 year lows once again today currently trading at 18.10 down 5 points in a pretty lack luster Friday afternoon, however finishing lower by nearly 80 points for the week still far below its 20 and 100 day moving average with excellent chart structure to the downside settling lower for the 5th consecutive trading session. Coffee prices also hit 2 1/2 year lows today also putting pressure on sugar prices because both crops are grown down in Brazil with an excellent harvest and ample supply coming onto the market continuing to put pressure on sugar prices in the short term and now you have to look back all the way to 2010 prices of around 15.25 a pound as the next major support. If sugar prices continue to go lower and right now the trend is down and I never recommend buying new contract lows because generally in my opinion contract lows will equal more contract lows in the future but if sugar prices get down to ridiculous levels like where we were in 2010 and if you are a longer term investor I would be scooping up prices down at those levels. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cotton Futures--- Cotton futures in New York were trading in a very narrow range this Friday afternoon after settling last week at 82.98 down only 30 points in the last 5 days but still trading above its 20 and 100 day moving average really consolidating the last run-up in prices with 84.00 as the next major resistance. Cotton prices have been rallying on the fact that there should be around 2 million less planted acres which will be going to corn and soybeans, however it is too early as we are still in February to really be able to get reliable figures because come April is when you want to see the prices of corn and soybeans and cotton to dictate what you will plant and that is still several months away and prices could move drastically in the next 60 days. Corn futures in the recent weeks have been going lower so you never know farmers what might plant more cotton if cotton is higher than corn at the time of planting season so at this point I still think cotton is going higher but I think you could see a bearish consolidation of the most recent move with the trading range between 80 and 84 for several more weeks. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
What Does Risk Management Mean To You? I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from. For example if a customer has $100,000 account in my opinion on any given trade he or she should risk 2% – 3% of the account value meaning if you are wrong the worst-case scenario is still a $97,000 remaining balance, however what I always see is traders risking ridiculous amounts of money and instead of the 3% stop loss will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar account could dwindle down to nothing very quickly and I’ve seen it many times throughout my career. What many traders forget to realize is they might have 4 or 5 commodity positions on and if you have too many contracts on all at the same time and all of those trades go against you which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from and your still in the game.
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
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.
Michael Seery, President
Phone # (800) 615-7649