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 sold off this Friday afternoon with gold in the August contract continuing its choppy trade down $20 an ounce at 1,392 still stuck in a two-week sideways channel and as I’ve stated in previous blogs even after yesterday’s $20 up move I still remain bearish gold & I don’t understand any reason to be owning gold at this point in time and I do think a possible retest of 1,320 is in the cards in the next couple of weeks. Silver futures have been in a tight sideways channel down about $.50 at 22.21 still looking bearish in my opinion as the commodity markets as a whole are turning negative once again. The U.S dollar today was up about 45 points putting pressure on many commodities, however the dollar had 2 straight down days so today was considered profit taking but I still believe the U.S dollar is headed higher against the foreign currencies which will put pressure on the commodity markets in short term. Copper futures for the July contract were down about 260 points today currently trading at 3.28 a pound still stuck in a 3 week consolidation and if you’re looking to sell copper my recommendation would be to put a stop at 342 therefore limiting your risk if the trend changes or if you’re looking to get long the market I would put my stop at 323 also limiting your monetary risk as the fact of solid chart structure has now entered this market. In recent blogs I have been recommending selling far out of the money puts and far out of the money calls taking advantage of this choppy trade which has tremendous moves on a daily basis therefore collecting the premium, however when you sell options there is unlimited risk so you must understand exactly when and how to sell premiums. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Grain Futures--- The grain market was higher across the board once again as the July soybeans hit a new closing high settling at 15.09 up $.13 selling off about $.14 from session highs which were hit earlier in the day at 15.23 as Chinese demand is starting to take its toll on carryover or supply levels and there is major concern that supply levels are too low which could send prices higher and as I’ve talked about in many previous blogs I think there could be a short squeeze in the July contract. November soybeans which is the new contract which will we harvested this fall up another $.15 cracking the $13 a bushel barrier to settle at 13.04 after settling last Friday at 12.48 and in previous blogs I recommended buying soybeans above 12.40 and I still think soybeans can head higher in the short term due to the fact of excessive rains here in the Midwest raining 13 out of the last 14 days. December corn up $.04 today at 5.67 and actually at 1 point hitting a 3 month high cracking 5.71 above its 20 &100 day moving average but one thing that concerns me about corn is there is a gap on the daily chart around 5.35 in my opinion gaps are generally filled so prices could still head back down in the short term, however as I’ve been advising I am bullish the July and November soybeans also the soybean meal which continues to move higher for the 4th consecutive day also hitting contract highs as there is major concern of supply problems. The U.S dollar was higher today but many of the commodities were sharply lower once again including crude oil and the precious metals sector, however the grain market continues to the upside for 2 reasons huge demand for the front month as well as rain which could impact the yields at harvest time. The odds of the U.S drought this year are starting to minimize due to the fact of excessive moisture & I still believe that the grain market will have a severe downturn in prices possibly hitting yearly lows as we enter July and August but at this point in time there is a lot of bullish news out there & the trend is your friend so right now you should be long this market placing stops below the 10 day low minimizing monetary risk in case the trend changes. TREND: HIGHER–CHART STRUCTURE: OK
5 Year Notes—The Five-year notes are continuing their bearish trend selling off 3 out of the last 4 trading sessions closing down 5 ticks at 122.31 rallying off session lows as a short term bottom might be in place. I have stated in many previous blogs to be selling the bonds and take advantage of Fed intervention trading far below its 20 & 100 day moving average nearing a 9 month low as the U.S dollar continues to move higher as a fundamental shift is now taking place in interest rates with a possible bullish dollar which we have not seen in years as investors are finally rotating out of bonds and putting those funds into the stock market. 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 days 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 1.01 and the yield has nearly doubled in 3 weeks as prices have crumbled on the fact that the QE3 are ending soon which 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, however volatility has increased in recent weeks.. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Livestock Futures--- Cattle futures in Chicago were higher with live cattle for the August contract up 130 points currently trading at 120.40 a pound right near 2 week high with major resistance at 124.20 and it looks like to me that a possible double bottom may have been formed in the live cattle futures market. The low in live cattle for the June contract was 118.00 so if you are looking to get long this market I would buy a futures contract and place a stop loss below that level risking around $1,000 per contract. Lean hog futures were up 60 20 points in the July contract still right at a 3 ½ month high trading above the 20 & 100 day moving average as Smithfield food which is the largest U.S pork producer was bought this week by a Chinese company spurring thoughts about future demand directly to China. If you’re looking to get long this market I would place my stop at the 10 day low which is at 89.75 risking around $1,300 per contract at this point and remember stop losses will be raised meaning that you will have trailing stops at $1,300 which is the worst-case scenario at this point in time. Feeder cattle prices for the August contract settled up 35 points at 144.40 still in a very choppy to bearish trade still below its 20 & 100 day moving average and I’m advising traders to sit on the sidelines in feeder cattle but I am bullish the live cattle and the lean hogs because there is a chance a bull market is underway especially in hogs. The commodity markets are extremely volatile in recent weeks and today is no exception with huge moves in oil and the grain market which is having big moves up or down on a daily basis which will affect livestock futures at this point with all the money sloshing around the world there is a possibility that the commodity markets are bottoming here in the next couple of weeks like they did last year. TREND: –MIXED--–CHART STRUCTURE: GOOD
Cotton Futures-- Cotton futures this week continued their bearish momentum down another 77 points in the December contract which is considered the new crop which will be harvested this fall trading at 82.07 down for the 2nd straight trading session still trading below its 20 and 100 day moving average hitting a 3 month low continuing its bearish trend. Cotton futures for the week ended down about 150 points after settling last Friday at 83.77 as the slow grinding bear market seems to be underway. If you are looking to go short the cotton market I would place my stop at the 10 day high which will risk around 1,750 if the trend does change , however the risk will be lower the longer you are in the trade as a trailing stop will continue to be lowered. Chinese demand has been weak recently pushing prices lower and I’m recommending a short position across the board in the cotton market as prices look to continue their downtrend in my opinion. Cotton prices could continue their bearish trend because of large crops possibly looming in the next couple of months and the slowdown across Europe and China so cotton prices at this point look bearish. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cocoa Prices-- Cocoa prices in the July contract are continuing their bearish trend this week hitting a 6 week low today finishing down another 20 points down about 50 points from last Fridays settle still trading below its 20 & 100 day moving average as good weather in Africa and weak demand is pushing prices lower. In many of my previous blogs I have been bearish cocoa and I still recommend selling the futures contract placing a stop above the 10 day high which is at 2364 with the original breakout at around 2300 risking around $650 per contract as the commodity markets still look weak and vulnerable to further downside action. Today’s action broke support at 2200 which tells me that prices could head all way back down the contract lows which was hit several months back at 2050 because the fact that there’s no demand for sugar & coffee so why is there demand for cocoa and I do believe prices are headed lower. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Coffee Futures--- Coffee futures in New York were slightly higher this Friday afternoon but down another 100 points this week hitting a 3 year low currently trading at 127.00 a pound in the July contract hitting a fresh 3 year low trading far below its 20 & 100 day moving averages with solid weather in Brazil and low demand for this product at this point continuing to push prices lower. Coffee futures settled near 145 a pound on May 10th trading down almost 2100 points in 3 weeks as traders are pushing prices lower with the next major support between 115 – 120 and I do believe prices are headed there in the next couple of weeks, however coffee prices down at those levels will start to look attractive because eventually bear markets end as well as bull markets and I do believe if you can pick up coffee around 115 & your long term investor I think you will be very happy in the long run. There is solid chart structure on the daily chart after having several false breakouts to the upside and downside previously so this one might be the real move to the downside and I do think prices are headed lower at this point in time especially with volatility remaining extremely low which is very surprising to me as we enter frost season down in Brazil. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Sugar Futures-- Sugar futures in New York continue their bearish trend finishing lower for the 3rd consecutive trading session at 16.55 a pound finishing down about 30 points from last Fridays settling price of 16.84 still trading below its 20 and 100 day moving average also hitting a fresh 3 year low today as well as coffee and they seem to be mirroring each other in recent months because both commodities are produced mainly in Brazil as large supplies and a bearish trend continue to push sugar prices lower. As I’ve talked about several previous blogs I do believe sugar prices are headed down to the July 2010 lows around 14.50 in the next couple of months with huge supplies and lack of demand with a strengthening dollar here in the United States which are all very bearish indicators for prices. I still recommend a short position in July sugar and if you are short this contract currently I would place a stop above the 10 day high in case the trend does change therefore minimizing your risk in case you are wrong. 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