Futures: All Eyes On This Week's Crop Report

Cotton

Cotton futures in the May contract settled last Friday in New York at 84.68 while ending the week on a positive note up 145 points, breaking a 7-day losing streak currently at 79.89, down nearly 500 points for the week as prices hit a 3 month low.

I have been recommending a bullish position from the 79.00 level, and if you took that trade, continue to place the stop loss below the September 29 low of 66.28 as an exit strategy. This is a high-risk trade as the volatility remains incredibly high as that situation is not going to change anytime soon, especially as we enter the summer season.

Cotton prices are trading below their 20 and 100-day moving average as this recommendation was a counter-trend trade. I believe prices have become too cheap as we topped out on February 25 at 95.68, dropping about 1,800 points in a matter of weeks from today's low. The commodity markets have run into trouble over the last several weeks because U.S. treasuries have hit a 1 year high in yields, pushing the U.S dollar higher, which are two bearish fundamental factors.

I remain bullish across the board. I believe this is just a retracement in a giant secular bullish trend that should continue due to massive quantitative easing from the U.S. government. Traders are keeping a close eye on next week's crop report, which will show the number of acres planted in the United States as that will certainly dictate short-term price action.

TREND: MIXED - LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGHOW

Coffee

Coffee futures in the May contract is ending the week on a positive note, up 225 points or 1.78% at 128.85 after settling last Friday in New York at 129.00, basically unchanged for the week bouncing off major support around the 125 level as I think prices look very cheap. Continue reading "Futures: All Eyes On This Week's Crop Report"

Will Valentine's Day Spoil Cocoa Futures?

Cocoa Futures

Cocoa futures in the May contract settled last Friday in New York at 2472 while currently trading at 2450, down slightly for the week still stuck in an 8-week consolidation pattern looking to break out on some from fresh fundamental news.

Fundamentally speaking, the concern that global cocoa demand will remain weak despite the Ivory Coast government's action to cut prices to boost sales.

Global chocolate demand concerns are negative for cocoa prices. Concerns have increased that Valentine's Day chocolate sales could fall from last year as tighter social distancing rules from the Covid pandemic delay a recovery in chocolate demand.

Cocoa prices are trading slightly below their 20 and 100-day moving average as the trend has turned to the downside. I think prices are just digesting the massive run up in price that we witnessed in November. Cocoa and coffee are the weakest commodities unable to join the rest of the agricultural markets to the upside, so be patient and wait for a trend to develop as trading in a choppy market is extremely difficult over time, so sit on the sidelines.

TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

S&P 500 Futures

The S&P 500 in the March contract is currently trading lower by 4 points at 3908 after settling last Friday in Chicago at 3880, continuing its bullish momentum. This is a strong demand market as investors continue to put money into the entire equity market, especially the Nasdaq-100, which is at an all-time high once again. Continue reading "Will Valentine's Day Spoil Cocoa Futures?"

Will The Futures Market Heat Up?

Natural Gas Futures

Natural gas futures in the March contract are currently trading at 2.44 after settling last Friday at 2.69 continuing its bearish momentum. Forecasts for warmer U.S. weather will curb heating demand for nat-gas continue to weigh on nat-gas prices.

On Thursday, the Weather Commodity Group said that the U.S. South and Midwest should see higher-than-normal temperatures predominantly over the next 2 weeks and that prior forecasts for a polar vortex in the Arctic to drop down into the U.S. later this month is not going to materialize. I'm not involved as I keep a close eye on a possible counter-trend trade. I think the spike bottom, which was created on December 28th around the 2.26 level, will hold as a possible Head Shoulders bottom pattern could be forming, in my opinion.

Natural gas prices are trading below their 20 and 100-day moving average as this trend remains lower to choppy. Still, I think this commodity will join the rest of the energy sector to the upside; it's just a matter of when the risk/reward will become more in your favor, especially if cheaper prices come about, so be patient and sit on the sidelines.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Copper Futures

Copper futures in the March contract is currently trading lower by 260 points at 3.6215 a pound after settling last Friday in New York at 3.6020, up about 200 points for the week still stuck in a tight 6-week consolidation pattern. Continue reading "Will The Futures Market Heat Up?"

Futures Market Continues To Push Higher

Silver Futures

Silver futures in the March contract settled last Friday in New York at 24.09 an ounce while currently trading at 26.10 up over $2 for the trading week as prices have now hit a 3 month high and will look to test the $30 level in the coming weeks ahead.

If you have been following my previous blogs, you understand that I have been keeping a close eye on silver as I think sharply higher prices are ahead as I have now been recommending a bullish position from around the 26.05 level. If you took that trade, continue to place the stop loss under the 10-day low standing around the 24.30 level as an exit strategy as the volatility will increase tremendously in the coming weeks ahead.

The entire precious metals sector looks to move higher as the U.S. dollar has now hit a fresh two-year low. That trend is getting stronger to the downside weekly because the United States government continues to print money at an unprecedented rate. That is an extremely bullish fundamental factor towards silver and the entire commodity market as a whole.

I believe the $30 level will be breached in the coming weeks ahead. I still believe the $50 level, which is the all-time high, will be tested as extremely low-interest rates coupled with the fact that the U.S government wants asset classes to rise, which means you trade with the path of least resistance and that currently is to the upside as I see no reason to be short.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Natural Gas Futures

Natural gas futures in the January contract settled last Friday in New York at 2.59 while currently trading at 2.70, up slightly for the trading week. It looks to me that a bottom finally has been formed as we enter the highly volatile winter months. Continue reading "Futures Market Continues To Push Higher"

S&P 500 Futures Point To Higher Prices

S&P 500 Futures

The S&P 500 futures in the December contract is currently trading lower by 17 points at 3651, rallying off session lows as prices hit a one-week low.

If you have been following my previous blogs, you understand that I believe higher prices will continue, and if you are long a futures contract, I would continue to place the stop loss under the 10-day low standing at 3592 as an exit strategy. However, tomorrow it will be raised to 3626 as the chart structure will turn outstanding; therefore, the monetary risk would be relatively low for such a historically volatile commodity.

The S&P 500 is still trading above its 20 and 100-day moving average. This trend remains higher despite the recent setback over the last couple of days blamed on profit-taking and overbought trading conditions as I still think higher prices are ahead. Money flows continue to enter the equity market as the IPO phenomenon continues as several tech companies have come about doubling or even tripling on their 1st day of trading. There is still a lot of pent-up demand, especially going into 2021 when the coronavirus vaccine will start to be distributed. I see no reason to be short stocks as trading with the path of least resistance is the most successful way to trade over time.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Silver Futures

Silver futures in the March contract settled last Friday in New York at 24.25 an ounce while currently trading at 24.10 down slightly for the trading week still stuck in a tight 11-week consolidation pattern looking for some fresh news to push prices higher.

I'm sitting on the sidelines as I'm a trend trader and try to avoid choppy markets, and that's exactly what we are experiencing. I will still be recommending a bullish position if prices close above the critical 25.71 level, which could happen in the coming weeks as I still think historically speaking, silver looks cheap. Continue reading "S&P 500 Futures Point To Higher Prices"