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.
Gold Futures
Gold Futures--- Gold futures are trading above their 20 and 100 day moving average basically settling unchanged for the trading week going out this Friday afternoon in New York down about $8 at 1,323 after prices hit 1,345 in Wednesday’s trade as the trend still continues to the upside. I think this is just a possible pause as prices have had a heckuva rally in the last 2 months and I have been recommending a long position in gold for quite some time while placing my stop below the 10 day low which currently stands around 1,315 which is only $8 away so that stop is very tight with a high probability of getting clipped at that price on Monday, however continue to focus on gold and silver to the upside and if you’re lucky enough to get some panic selling I would still be looking at buying as 2013 created the low in gold prices in my opinion.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures are trading above their 20 and 100 day moving average finishing down around $.70 for the trading week going out this Friday afternoon in New York around 21.13 in the May contract. I have been recommending a long position when silver broke out a couple weeks ago above 20.50 an ounce and we basically consolidated after that breakout occurred & I still do believe prices are headed higher due to the fact that commodities and stocks have bullish trends currently, so continue to play this to the upside. If you’re looking to get involved in the silver market and futures are too risky for you look at bull call option spreads for the month of July which will limit your risk to what the premium costs and allows you to stay in the market for the next 4 months as volatility will continue to get higher in my opinion. Silver futures have been bottoming in recent months remembering the fact that we traded in the mid-30s in 2013 at one point so I think prices at this level still look very cheap especially if you have a longer-term view and if you need help structuring your portfolio in the precious metals I will be more than happy to assist you in those needs
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean futures in the November contract which is considered the new crop will be harvested this fall and now is trading above its 20 & 100 day moving average which has not happened in quite some time telling you that the trend has definitely turned to the upside with a wild trading week this week in Chicago sending prices above 11.80 in Thursday’s trade only to settle at 11.55 reversing nearly $.30 as profit taking was blamed. Soybean futures finished higher trading around 11.68 a bushel and finishing higher by about $.25 for the trading week continuing its bullish trend. Prices in Thursday’s trade hit 5 month highs as the drought in central Brazil is having investors think that there will be crop damage therefore alternating the supply/ demand tables as the commodities in general have also rallied as the bottom looks to have been created in 2013. All commodity markets go in cycles as we had a very bearish 2013 but I do believe 2014 is a different story & we will have inflation down the road and if you’re still bullish the soybeans I would continue to place my stop below the 10 day low as I do think prices are headed higher and that number currently is around 11.35 risking around $.25 from today’s level or $1,250 per contract.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Coffee Futures
Coffee Futures---This is an actual email that I received from a major coffee producer in Brazil that was sent to me late Thursday night--- “I have been following your comments and suggestions on barchart´s page and have found quite accurate. I live in Machado, state of Minas Gerais, the largest Arabica producing area in Brazil and the lack of rain mixed with unusual hot temperatures are quite scary. However, the worse is yet to come. Even if it the amount of rain gets back to normality by March and April, coffee trees are no longer capable to produce enough energy for the flowering season that must happen between October and November. Having said that, 2015´s crop could be a total disaster if on top of that frost decides to show up by late May.
Coffee could face some corrections but price has no other place to go but up as Brazil alone is consuming around 25 million bags per year. If we´re down to 50 million bags this year ( I like to be optimistic) that will be quite interesting to watch.
I continue to recommend a long position either with a futures contract or some type of bull call option spread for the month of July as 2.00 a pound is the next level of resistance as prices closed right as new contract highs at 180.30 a pound in the May contract.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Sugar Futures
Sugar futures finished lower this Friday afternoon closing around 17.66 a pound in the May contract but rallied about 65 points for the week all due to the drought worsening in central Brazil which is cutting crop estimates which is pushing prices right near 3 ½ month highs. Sugar futures have rallied from 15.00 a pound in late January to all the way above 18.00 in yesterday’s trade as this market remains bullish and I have been recommending a long position when the breakout occurred at 16.58 I would place my stop loss at the 10 day low of 16.00 if you are long. Sugar futures are trading above their 20 and 100 day moving average; however the chart structure is very poor as volatility has entered in the last couple of weeks having wild trading sessions of 80 points or more so make sure you have a proper money management technique in place limiting your risk in case you are wrong but I do believe prices are headed higher.
TREND: HIGHER
CHART STRUCTURE: POOR
Orange Juice Futures
Orange juice futures in the May contract are very quiet in New York trading around 146 still stuck in a 13 week consolidation between 138 – 150 looking to breakout soon in my opinion as my theory states the longer the consolidation the more powerful the move and in my opinion I think the move will be to the upside as the commodity bull market are underway. Orange juice futures have outstanding chart structure allowing you place a tight stop regardless of what your opinion is as prices are still trading just a hair above its 20 day but about 700 points higher from its 100 day moving average. The chart continually seems to be grinding higher forming a triangle pattern at this point but look for the breakout at 150 then I would be recommending taking a long position in the futures contract placing your stop below 138 risking around $1,800 per contract. Many of the soft commodities have rallied in recent weeks especially coffee and sugar due to the fact that there’s a drought in central Brazil as Brazil also is the largest orange juice producer in the world as well and I do think orange juice prices will follow coffee and sugar higher. Orange juice futures have been in a bullish trend since bottoming out at the 52-week low on 10/29/13 at 121.10 and is currently 21% higher than that day while only about 3% from its contract high which was hit on June 11th at 151.70 and that’s where I think a lot of buy stops will be placed which could propel this market up to 160 rather quickly.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Corn Futures
Corn futures are barely trading over their 20 and 100 day moving average as prices have been consolidating in the last week or so in a very tight trading range unable to break below 4.60 also unable to break above 4.70 a bushel trading around 4.69 in the December contract and I’ve been recommending a long position in this market as I do think there’s an opportunity prices could shoot higher pretty quickly due to the fact that many of the commodity markets have moved higher including soybeans and soybean meal which is used as a feed product as well as corn. The chart structure in corn is outstanding at this time and I do recommend a long position placing your stop loss below the 10 day low of 4.54 a bushel risking around $.10 cents or $500 per contract as we enter the volatile season in corn as spring planting is right around the corner here in Chicago & we are still extremely cold and wet. Traders are keeping a close eye on the next USDA crop report which comes out on March 10th and that will show planting intentions as it will be interesting to see what the final figure comes to be as estimates are around 92 million acres. If you are bullish corn prices there are several different ways to approach this market as the 1st one being the simplest which is buying an outright futures contract for the December month which is considered the new crop and will be harvested this fall or look at simple bull call option spreads limiting your risk to what the premium costs.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Wheat Futures
Wheat futures in the May contract are trading barely above their 20 day but still below their 100 day moving average hitting a 2 week low in yesterday’s sharp selloff reversing today to finish up about $.10 to trade at 6.00 a bushel finishing slightly lower for the trading week. I’m recommending sitting on the sidelines in this market and waiting for a better chart pattern to develop as currently the trend is mixed as wheat futures sold off from $7.20 down to recent lows of about 5.55 and right now it’s in no man’s land as I like to find a trend that is strong & this trend is not strong and by far is the weakest out of the grain complex due to the fact that wheat’s fundamentals are not bullish as excellent crops have been grown around the world and supplies are not tight so I remain much more bullish corn, soy meal, and soybeans than I am wheat so sit on the sidelines and wait for some better chart structure to develop.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Oat Futures
Oat Futures--- I’ve been talking about the oat market in previous blogs due to the fact that these are all-time high prices which is really amazing in my opinion as I do believe that will push up other grain prices including the corn market which I currently do have a bullish recommendation as the oat market finished up about $.30 for the week in the May contract closing at 4.61 and actually hitting $5 in Wednesday’s trade all due to supply concerns and poor crops. If you look at the chart it had outstanding chart structure several months ago & formed a nice rounding bottom paying you off if you were smart enough to get in around 3.30 a bushel as prices still have not hit a 2 week low in nearly 2 months.
TREND: HIGHER
CHART STRUCTURE: AWFUL
Live Cattle Futures
Live cattle futures in the April contract exploded to the upside finishing higher by 400 points this week to close at 145.15 a pound hitting all-time highs as the meat sector continues its bullish run and I’m still recommending a long position in this market as I think prices are going higher as the chart structure remains excellent allowing you to place your stop loss at 140.80 as the top has not been created in my opinion. The chart structure in the cattle market is outstanding at this time and those are the markets I like to focus on as the demand for beef is outstanding at this time and who knows how high this market could go, but in my opinion 150 is a real possibility in the next couple weeks.
Feeder cattle prices in the April contract rose 200 points this week to close around 173.20 pound also hitting new all-time highs and I still recommend a long position in feeder cattle was well as it’s much easier to trade with the trend than try to pick a top in this market as prices still look to go higher. Many times tops are created with extreme volatility like natural gas in the March contract this week which went straight up and straight down, however the meat complex has outstanding chart structure where it’s just grinding higher and that tells me that it top has not been created.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
U.S. Dollar Futures
The U.S dollar sold off sharply this Friday afternoon finishing down 50 points at 79.80 hitting a 9 week low looking to retest the contract lows which were hit 4 months ago around 97.50 as I’m recommending a short position in the U.S Dollar Index placing my stop above the 10 day high which currently stands at 80.60 risking around $800 per contract as the trend now has turned bearish in my opinion. The commodity markets certainly like the fact that the U.S dollar is headed lower as well as the bond market rallying sending interest rates to new recent lows as it reminds me of 2006 all over again when stocks and commodities moved higher as the U.S equity market hit all-time highs in the S&P 500. Remember when you trade you want to try to keep it simple and this trade is extremely simple by recommending selling one futures contract and continuing to place your stop at the 10 day low as I do think contract lows will be breached next week as the Euro currency finished up over 100 points this afternoon to close above 1.38 also hitting new recent highs with 1.40 next resistance point.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
S&P 500 Futures
The S&P 500 in the March contract hit another all-time record high trading higher by 2 points at 1855 rallying about 16 points in the last 2 trading days as investors are extremely bullish this market due to the fact of low interest rates and a weakening U.S dollar pushing commodity prices higher which also helped push up stock prices. The S&P 500 is trading above its 20 & 100 day moving average telling you that the trend is to the upside as this bull market continues in my opinion as Friday’s remain the most bullish day of the week in equities as investors continue to think that higher prices are ahead with the next major target at 1900 in the next possible couple of months as mergers and acquisitions are taking place with solid earnings across the board and nowhere else to go due to the fact of extremely low interest rates so look to continue to buy the S&P 500 in my opinion especially on dips.
TREND: HIGHER
CHART STRUCTURE: SOLID
NASDAQ Futures
NASDAQ futures continued their torrid pace to the upside trading higher by another 15 points in early trade at 3716 hitting a 14 year high before profit taking came in sending prices slightly lower for the trading session but it looks to me that we have a high possibility of breaking all-time highs above 5000 come year end as the technology sector is clearly on fire with a lot of positive news and the fact that stock prices aren’t out of whack speaking of valuations, however there are certain companies like Tesla motors and some Internet stocks that are highly overvalued, however, as a whole prices are not out of control like they were in 1999 and I remain bullish this market recommending bull call spreads for the month of July or buying a futures contract as the bull markets in commodities and stocks are continuing.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Where Should You Place Your Stops? Identifying where stops exist in the market is an important lesson to learn because placing a correct stop loss that will improve your trading tremendously over the course of time. Nobody knows for sure where stops are located, however I have learned a couple of things over my 20 year career and I have a general idea where stops are placed and why. Buy stops are generally placed above the 10 day high as well as above contract highs as the bulls generally are buying more and the short selling are getting stopped out.
Sell stops are usually placed at the 10 day low as well as below contract lows which means the shorts are adding to their position and the longs are getting stopped out as they figure they are wrong. The other common places to have stops are at certain moving averages such as the 20 or 100 day moving average where traders think either the trend is turning bullish or the market is starting to break down. Placing stops to close or not at important price levels can get very frustrating because the market can stop you out and then go the direction that you thought leaving you behind and out of the market. Placing stops is one of the most important aspects of trading in my opinion.
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
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
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.
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: (800) 615-7649
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