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.
Precious Metal Futures--- The precious metals fell out of bed this week especially gold which finished down for the 6th consecutive day trading far below its 100 day moving average all due to the fact that the U.S dollar hit another contract high today trading up nearly 70 points again today as investors are fleeing out of gold and taking that money and placing it in the U.S dollar and the S&P 500 which is hitting another record high again today. Gold futures for the June contract settled last Friday at 1,436 finishing down about $70 for the week trading at 1,362 hitting a 2 year low with a possible retest of 1,321 which was hit on April 16th of this year. Investors see no reason to own gold at this point in time when you can buy the stock market which seems to go up every single day, however the real story is large hedge funds including George Soros which have been liquidating their gold positions in recent weeks and that is also putting pressure as investors are taking money out of the ETF gold market. Silver futures for the July contract were down another $.38 at 22.36 an ounce trading below its 20 day moving average and is trading $6 below its 100 day moving average which tells you this trend is very strong to the downside and if gold continues to go down its going to be difficult for silver to rally. Silver looks bearish here in short term after settling last Friday at 23.65 finishing down about $1.00 for the week also hitting 2 ½ year lows. The next major support in silver which was also hit on April 16th of this year is at $21 and if that level is broken you could possibly see silver heading down to the 18/$19 level especially if gold continues to fall out of bed. Copper futures were a different story finishing up 300 points today in the July contract after settling last week at 3.35 a pound down slightly for the week, however its following the S&P and the housing market more than silver and gold at this point as investors see no reason to own gold because it actually has no real commercial usage but copper is used in housing and many other products with improving economies around the world copper demand should increase but at this point in time I would avoid copper because it does not have a trend while silver and gold have a trend to the downside so if you’re looking to get short this market I recommend selling silver and gold in place a stop above the 10 day high therefore minimizing your risk in case the trend does change. TREND: LOWER –CHART STRUCTURE: SOLID IN GOLD & SILVER
Grain Futures--- The grain market was mixed today with soybeans in the July contract which I’ve talked about in previous blogs that there is the possibility of a short squeeze in the old crop soybeans due to the fact that carryover levels or supply are at extremely low levels and if you look at the May contract it exploded in its last several trading days settling around 15.30 also helping to push July soybeans up another $.21 today at 14.49 a bushel right at a 6 week high with solid chart structure allowing you to place a stop at the 10 day low at 13.66 if you’re looking to get long this market. July soybeans are trading above their 20 & 100 day moving average as the trend continues to the upside here in the short term. December corn is trading in the exact opposite direction trading below its 20 and 100 day moving average and this is considered the new crop which will be harvested this fall down 5 cents at 5.19 which is a new contract low despite the fact of all the flooding and late planting this year the market still seems bearish due to the fact that we are planting 98 million acres which should harvest a record crop. Wheat futures which I’ve also talked about in previous and I was bullish this contract when it broke above 7.20 however wheat hit a 6 week low and is still stuck in a 10 week consolidation trading lower for the 4th day in a row despite the fact of poor crops in South Dakota and Kansas this market continues its bearish trend trading below its 20 and 100 day moving average with the next major support at 6.75 that level is broken you could see a bear market develop in wheat prices. The U.S dollar has been going up sharply in recent days finishing slightly lower in today’s activity lending very little support to the grain market but the only bull market going on in the grains is the July soybeans everything else seems to be headed lower at this point in time so keep an eye on the old crop beans because there is a chance you could rally sharply into expiration. If you’re looking to get involved in July soybeans 1 strategy might be to look at are bull call spreads which expires the 3rd week of June for the July contract therefore limiting your risk to what the spread costs. TREND: LOWER---JULY SOYBEANS HIGHER–CHART STRUCTURE: EXCELLENT
Cotton Futures--- Cotton futures had a very quiet trading week basically finishing around 86.35 trading slightly lower for the trading week and is still above its 20 and 100 day moving average by just an eyelash as export sales were disappointing coming out of the USDA yesterday as China who is our largest importer is slowing down which could put some pressure here in the short term. Many of the commodity markets have been heading lower due to the fact that the U.S dollar continues to head higher which is putting pressure on prices and that is exactly what is happening in cotton, however the volatility in cotton is very low if you look on the daily chart its creating a wedge looking to breakout in one direction or the other so if you are looking to get involved in this market its allowing you to place a tight stop loss due to the fact that there is excellent chart structure. At this point in time I’m advising traders just to sit on the sideline in the cotton market because I really don’t know where prices are headed at this point but I do believe as we enter the summer month’s volatility will pick up and a trend will develop soon. TREND: SIDEWAYS –CHART STRUCTURE: EXCELLENT
Coffee Futures--- Coffee futures finished down 295 points and had a disappointing week finishing lower by about 800 points still in a real seesaw chart pattern finishing around 137.00 a pound creating a false breakout to the upside last week with a false breakout to the downside a couple weeks ago so were still unable to breakout of this 8 week consolidation. We are entering the volatile season in coffee as frost season is right around the corner which could propel prices higher if there are any weather problems but this trend is sideways and I’m still recommending traders to avoid this market until a trend develops and I do believe that the three-year downturn in prices is nearing an end in my opinion. One strategy if you’re looking to get involved in coffee and avoid some of the volatility which could be coming is to look at bull call option spreads and that is an option play which limits your risk to what the premium cost and I would go out to the month of September which gives you around 3 months to hold that position before expiration. TREND: SIDEWAYS –CHART STRUCTURE: EXCELLENT
Orange Juice Futures-- Orange juice futures are still stuck in a two-month consolidation between 140 – 150 down about 400 points for the week and what looks to me as a possible top forming in prices as the soft markets seem to be entering bearish trends once again. Orange juice is trading right at its 20 day moving average but now is below its 100 day moving average and if you’re looking at possibly going short this market my recommendation would be to put a stop loss around the 150 limiting yourself to about 800 points risk which is around $1,200 per contract if prices reverse and climb higher. Greening disease has been a major concern for orange juice and it will be a concern for several years to come, however with the U.S dollar continuing to decline it’s going to be difficult for many of the commodity markets to rally unless a weather event or demand picks up tremendously. TREND: SIDEWAYS –CHART STRUCTURE: EXCELLENT
Cocoa Futures--- The cocoa market was very quiet this Friday afternoon finishing up only about 2 points at 2301 still trading above its 100 day moving average but now is crossed the 20 day moving average to the downside hitting a 4 week low today just down slightly for the week and in many previous blogs I was bullish cocoa prices placing my stop at the 10 day low which was hit several days back and now have turned bearish as a 4 week low as been created with excellent chart structure allowing you to place a stop loss above the 10 day high which is 2402 risking around $1,000 dollars per contract if you are wrong. The U.S dollar has really hurt prices here in the last several days and if it continues to go higher its bearish cocoa prices in the short term, however I always like markets with excellent chart structure and this one has very good chart structure on the daily basis and maybe the trend has changed to the downside with a possible retest of the contract lows around 2050 in the coming months. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Energy Futures-- The energy futures bucked the trend this week despite the fact that the dollar continues to surge higher but is not putting any pressure on energy prices as July crude oil is still trading above its 20 and 100 day moving average finishing up around $.90 this Friday afternoon at 96.40 a barrel climbing higher for the 3rd consecutive day following the S&P 500 to the upside. I’ve been advising traders to sit on the sideline in this market because there is no chart structure and I guess the trend might be to the upside but at this point I don’t believe there’s a solid trend to sink your teeth in with major resistance at 98 – 100 which could be tested next week. This market is showing incredible strength in my opinion due to the fact that gold is falling out of bed with many other commodities but even with record supplies here in the United States prices still continue to hang near the top and of the trading range. Heating oil futures for the June contract are trading above their 20 day moving average but below their 100 day moving average trading right at 4 week highs up around 300 points the trading week looking to breakout to the upside with major resistance at 2.95 as crude oil is propping up all of the products. Unleaded gasoline for the June contract is trading above its 20 day moving average but still below its 100 day moving average hitting a 5 week high today as I’ve stated many previous blogs I believe a triple bottom may have occurred in unleaded gas prices and I think were headed higher as demand season for gas starts Memorial Day weekend. The chart structure in heating oil and in unleaded gasoline is much better than it is in crude oil so focus on the products at this time especially unleaded gas to the upside as prices here in Chicago are flirting around 4.75 a gallon because the fact that we have extremely high taxes and a special summer blend so there is a chance that we could see prices head higher at the pump the summer. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Sugar futures – Sugar was higher by 8 points to close at 16.89 but has finished lower 9 out of 10 trading sessions breaking out to a new 3 year low trading below its 20 & 100 day moving average and as I've stated in previous blogs I am bearish sugar prices and I am recommending a short position putting a stop above 17.90 in case the trend does break out to the upside but at this point in time I still believe that the trend in sugar prices are lower. With a record harvest coming out of Brazil and supply rising every single day that is keeping a lid on prices here in the short term even though the fact that Brazil has pushed up their mandate for ethanol production using sugar trying to reduce some of the supply surplus but that is still not having an impact on prices and I do believe we will head down to the 2010 lows of 14.50 a pound here in the next couple of months. The daily chart in sugar has outstanding chart structure allowing you to place very tight stops if you are bullish or bearish limiting your monetary loss due to the fact that your stop loss could literally be within 30/50 points away which is between $300 $500 a contract allowing you to speculate with limited risk. TREND: LOWER –CHART STRUCTURE: EXCELLENT
5 Year Notes—The Five-year notes sold off for the 5th out of 6 trading sessions down another 8 ticks at 123.30 with the possibility of an all-time high double top occurring last month now trading below its 20 & 100 day moving average hitting a fresh 5 week low as investors are finally rotating out of bonds and putting those funds into the stock market which is hitting all-time highs again today. For the first time in many months the bonds are starting to sell off and this has been a frustrating trade because stocks and bonds were both going up at the same time but now the rotation into stocks and out of bonds is finally occurring. In my opinion I might be sticking my neck out here if you look at the five-year note on a one-year chart it has been consolidating between 123-124 since last September which is now a 8 month consolidation and I do believe we will break the 123 level here in the next couple of months all due to the fact that I think there will be a rotation out treasuries headed into stocks and I do think stock markets around the world will continue to move higher. If you have a longer-term horizon I think selling the 5 year notes at this point in time yielding 0.82 is an excellent opportunity to take advantage selling near all-time highs while the all-time low in this market was 0.59 which happened last year and I don’t believe you will go down to those levels again and once U.S treasury stops purchasing treasuries yields could go much higher in my opinion. The five-year note is probably one of the most conservative trades there is because since the fact that is yield is so small and it has little volatility a good move in the five-year note is about 10 ticks which is around $325 profit or loss on that day but there are many days were it moves 1 or 2 ticks so this is a very good investment vehicle for somebody who doesn’t like to take on a lot of volatility. TREND: LOWER –CHART STRUCTURE: EXCELLENT
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