We've asked Michael Seery of SEERYFUTURES.COM an IB of Peregrine Finanial Group 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 Busines, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.
Stock Futures--- The stock market this morning are sharply lower across the board due to the fact of the monthly unemployment report which was bearish adding 115, 000 new jobs however 175, 000 new jobs were expected and is pushing the S&P 500 down 18.00 points currently trading at 1368.50 while the Dow Jones industrial average is down 150 points breaking 13,000 mark in the June futures currently trading at 12, 996 and active trade in Chicago today. The NASDAQ futures for the June contract are lower by nearly 47 points currently trading at 2,645 again due to a negative unemployment report which put the unemployment rate of 8.1% which is the lowest rate in nearly 3 years , however in my opinion I think the Obama administration is trying to get the unemployment rate to about 7.8% before election time because it looks good politically that the rate continues to drop however the economy is still poor and the unemployment rate in the last several years really can give mixed signals.
Energy Futures---The energy futures this morning are sharply lower across the board with crude oil breaking major support hitting a 10 week low this morning in the June contract currently at 98.00 down nearly $4.70 for the trading day on pessimism of lack of demand from Europe and China and world economies slowing down with the unemployment rate that came up this morning at 7:30 AM central time at 8.1% which only added 115, 000 for the month which was expected to be about 170, 000 and was deemed negative pushing most commodity prices lower, however the energy futures were sharply lower before that report even came out showing you that the trends are negative at this point. Unleaded gasoline for the June contract down another 900 points currently trading at 2.96 a gallon hitting a new 14 week low while heating oil is breaking out to the downside as well down another 900 points at 3.00 resuming its bearish trend while natural gas futures are only down 7 points at 2 .27 in the June contract which I also see heading back towards contract lows in the next couple weeks or so. Energy prices went up too high to quickly during the spring and right now they are paying the price because there is an adequate supply and there's not that much demand for gasoline at this point so prices in my opinion are headed lower in the short term unless some problems rise in the Middle East which is been very quiet in the last couple of months. Many of the commodity sectors have been falling in the last several weeks giving you an idea that the concern of the Federal Reserve at this point is deflation not inflation and if you look at the amount of commodities that are near contract lows or near 2 or 3 month lows it is the majority of most sectors except for maybe soybeans and soybean meal but many of the other commodities are right near recent lows if not making new lows which tells me that commodity prices even at these levels are too high at this point in time.
Precious Metal Futures-- Precious metals this week grinded lower continuing their bearish trend with gold on Thursday selling off by more than $17 dollars however on Friday after the monthly unemployment report remained steady climbing $4 dollars an ounce in the June contract to settle at 1, 639 an ounce while silver futures hit a fresh four month low earlier the trading session all the way down to 29.73 before rallying the close up nearly 10 cents to close around 30.10 in the July contract, however in my opinion silver is in a bearish trend looking to head back down to the $26 – $27 level here in the near short term. Copper futures for the July contract basically finished down 300 points for the trading day closing right around 370.00 a pound down about 1200 points for the week still mired in this trading range looking for some new fundamental information to break out one way or the other. Most the commodity sectors were sharply lower this morning however the monthly unemployment report which was construed as negative is giving a little support to the precious metals in the early going, however I do believe that many commodity prices are heading lower because I believe they are too high priced at this point and time because the economy is performing very slowly at this point and you can see it in the charts with many commodities right near lows or in a bearish direction. Platinum futures hit a 13 week low this week trading down the 1, 537 which tells you that there is a lack of demand for platinum which is also going to push gold prices down in my opinion while Palladium futures are also stuck mid-range right around 661 with real trend in sight.
Grain Futures--- The grain futures this morning are trading sharply lower with soybeans for the July contract down 12 cents to close at 14.60 while wheat futures which have been pummelled this week right near contract lows once again an extremely choppy trade are lower again by 150 cents currently at 5.98 in the July contract due to the heaviest supply since 1986 when prices went all the way down to 2.40 a bushel however I do not see prices going down to that level due to the fact that the U.S dollar is in a totally different price than it was 25 years ago however I do think corn and wheat prices continue to head lower in a choppy pattern. Traders are keeping an eye on the May 10th crop report which is this Thursday which will talk about South American crop and whether they cut it further decline in supplies causing another price spike which happened last month on the previous report but only time will tell and we still have a week left of that report comes out. This morning there is a lot of pressure on the energies as well as some other commodities and that also could push grain prices down in sympathy for the trading day. Corn futures are lower by 10 cents in the July contract 6.03 hanging on by the skin of its teeth looking to make possible contract lows next week while soybean meal which is been probably the biggest bull markets on any commodity this year are lower by 2 dollars to settle around 424 a ton while rough Rice futures had a terrific day yesterday reversing some of earlier in the week's losses is been open right around 15.20 a bushel in Chicago today.
Orange Juice Futures-- Orange juice prices are lower for the 5th consecutive trading session in an absolute bloodbath this week in prices closing down another 400 points to a new fresh two year low at 123.00 right at major support which might hold in the short term due to extreme oversold conditions, however this market is a falling knife and continues to hit contract lows on a daily basis due to lack of demand and a huge supply coming into the market. If you look at orange juice prices on the daily chart it looks like it is heading lower and clearly the trend is sharply lower and I do think we will head lower in the short term possibly even down to 100 level which would be an extreme selloff and I think if you're a longer-term investor I think that could be an excellent buying opportunity if the price gets to such an extreme level as that. This week traded as high as 148.00 on Monday morning only to continue a tremendous bear market down to 123.25 finishing down nearly 2500 points this week which is a gain or loss of 3,600 dollars per contract depending if you were short or long the market. Since last Fridays close orange juice has hit a fresh two year low with the next support all the way down the 115-120 which could happen in the next couple of days. There is very little demand for any of the soft commodities including orange juice which is considered a luxury product and during recessions orange juice demand slows dramatically causing lower prices. The weekly ranges in orange juice futures have been very wide but it's always to the downside and has been pretty simple if you have been short this market because the down days are very powerful and the up days have been small gains and that is a sign of a giant bear market. Remember 2009 in February prices backed down to the 70.00 which was the low at the time and I don't believe we will head that low but at this time prices are in such a slide that it is very difficult to become bullish at these levels. An old expression in the commodity markets is you never want to catch a falling knife basically it states that picking a bottom is very dangerous especially when the commodity is in a free fall in prices such as orange juices with no chart structure at all.
Meat Futures--- Live cattle futures are lower by 80 points currently trading at 115.10 a pound while feeder cattle prices are lower by 45 points reversing some of yesterday large gains. The cattle markets have been in an absolute free-for-all in the last several months however yesterday live cattle for the June contract finished up 300 points to close at 116.00 pound on renewed optimism that possibly this tremendous bear market may have exhausted itself at least in the short term however feeder cattle prices remain in a sideways channel also finishing up 250 points yesterday going into today's close slightly lower on the open while lean hog prices continue to hit contract lows down another 120 points today in the June contract trading at 83.57 and like I've been stated in previous blogs $.85 a pound is still a very high price for hogs historically speaking so prices could fall substantially further even from these so-called low levels. The commodity markets as a whole were all sharply lower today so it does not surprise me that the meats which have been in a big bear market continue to fall as traders are shaking their heads really wondering how low the price can actually go during the summer months. The trend is your friend in commodities and the strong bear trends in the meats look to me that they will continue to head lower at least in the short term remembering the fact that you don't know how high a commodity can actually go or how low prices can go before it bottoms or tops out.
Cocoa Futures-- Cocoa futures settled down 22 points to close around 2280 in the July contract continuing its choppy direction. Many of the commodity markets were lower today on concerns of an economic slowdown, due to a negative unemployment report that came out this morning. Cocoa started the week at 2309 and traded as low as 2144 before rallying sharply off those lows on 2 separate days to close right near the higher end of the recent trading range at 2330. I really do not have an opinion about Cocoa prices at this time however the soft commodity markets are very bearish and have been in tremendous bear markets in the last six months or so and I still have to believe that Cocoa prices will probably catch up and start heading lower with the rest of the soft commodities such as orange juice, coffee, sugar, and cotton. 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.
Cotton Futures—Cotton futures were very quiet today selling off another 80 points to trade around 85.70 which is another contract low with traders are looking ahead to the May 10th crop reports which will give these markets short term price direction while cotton futures had one of their quietest trading sessions in recent memory today, however with the summer month’s right ahead I see intense volatility coming very soon with big movement in prices as well. Volatility in cotton at this point and time is extremely low so expect price action to pick up in the next couple of months. Cotton futures started the week in the December contract at 87.90 a bale and have traded as low as 85.40 a bale in a pretty lack luster trading week basically grinding lower in price almost on a daily basis. As I've stated in previous blogs the soft commodities on a big bear market is very difficult to see any substantial rally in the coming weeks however summer months are ahead and we have been unusually warm and dry throughout many parts of the United States and if a weather market does develop such as drought prices will turn on a dime and go up quickly. I do believe that cotton price declines at these levels are limited and I don't see a whole lot more downside, however I do see 80 cents as a possibility in the coming weeks but I think you're starting to squeeze blood out of turnip at these levels. 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.
Sugar Futures—Sugar futures are rallying this morning by 15 points to currently trade at 20.83 blamed on short covering but prices continue to grind lower and it was one year ago in early 2011 when sugar prices hit a low of 20.40 and if we break that level you are looking to go down into 18 – 19 range in sugar prices pretty quickly in my opinion. Crude oil futures were crushed today however it had little impact on sugar prices today but if crude continues to head lower than you will see sugar price be affected negatively. The softs commodities have been in bear markets with sugar, cotton, orange juice, coffee, all making contract lows basically on a daily basis. Sugar prices have a glut in supply in the last couple of months due to a better expected harvest also with a lack of demand causing prices to decline to yearly lows and in my opinion I believe sugar prices are headed lower at this point but long-term investors should keep an eye on this market because if prices do get into the 15 – 16 range that could be an outstanding buying opportunity just like it was in 2010.
Coffee Futures—Coffee futures today sold off another 100 points to close around 174.75 which are testing the contract low of 174.10 which looks very vulnerable at this point with many sell stops below that level which could propel prices down to the 150-160 range pretty quickly. The problem with coffee prices recently is the same problem with many of the softs because it is considered a luxury item and during recessionary times people don't buy as much of these commodities and try to cut back saving money. The other problem with coffee is the up days are generally have pretty small gains, however if you look at the daily chart look at how many 600 or 800 point down days we've had wiping out all of those small little gains and generally hitting new contract lows almost on a weekly basis. The coffee market is trying to bottom at 175 price area but if that price is penetrated you would have to believe that prices would be headed lower, however if prices stay above that level and the longer they stay above that level the odds of a bottom forming increase on a daily basis. 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.
Michael Seery, President
Seery Futures
Twitter--@seeryfutures
Phone # (800) 615-7649
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Mr. Seery's comments on the dollars relative value vs. 30 years ago and their influence on chart levels merits further discussion. Any comments?