Optimism Fuels Futures Higher

S&P 500 Futures

The S&P 500 futures in the June contract settled last Friday in Chicago at 2779 while currently trading at 2840 up about 60 points for the trading week as prices are right near a five week high.

Optimism about a possible remedy from the company Gilead for the Coronavirus is pushing prices higher as the Nasdaq 100 is only down about 10% for the year and has experienced a significant rally over the last week as it certainly looks like the panic bottom which developed in March will hold. The S&P 500 is trading above its 20-day but still below its 100-day moving average as the trend is higher to mixed as the United States quarantine could be over in the next couple of weeks as businesses will start up once again as that is terrific news.

The next major level of resistance is all the way up to the 3000 level. I still think there is room to run to the upside, and I see no reason to be short U.S. equities. I do believe this economy will come back quickly, even though we might have a 20% unemployment rate. So, if you are long a futures contract, I would stay long while placing a tight stop as the volatility remains exceptionally high.

TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Silver Futures

Silver futures in the May contract is ending the week on a sour note down $0.32 or 2.03% at 15.31 an ounce after settling last Friday in New York at 16.05 down over $0.70 for the trading week as prices have now hit a one week low.

The U.S. equity markets have rallied substantially this week as money flows have entered back into that sector and out of the precious metals, at least in the short-term. Prices are still trading above their 20-day, but still below their 100-day moving average as the trend is higher to mixed.

I have been recommending a bullish position from around the 16.00 level, and if you took that trade, the stop loss has now been raised to 14.35 as the chart structure will also improve in next week's trade. Therefore, monetary risk will be reduced. For the bullish momentum to continue, prices have to break the April 14th high of 16.30.

I remain bullish as prices have dropped due to profit-taking. With all the stimulus packages that the U.S government has initiated longer-term, you have to be bullish silver as historically speaking, prices look very cheap.

TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

Platinum Futures

Platinum futures in the July contract settled last Friday in New York at 748 an ounce while currently trading at 787 up nearly $40 for the trading week and on April 14th traded as high as 838 as then prices fell blamed on profit-taking.

Platinum prices hit a four week high as I'm keeping a close eye on a bullish position. I do think a longer-term bottom has been in place. However, the 10-day low stands at the 700 area as the risk/reward is not your favor to take a bullish position. I will look for prices to come back down to the 750 level, which could happen in next week's trade.

Platinum prices are trading above their 20-day but still below their 100-day moving average as the trend is higher to mixed. My only precious metal recommendation at the current time is a bullish silver position which is also mirroring the platinum chart, but with less risk.

Volatility is extremely high, and in Tuesday's trade was up over $80. So, if you do get involved with this commodity, make sure that you place the proper amount of contracts while risking 2% of your account balance on any given trade as the volatility will remain high for months to come, in my opinion.

TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Not A MarketClub Member Yet?

Getting started is easy! Test our tools with a 30-Day Trial.

Coffee Futures

Coffee futures in the July contract is currently trading down by 150 points at 119.70 or 1.24%. Prices have been stuck in the mud over the last three weeks as this commodity remains in a three week consolidation pattern. I am advising clients to avoid and wait for a true break out to develop.

If you take a look at the monthly chart, coffee prices continually bounce off that 100 level. I do think that level will act like cement as a long-term bottom is in place, in my opinion. However, I will wait for the risk/reward to become more in your favor to take a bullish position to the upside. Fundamentally speaking, one supportive factor for coffee recently was the latest report from the Green Coffee Association that U.S. March green coffee inventories fell -4.6% m/m and -1.4% y/y to 6.024 mln bags.
Dwindling U.S. coffee inventories are bullish for coffee prices after ICE-monitored coffee inventories on Wednesday fell to a 2-1/2 year low of 1.866 mln bags.

Coffee prices are trading right after 20 and 100-day moving average as the trend really is mixed. Still, prices have held up relatively well, especially compared to any other agricultural market as historically speaking, this market remains incredibly depressed as I think the upside potential could be large in the coming months ahead.

TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Soybean Futures

Soybean futures in the July contract settled last Friday in Chicago at 8.71 a bushel while currently trading at 8.44 down nearly $0.40 for the trading week lower for the 5th consecutive session as there is nothing bullish fundamentally speaking about the soy complex.

I'm sitting on the sidelines; however, I do believe prices will test the March 18th low of 8.29 possibly next week as planting season will not start until early May as weakening demand across the entire grain complex remains extremely weak. Soybean meal and soybean oil also continue to move lower weekly as prices are trading far below their 20 and 100-day moving average. If you are short a futures contract, I would place the stop-loss above the 10-day high standing at the April 13th level of 8.77 as an exit strategy. However, the chart structure will not improve for another six trading sessions.

Volatility remains average, but as we start to enter the summer months, the volatility can explode due to weather conditions. Still, for the next several weeks, this market looks to be on the defensive.

TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Sugar Futures

Sugar futures in the July contract is currently trading at 10.50, ending the week on a positive note up 17 points or 1.65% after settling last Friday in New York at 10.49 basically unchanged forming a bottoming pattern. In my opinion, as prices look to have finally found support.

Sugar prices are now trading right at their 20-day but still far below their 100-day moving average, which stands at the 13.04 level. That's how far prices have dropped since the peak right above the 15 level on February 12th, dropping over 35% as the agricultural markets have certainly taken a hit due to the Coronavirus.

I'm sitting on the sidelines; however, I do believe a bottom has been formed. I will be looking at a bullish position once prices hit a four week high, which could happen in next week's trade as historically speaking prices look very cheap. If the United States starts to work again, prices will start to rally due to stronger demand, so keep a close eye on this market as I will not go short at these depressed levels.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Live Cattle Futures

Cattle futures in the June contract settled last Friday in Chicago at 84.37 while currently trading at 86.50 down about 200 points for the trading week higher for the 4th consecutive session as it certainly looks to me that the spike bottom which was created on April 6th at 76.60 will hold.

I had been bearish cattle prices over the last several months. Still, I do think there is light at the end of the tunnel as the United States economy looks to be getting back to work, possibly in the next couple of weeks. That will spur massive demand, in my opinion, as I will be looking at a bullish position as I think the downside has been exhausted. Cattle prices are now trading right at their 20-day but still far below their 100-day moving average around the 107 level as that is how far prices have collapsed over the last couple of months, so keep a close eye on this market as we could be involved in a bullish position soon.

Volatility is extraordinarily high, and that situation is not going to change as we are experiencing limit up and limit down trading sessions. So, if you are involved, make sure that you only risk 2% of your account balance on any given trade as the proper money management technique.

TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Trading Theory

Never answer a margin call because you are probably over trading, and most likely, the position is going against you and possibly have lost much more than 2% on that trade.

Never allow this to happen to you because you always want to have a sufficient margin in your trading account just in case the exchange raises margin, and that will not force you out of the position.

A great rule is to keep 50% of your total portfolio in cash and the other 50% in trades that way if something crazy happens, and it does sometimes this helps in hugely managing risk.

If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com

Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: 630-408-3325
mseery@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. 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.

One thought on “Optimism Fuels Futures Higher

  1. The S&P and the whole market are in a recovery phase but I think eventually they will resume their free fall..

Comments are closed.