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.
Grain Futures--- The grain market sold off sharply in the new crop grains with November soybeans down $.24 at 12.51 a bushel hitting new 4 week lows as outstanding weather in the Midwest is pressuring prices with the USDA crop report coming out stating that this is the 3rd highest acreage in history at 76.1 million acres up 1% from last year and as I’ve been recommending in many previous blogs to continue to sell the soybeans I do believe prices are headed sharply lower from these levels. Soybean prices in the November contract are trading below their 20 and 100 day moving average settling right at session lows this Friday afternoon in Chicago and I do believe you will see further weakness next week as generally the Fourth of July weekend is the top in the grain market. July soybeans hit a new contract high of 15.74 finishing up about $.16 as the spread between old crop and new crop hit a new high today as supplies are very small in the July contract and could be very large in the November contract in a couple of months. Corn futures for the December contract finished right on session lows down $.27 at 5.10 bushel trading far below its 20 and 100 day moving average is outstanding weather is pressuring the corn market as the USDA announced today that is the highest corn acreage since 1936 despite the fact that stockpiles are down 12% with outstanding weather and a ballooning carryover come fall prices are finally starting to break. As I’ve been recommending in previous blogs to be short the entire grain market and I’m still recommending that because I do believe prices are still extremely overvalued and there is a possibility of $3 corn and $9.50 soybeans in my opinion in the next 3 months. Wheat futures for the December contract finished right on session lows down 17 cents at 6.72 a bushel trading far below their 20 and 100 day moving average and have broken out of a 14 week consolidation and I have been recommending selling wheat futures and I do believe that wheat prices could head back down to $5 in the next month or so with ample supply & waning demand. I’m a technical trader so I generally don’t listen to a lot of fundamentals but these markets fundamentally look very weak and technically even weaker so continue to be short placing a stop loss above the 10 day high case the weather or trend does change. Soybean oil finished lower for the 5th consecutive day hitting another contract low at 45.15 and I still am recommending short being oil because it is the weakest of the grain sector as there is a massive oversupply building due to the fact of heavy demand for soybean meal and very little demand for soybean oil. TREND: LOWER –CHART STRUCTURE: SOLID
Precious Metal Futures-- The precious metals rallied this Friday afternoon but have been absolutely crushed this week with gold settling at 1,226 an ounce up around $15, however prices hit a new 3 year low this week trading as low as 1,179 and as I’ve been recommending in many previous blogs to be short the precious metals sector but at this point in time with extreme volatility & very poor chart structure I’m recommending to be taking profits and sit on the sidelines. Silver futures finished up $.95 today at 19.49 in the July contract and as I stated in previous blogs I thought silver could hit the $18 level and it did trade as low as 18.18 in the early session today, however I still believe prices are headed lower and I would not be bullish the precious metals at this time. Copper futures which I’ve been recommending short positions across the board finished at 3.0560 a pound unchanged for the trading day but I do believe prices are headed substantially lower from these levels as higher interest rates are keeping a lid on precious metals prices so look for copper prices to possibly hit 2.50 in the next month or so. The trends have really been strong in recent weeks and if you been listening to any of my recommendations you have been doing extremely well and I do believe that commodity prices are still headed lower so take advantage of it by selling the futures contract or by buying bear put spreads limiting your risk to what the spread premium costs. TREND: LOWER –CHART STRUCTURE: TERRIBLE
Cotton Futures--- Cotton futures in New York are basically unchanged this afternoon as the acreage report came out stating that there’s 13% less acreage this year than last year as demand has fallen while cotton prices are trading below their 20 and 100 day moving average with the next major resistance around 82.00 which is also 5 month lows. We’ve seen extreme volatility in cotton in the last couple of weeks when prices hit a new one year high only to come right back down and retest 5 month lows and in my opinion as I’ve stated in previous blogs I am bearish the commodity markets and if cotton is to break 82 I would be looking at selling a futures contract or buying a bear put spread. At this point in time however, I’m advising traders to sit on the sideline because there is no trend so wait for a break out to occur and then go with the trend. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Orange Juice Futures-- Orange juice prices this week tumbled to 4 month lows as the commodity markets in general remain pessimistic and I have been recommending selling orange juice for some time now and I do believe prices are headed lower. Orange juice prices are trading far below their 20 and 100 day moving average settling last Friday at 141.80 and going out today around 129 with the next possible test of 100 in my opinion in the coming weeks as orange juice is considered a luxury item and when commodity prices are falling the luxury items fall 1st and hardest in my opinion. The chart structure in orange juice was excellent coming into this week then prices had 2 sharply lower days so if you’re not in this market I would wait for some chart structure to develop and go with the trend but at this point I do think orange juice prices are headed much lower. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Coffee Futures-- Coffee futures are slightly lower this Friday afternoon basically trading unchanged for the week still trading below their 20 and 100 day moving average right near fresh 3 year lows settling last Friday at 122.35 and going out today around 123.00 a pound continuing its bearish momentum. The chart structure in coffee is starting to improve and I still am recommending short positions thinking prices could drop all the way down to the 100 level in the coming months as the commodity markets in general look very pessimistic in my opinion as higher interest rates and a rising U.S dollar are keeping a lid on prices at this point in time. The weather in Brazil is outstanding with a record crop which should put more pressure on prices as the frost premium is simply coming out of the market as traders are looking for a possible bottom in the near future. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Sugar Futures--- Sugar futures were slightly lower this afternoon settling around 16.90 a pound basically unchanged for the week trading right at its 20 day moving average for far below its 100 day moving average which stands at 17.92 after hitting a 4 week high in Tuesdays trading at 17.49 only to retrace and settle basically unchanged for the trading week as volatility is starting to pick up in sugar. The Brazilian government is raising their ethanol quota which is trying to cut sugar supplies to keep prices higher, however in my opinion when governments try to do that that tells you that the surplus is quite large and they are worried about falling prices so I still believe prices are headed back down to 2010 levels to around 14.50 a pound, however at this point in time there is no trend in sugar so I’m advising traders to sit on the sideline until either a new break out above 17.50 happens or prices hit new contract lows remembering to place a stop above the 10 day high or lows depending on what direction your position is minimizing risk in case the trend does change. Strong crude oil prices have propped up sugar prices recently while most of the markets have been going down sugar and oil have been rallying in recent days ,however I believe this is short-lived and I do think prices are headed lower. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cocoa Futures-- Cocoa futures were slightly higher this afternoon settling around 2161 up slightly for the trading week but still trading below its 20 and 100 day moving average right near three-month lows and as I’ve stated in previous blogs I do believe cocoa prices are headed lower with the rest of the soft commodities because of the fact that cocoa is considered a luxury item and luxury items in the commodity markets are headed lower. People still have to fill up their gas tank that is why crude oil prices are still relatively high but people do not need to eat chocolate if they are trying to cut back especially with a higher interest rate market and a strong dollar I do believe cocoa prices are headed lower here in the short term. The chart structure in cocoa is awful at this point in time which doesn’t allow you to place tight stops so depending on your risk tolerance in this market I would go back to my 2% to 3% risk management rule in case you are wrong. TREND: LOWER –CHART STRUCTURE: TERRIBLE
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
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