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 today continued its bearish momentum with soybeans for the November contract down another $.21 at 12.30 a bushel as private estimates are starting to come out with 44 bushels per acre which could create a 3.40 billion bushel crop which would be their all-time record crop pressuring the new crop soybeans as the weather has been outstanding in recent weeks. Remember soybeans are trading far below their 20 and 100 day moving average looking to break major support at $12 and in my opinion I do believe prices are headed substantially lower here in the near future as the weather in the Midwest is absolutely astonishing with mild temperatures and constant rain and I believe record crops across the board in the next 3 months are coming. Corn futures for the December contract which is the new crop are trading below its 20 and 100 day moving average down another $.11 at 4.92 hitting new recent lows after settling last Friday at 5.11 as private estimators are thinking that 160 bushels per acre are very realistic which would be 14.30 billion crop up over 3 ½ billion from just last year’s decimated drought crop. I’ve been recommending short positions in the grains for weeks now and I hope people are listening because there are doing very well for taking my advice and I still believe that prices are headed substantially lower from these price levels. Wheat futures for the December contract are estimated to have a 2.02 billion crop down about 50 million bushels from the USDA estimate settling last Friday at 6.72 basically unchanged for the trading week and I still recommend a short position across the board placing a stop above the 10 day high minimize your risk in case the trend does change. The U.S dollar hit a 3 year high today and interest rates spiked up tremendously which is extremely negative for the commodity markets so continue to take my advice and sell the grain market in my opinion as prices are ridiculously high historically. If you are a farmer I can’t stress enough the fact that you should be hedging this crop because the soybeans still could go to $9 a bushel and I still think corn could trade under $3 a bushel with wheat possibly in the low $4 dollar range at harvest time. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Precious Metal Futures-- The precious metals continue their downturn as higher interest rates are pressuring gold down $37 an ounce at 12.14 which is a new closing low and as I’ve been telling people through many previous blogs to keep selling the precious metals as there really is no reason to own gold since deflation is in the air not inflation. Silver futures are down $.95 in the July contract at 18.75 looking to retest recent lows with the possibility of prices going down to the $15 level here in the next couple of weeks as the tide has turned in the commodity market. I have been recommending a short copper position for quite some time as copper was absolutely pummeled today down 1100 points at 3.06 a pound placing a stop above the 10 day high which is 3.17 and I do believe copper prices are headed steadily lower possibly down to 2.50 in the next 4 to 6 weeks as demand has weakened tremendously in China and higher interest rates will put the kibosh on copper prices in my opinion. All of the precious metals are trading far below their 20 and 100 day moving average and I believe that will continue for quite some time as the U.S dollar is the place to park money due to the fact that interest rates are much higher here than overseas which will continue to put pressure on the precious metals in my opinion. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cotton Futures-- Cotton futures are trading below their 20 and 100 day moving average settling last Friday at 84 going out today at 84.95 rallying slightly due to the fact that the USDA report which came out last week stated that there is 17% less acreage this year, however I’m still pessimistic on cotton prices with Chinese demand weakening in recent months. At this point in time I’m advising traders to sit on the sidelines and wait for cotton to cross 83 and if that level is breached I believe you sell the futures contract or look at bear put spreads for the December contract taking advantage of weak commodity prices as interest rates have skyrocketed here in the last week and the dollar has hit a 3 year high which is always pessimistic commodity prices. The grain market continues to head south and I think eventually that is going to impact cotton prices as we had a false breakout to the downside and then a false breakout to the upside so the next real breakout in my opinion will be the real one and I assume it’s going to be to the downside. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Orange Juice Futures-- Orange juice futures are still trading below their 20 and 100 day moving average as good rain showers in Florida are pressuring prices, however orange juices have been up 6 consecutive days after falling out of bed last week settling last Friday at 128.70, however I’m still recommending to sell orange juice and place a stop above the 10 day high as I do believe that prices are way too high historically with higher interest rates and a sharply higher U.S dollar. Orange juice is considered a luxury item which tells me weakness is ahead due to the fact of higher rates and a sharply higher dollar remembering the fact that orange juice prices historically are still very high. My recommendation in this market is to sell a futures contract placing a stop above the 10 day high minimizing your risk in case the trend does change. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Coffee Futures-- Coffee futures had a very quiet week trading below their 20 and 100 day moving average settling last Friday at 120.40 basically unchanged for the week stuck in a two-week sideways channel in a possible bottoming formation and I’m still recommending traders to sit on the sideline unless new contract lows are made next week. The commodity markets have changed in recent weeks with higher interest rates and a sharply higher dollar so it’s hard to justify higher coffee, orange juice, cotton and all the other commodities especially due to the fact of Chinese demand slowing down as well as Europe still in a complete mess and I believe prices are still headed lower. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Sugar Futures-- Sugar futures were lower for the 6th consecutive day trading below their 20 and 100 day moving average right at a fresh 3 year low and as I’ve stated in many previous blogs I believe we are headed down to the July 2010 lows of 14.50 and I’ve been recommending to sell the futures contract when they made new contract lows last week or look at some bear put spreads because I think prices have just begun to the downside. There is such an excess supply of sugar in Brazil at this point and the government is even trying to use a mandate to use sugar to increase its ethanol usage and that is a huge red flag in my opinion so traders continue to sell sugar futures because the fact that is excellent chart structure allowing you to place a stop above the 10 day high risking around $900 when initially placed and I think sugar prices are in a tremendous bear market. TREND: LOWER –CHART STRUCTURE: EXCELLENT
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