Futures Market Trending Higher

Natural Gas Futures

Natural Gas futures in the June contract is currently trading higher by 3 points at 2.94 as prices are right near a two-month high, continuing its bullish momentum in this week's trade.

I have been recommending a bullish position initially in the May contract at the 2.66 level. If you took that trade, the stop-loss has been raised to the 10-day low, which now stands at 2.73 as an exit strategy as to chart structure will also improve daily; therefore, the monetary risk will be reduced.

Fundamentally speaking, gas prices have underlying support from expectations for increased heating demand for nat-gas after Maxar said below-normal temperatures are expected for the central and eastern U.S. from May 4-8. Strength in foreign demand for U.S. nat-gas supplies is bullish for prices. Gas flows to U.S LNG export terminals on Thursday rose +64% y/y to 11.4 bcf. On Apr 18, gas flows to U.S LNG export terminals climbed to a record 11.921 bcf (data from 2014) according to BNEF.

Gas prices are trading above their 20 and 100-day moving average as this trend remains strong to the upside. I believe the 3.08 level, which was hit on Feb 18, will be breached in the coming days ahead as the entire energy sector remains in a longer-term bullish secular trend. In my opinion, there is room to run to the upside, so stay long as the volatility also should start to escalate in the coming weeks ahead.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Cotton Futures

Cotton futures in the July contract settled last Friday in New York at 88.80 while currently trading at 87.80, down about 100 points for the trading week. However, prices remain in a strong bullish trend to the upside.

I have been recommending a bullish position initially in the May contract from around the 79.00 level while rolling over into the July contract due to expiration, and if you took that trade, continue to place the stop loss under the 10-day low standing at 84.71 on a closing basis only as an exit strategy.

Cotton prices have been following the grain market higher in recent months. I still think there is room to run, and I think prices will be trading over the 100 level come summertime, especially if any adverse weather condition comes about, such as the drought, which we have not experienced since 2012, which tells me we are overdue.

The volatility certainly is going to expand tremendously in the next several months, so make sure that you risk 2% of your account balance on any given trade while maintaining the proper amount of contracts at the same time. Cotton prices are still trading above their 20 and 100-day moving average as the trend remains to the upside, and remember, trading with the path of least resistance is the most successful way to trade over time.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Coffee Futures

Coffee futures in the July contract settled last Friday in New York at 138.50 while currently trading at 142.20, up about 370 points for the week as prices are near a 4 year high, continuing its bullish momentum.

I have been recommending a bullish position from around the 126 level. If you took that trade, continue to place the stop loss under the 2 week low, which stands at 131.10, as an exit strategy on a closing basis only as the chart structure will continue to improve.

Weather conditions in Brazil, which is the largest producer of coffee globally, continue to be a concern because they are not getting adequate rain at this time. If this situation continues, you could see sharply higher coffee prices.

Coffee is trading above its 20 and 100-day moving average, telling you the trend is to the upside as the entire soft commodity sector remains in a bullish trend as I have several bullish recommendations at the current time. The volatility will start to expand to the upside as coffee is one of the most volatile commodities that can experience tremendous price swings daily as historically speaking prices are depressed, so stay long.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Coffee Futures

Sugar futures in the July contract settled last Friday in New York at 16.88 a pound while currently trading at 16.85, basically unchanged as prices are still hovering right near their contract high.

I have been recommending a bullish position from around the 17.10 level while placing the stop loss at 14.57 on a closing basis only as the proper exit strategy. You want to give this trade some room as the volatility certainly is increasing. Sugar prices are trading above their 20 and 100-day moving average as this trend has turned to the upside, breaking out earlier in the week as prices traded as high as 17.79 before profit-taking ensued.

Fundamentally speaking, concerns about reduced global sugar production as dry conditions may curb sugar yields in Brazil after Somar Meteorologia recently said that soil moisture in Brazil's sugar-cane growing regions has been insufficient to provide good development of cane crops. Czarnikow said rain in Brazil's Center-South region from October thru March was 36% below average, the biggest drought in more than a decade.

I also have bullish recommendations in coffee, cotton, and orange juice as I think all commodity sectors will continue to move higher throughout 2021, so stay long.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

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Cocoa Futures

Cocoa futures in the July contract settled last Friday at 2450 while currently trading at 2373 down sharply this Friday afternoon, ending the week on a sour note.

I have been recommending a bullish position from the 25.00 level. If you took that trade, continue to place the stop loss on a closing basis only at 22.51 as an exit strategy as the volatility certainly has come to life over the last couple of weeks.

Cocoa prices hit a 5 week high in yesterday's trade before today's sell-off as now we are trading below the 20 and 100-day moving average as the trend is lower. However, in my opinion, the trend is mixed, but I do believe the risk/reward is in your favor to take a bullish position.

At the current time, all of my recommendations are to the upside as I still think some commodity sectors look cheap, including cocoa. If you are not involved in this market, the monetary risk has been reduced substantially, which now stands at around $1,250 per contract plus slippage and commission, which is more suitable for smaller trading accounts.

TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Rice Futures

Rice futures in the July contract are currently trading at 13.60 after settling last Friday in Chicago at 13.73, down slightly for the trading week experiencing extremely high volatility. That situation is not going to change as we enter the summer months.

I have been recommending a bullish position from around the 13.60 level, and if you took that trade, continue to place the stop loss on a closing basis only at 13.06 as an exit strategy. However, the chart structure will not improve for another 4 trading sessions, so you will have to accept the monetary risk at this time.

Rice prices are still trading above their 20 and 100-day moving average, telling you that the trend is to the upside, with the next major level of resistance at last week's high around 13.80 / 14.00. If that is broken, this market could touch the 15 level as the entire grain sector remains bullish.

I also have a bullish wheat recommendation as all of the quantitative easing that the U.S. Federal Reserve is using coupled with stimulus packages that seem to have no end as that is flooding all asset classes pushing prices higher, and that situation is not going to end in 2021

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Silver Futures

Silver futures in the July contract settled last Friday in New York at 26.11 an ounce while currently trading at 25.88, down about $0.20 for the trading week as prices are still hovering right near a 5 week high. I have been recommending a bullish position from around the 25.85 level, and if you took that trade, continue to place the stop loss at 23.78 on a closing basis only as the exit strategy.

Silver prices are still trading above their 20 and 100-day moving average, telling you that the trend has turned to the upside, with the next major level of resistance standing around the 26.50 level. Suppose you have been following any of my previous blogs. In that case, you understand that I do not believe the $30 level will hold as this commodity is in the beginning of a longer-term secular bullish trend, in my opinion.

The volatility will start to explode in the summer months as we will start to see tremendous price swings daily, and if you are trading a smaller account, you can take advantage of the mini contract, which is 1,000 ounces versus the 5,000-ounce contract.

If you are a long-term investor, I would buy at today's price level as you have to remember inflation is already at hand in many different commodity sectors, especially the housing market. It's going to bleed into all other sectors as 12 months from now, and I firmly believe higher prices will be ahead.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Platinum Futures

Platinum futures in the July contract is trading higher by $5 at 1,202 an ounce and traded as low as 1,178 earlier in the trading week as prices have been stuck in a relatively quiet consolidation over the last couple of months.

Suppose you take a look at the daily chart. In that case, the uptrend line remains intact as I remain bullish on this commodity as I'm looking for a little further sell-off before entering into a bullish position as the monetary risk would also be reduced.

I have a bullish silver recommendation as I think the whole sector continues to move higher as today is blamed on a quiet trading session. Platinum prices are trading above their 20 and 100-day moving average. The trend is to the upside as the 10-year note hit the 1.70% level today as that is a fundamental bearish factor towards higher prices as many sectors were lower in today's trade. In my opinion, I do not believe the February 16th high of 1,351 will be the top and 2021 as I still see much higher prices ahead, so be nimble and look to be a buyer soon.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

What Does An Inverted Market Mean? It's when a futures market where the nearer month contracts are more expensive than the distant months' contracts as an inverted market occurs during periods of shortages.

Typically, the further months are more expensive because the goods have the additional costs of insurance, storage, and interest costs incurred in borrowing funds to hold the commodities.

Take a look at what has developed in crude oil prices over the last month, with the October contract higher than all the back months due to demand.

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
[email protected]

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.

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