Orange Juice Futures
Orange juice futures in the January contract settled last Friday in New York at 114.35 while currently trading at 111.75, up slightly for the week looking to break out to the upside in my opinion soon. If you take a look at the daily chart, the downtrend line remains intact. However, that is in major jeopardy of being broken in next week's trade.
I will be recommending a possible bullish position if prices break the October 13th high of 118.75 while then placing the stop loss under the spike bottom and contract low, which was touched on October 21st at 107.35 as the risk is around $1,700 per contract plus slippage and commission.
Juice prices are now trading above their 20-day but still below their 100-day moving average as the agricultural sector is starting to look strong. I'm bullish on most commodities and equities at this time, and I think we will finish 2020 on a very strong note.
Orange juice is starting to enter the extremely volatile winter season where a frost can crush the orange juice crop in Florida as the volatility is extremely low. That situation will not last much longer, so play this to the upside as the downside is very limited, as I will not take a short position.
CHART STRUCTURE: EXCELLENT
Silver futures in the December contract settled last Friday in New York at 23.64 an ounce while currently trading at 25.45 up about $1.90 as prices are near a 7 week high.
If you have been following my previous blogs, you understand that I have been looking at a possible bullish position if prices close above 25.71 as we did trade as high as 25.97 early in the trading session. Still, we have not closed there, so I will sit on the sidelines and see what's Monday's trade brings. I have a bullish gold position, which is slightly lower today as I think the entire precious metals sector should continue to march higher due to all of the stimulus packages.
Silver prices are trading above their 20 and 100-day moving average as this trend finally has turned to the upside after consolidating over the last couple of months as I still think the $30 level will be breached in the coming weeks ahead. I see no reason to be short silver or any of the commodities at this time, as I think 2021 will witness some tremendous bullish secular trends to the upside.
CHART STRUCTURE: SOLID
Copper futures in the December contract settled last Friday in New York at 3.0475 a pound while currently trading at 3.1505, ending the week up over 500 points continuing its bullish momentum as prices are still hovering right near a 2 ½ year high.
I am not involved, but I believe higher prices are ahead as I have a bullish recommendation in gold. If you believe the bullish trend in copper will continue, I would buy at today's price level while placing the stop loss under the 10-day low standing at the 3.0280 level as an exit strategy as the commodity markets have caught fire after the U.S election. The chart structure is relatively solid at the current time. However, for the bullish momentum to continue, prices have to break the October 21st high of 319.85 as the volatility remains high as that will not change anytime soon as I think the trend will continue to the upside.
Copper prices are trading above their 20 and 100 day moving average as this trend is strong as the housing market in the United States continues its torrid pace due to strong demand, and that also means strong demand for copper as I see no reason to be short.
CHART STRUCTURE: SOLID
Coffee futures in the December contract settled last Friday in New York at 104.40 a pound while currently trading at 107.25, up nearly 300 points for the week trading higher for the 2nd consecutive session as prices are near a three week high.
I have been recommending a bullish position over the last several weeks from around the 109.55 level, and if you took that trade, continue to place the stop-loss under the contract low and 14-year low at 96.90 as an exit strategy. However, we will have to roll over into the March contract starting next week due to expiration.
Coffee prices are now trading above their 20-day but still below their 100-day moving average as the trend remains to the downside. I think prices are bouncing off major support, as I will not take a short position. I've talked about in many previous blogs the downside is very limited as we are squeezing blood out of a turnip, in my opinion. The volatility will certainly start to increase as we start to enter the winter months with the next level of resistance at the 110 area, and if that is broken, that would tell me that the bottom is in place, so stay long.
CHART STRUCTURE: EXCELLENT
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Sugar futures in the March contract settled last Friday in New York at 14.36 a pound while currently trading at 14.89 higher by around 50 points for the trading week ending on a positive note.
I have been recommending a bullish position from around the 14.65 level, and if you took that trade, continue to place the stop loss under the 10-day low standing at 13.94 as the chart structure is excellent. Fundamentally speaking, prices have trended higher over the past six weeks up to 8-1/4 month highs Tuesday on concern that Brazil's dry conditions may curb sugarcane yields and reduce Brazil's sugar production. Irregular rain in Brazil's sugar-growing areas is keeping soil moisture levels below normal. Last Monday's data from Somar Meteorologia showed that Minas Gerais, Brazil's largest arabica coffee-growing region received 18.9 mm of rain last week or only 62% of the historical average.
Prices are trading above their 20 and 100-day moving average as this trend is strong to the upside and by far the strongest trend out of the entire soft commodity sector, however for the bullish momentum to continue, prices have to break the November 3rd high of 15.23 in my opinion. I think that situation could happen next week, so stay long as I still think the 20 level could be touched in the coming months ahead, especially if poor weather conditions persist.
CHART STRUCTURE: SOLID
Soybean meal Futures
Soybean meal futures in the December contract settled last Friday in Chicago at 378 a ton while currently trading at 383, continuing its bullish momentum even though prices are ending on a sour note down over $5 for the session.
Traders are awaiting next week's crop report as the U.S soybean crop in 2020 continues to get smaller; therefore, carryover levels are continuing to tighten as the picture for this commodity remains bullish. I have been recommending a bullish position over the last couple of months from around the 299 level, and you took that trade continue to place the stop loss under the 2 week low on a hard basis only at 371 as this trend has been remarkable to the upside.
This is my only grain recommendation as I was stopped out of wheat and soybeans last week as both of those commodities had hit a 2 week low and then have continued their bullish momentum. The commodity markets in general for 2021 look to trade much higher in my opinion as massive stimulus packages coupled with the fact that the tax cuts will remain for at least 2 years are both very bullish factors going forward, so stay long.
CHART STRUCTURE: SOLID
Live Cattle Futures
Cattle futures in the December contract settled last Friday in Chicago at 108.30 while currently trading at 108.80, up slightly for the trading week as prices are right near a 3 week high.
I do not have any livestock recommendations; however, I do have a bullish bias towards cattle. I will be looking at a possible bullish position in the coming weeks ahead. However, the chart structure is terrible at the current time as prices have rallied over 600 points over the last week or so. The commodity markets, in general, look bullish across the board, and I still think prices historically speaking look cheap. I will not initiate a short position as prices are now trading above their 20 and 100-day moving average as the trend is higher to mixed.
Massive stimulus packages should be initiated in the next couple of months, coupled with the fact that the Trump Administration tax cuts will stay in place for at least two more years, which is bullish for all asset classes, including cattle. I do not believe the 114 level will be the contract high, so sit on the sidelines and wait for the risk/reward to be in your favor as it still could take a couple of more weeks.
TREND: MIXED - HIGHER
CHART STRUCTURE: POOR
What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market allowing you to place a stop loss relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure as I like to place my stops at 10-day highs or 10-day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loss.
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