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June 14, 2015

Futures Market Recap Week Ending June 12

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Crude Oil Futures


Crude oil futures in the July contract are trading lower for the 2nd consecutive day trading at 59.90 a barrel down over $.90 this Friday afternoon in New York after settling last week at 59.13 up slightly for the trading week. Oil futures have been in a trading range between $57 – $62 over the last month as I’ve been recommending a short position when prices broke the $58 level and if you took that trade continue to place your stop on a closing basis at 61.75 as we were almost stopped out in Wednesdays trade as we’re still hanging in there by the skin of our teeth.

Crude Oil futures are now trading above their 20 and 100 day moving average telling you that the short-term trend is to the upside; however when I took this trade the trend was to the downside as I continue to place my stop at the 10 day high. The volatility in recent weeks has been extremely high and I think that will continue as investors are now focused on Rig counts coupled with so many daily reports coming out on supplies sending high volatility into this market so make sure that you risk 2% of your account balance using the proper amount of contracts as over trading is the kiss of death in my opinion.

If you took the original trade the risk was around $1,800 per mini contract plus slippage and commission as this trade has been very stubborn but we are still involved so let’s what Monday’s trade brings as I remain short.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

Gold Futures

Gold futures in the August contract are down $2 this Friday afternoon in New York currently trading at 1,178 an ounce slightly lower for the 2nd consecutive trading session after settling last Friday at 1,169 up slightly for the trading week as I have been recommending a short position while placing your stop loss at the 10 day high which now stands at 1,195 risking around $18 or $650 per mini contract plus slippage and commission. Gold futures are still trading below their 20 and 100 day moving average telling you that the trend is to the downside as the risk/reward is in your favor in my opinion as the chart structure is outstanding, but if you did not take the original trade I would still sell even at today’s price levels.

The precious metals as a whole look very weak in my opinion as a strong U.S dollar and rising U.S interest rates are continuing to pressure these commodities in my opinion as the next level of major support is at 1,160 & if that is broken I think you can see the start of a bear market as all the interest lies in the S&P 500 at the current time which is trading right near an all-time high as investors just don’t see any fundamental reason to own gold despite all the craziness throughout the world.

Volatility in the gold market has been relatively quiet and that is why the chart structure is outstanding as prices really haven’t gone anywhere in the last couple weeks but I still believe that the path of least resistance is to the downside.

TREND: LOWER

CHART STRUCTURE: OUTSTANDING

Silver Futures

Silver futures in the July contract settled last Friday at 15.80 an ounce while currently trading at 15.87 hitting an 8 week low right near critical support in my opinion as I do believe if 15.40 is broken this market turns extremely bearish, however prices have rallied off that level many times so be patient and wait for the true breakout to occur as I’m sitting on the sidelines at the current time.

Silver futures are trading below their 20 and 100 day moving average telling you that the trend is to the downside, however the 10 day high is too far away to enter as it does not meet my risk criteria so be patient and wait for the chart pattern to improve while keeping a close eye on 15.40 because if that’s broken I think prices could head substantially lower as I don’t see any reason to own the precious metals at the current time as I’m recommending a short position in gold.

The problem with the precious metals is the fact that U.S interest rates are on the rise coupled with the fact of a strong U.S dollar as all the interest remains in the stock market which is still right near an all-time high as I think lower prices are ahead.

TREND: LOWER

CHART STRUCTURE: POOR

Orange Juice Futures

Orange juice futures in the September contract settled last Friday at 119.15 while currently trading at 124.80 higher on speculation that greening disease could lower production pushing prices sharply higher breaking out of a consolidation, however I’m sitting on the sidelines due to the fact that the chart structure is rather poor as the 10 day low is at 112 which is too far away as the monetary risk is too high at this time.

I want traders to keep an eye on this market as the chart structure will start to improve next week as it certainly looks like prices have bottomed in my opinion as I have traded orange juice many times this year all of them to the downside so this will be my first bullish recommendation in quite some time because as a trend follower you must be able to go with the path of least resistance as it certainly looks like a double bottom was created around the 110 level.

Orange juice prices can be extremely volatile as the summer season is usually rather quiet compared to the winter season when you can experience a frost in the state of Florida sending prices sharply higher, however you must respect this market as it can have violent price swings so make sure you place the proper amount of contracts always risking 2% of your account balance on any given trade.

TREND: HIGHER

CHART STRUCTURE: POOR

Soybean Futures

Soybean futures in the November contract are trading below its 20 and 100 day moving average after settling last Friday in Chicago at 9.14 while currently trading at 9.06 down slightly for the trading week as I was recommending a short position for the last month or so getting stopped out earlier in the week at the 10 day high as I’m currently sitting on the sidelines but I do believe prices are still headed lower. As I write this article in the state of Illinois we are raining once again as the crop is a little bit behind schedule but I do believe we will produce a very solid crop especially if this ideal weather continues as traders are keeping a close eye on the June 30th acres report which will definitely send high volatility into this market.

The USDA announced carryover levels for the new crop which currently stands at 475 million bushels which was reduced by 25 million but in line with estimates as weather is the main concern as we await Monday’s crop progress report showing how much crop has been planted as last week we stood at 80% which was disappointing sending prices above 9.30 before profit-taking ensued.

If this market breaks below the 8.97 level I will recommend a short position while placing my stop at the 10 day high so we will see what Monday’s trade brings.

TREND: MIXED

CHART STRUCTURE:SOLID

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

Sugar Futures

Sugar futures in the July contract settled last Friday at 12.05 a pound while currently trading at 11.69 hitting a 6 year week low this week continuing its bearish momentum to the downside as I’ve been recommending a short position from around 12.00 and if you took that trade place your stop loss above 12.50 which is the 10 day high, however the chart structure will be lowered later next week minimizing monetary risk.

Sugar futures are trading far below their 20 and 100 day moving average as the long-term trend is certainly intact as well so take advantage of any price rally as the chart structure and risk/reward are in your favor as nobody knows how low prices can actually trade as heavy volume has entered this market during the week which tells me that this move to the downside is real.

Many of the commodity markets have turned weak once again due to rising U.S interest rates and a strong U.S dollar as I see very little fresh fundamental news to push prices higher except possible short covering as the path of least resistance is still to the downside as that’s the way you want to trade in my opinion while maintaining the proper risk management.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

Cotton Futures

Cotton futures in the December contract are trading below their 20 and right at their 100 day moving average settling last Friday in New York at 64.55 while currently trading at 64.45 basically unchanged for the trading week as this has been one of the choppiness markets I can remember in a long time as I have not traded cotton in over four or five months and if you look at the daily chart it’s absolutely terrible in my opinion.

As I’ve talked about in many previous blogs I definitely stress the fact to avoid markets like this because they are extremely difficult to trade successfully in my opinion as what we are looking for are trends and there is no trend in cotton at the current time despite the fact that we will not produce a record here in the United States but the problem is worldwide supplies are very large keeping a lid on prices in 2015.

Cotton prices are entering the extremely volatile summer season as weather concerns can push prices rather quickly, however at the current time weather conditions are solid at the current time as the 7/10 day forecast shows adequate rain with normal temperatures as I don’t think I will be involved in this market for quite some time until the chart structure improves.

TREND: MIXED

CHART STRUCTURE: TERRIBLE - AVOID

Coffee Futures

Coffee futures in the December contract settled last Friday at 140.90 while currently trading at 137.50 lower for the 3rd consecutive trading session now trading below its 20 and 100 day moving average telling you that the short-term trend is to the downside. I am currently sitting on the sidelines in this market as the trend remains extremely choppy in my opinion, however there is a price gap at 133-135 and I think that will be closed come next week as a possible retest of the contract low around 130 in the cards but avoid choppy markets and look at markets that are beginning to trend.

Coffee prices have been under pressure over the last 6 months due to the fact that the Brazilian Real is historically low versus the U.S dollar and that’s putting pressure on anything that’s grown in the country of Brazil coupled with the fact that excellent production put ample supplies onto the market as I don’t see any fresh fundamental news to dictate short-term price action so look for that price gap to be filled and then possibly testing the contract low next week.

TREND: LOWER

CHART STRUCTURE: POOR

Corn Futures

Corn futures in the December contract which will be harvested this October settled last Friday in Chicago at 3.78 a bushel while currently trading at 3.71 down for the 3rd consecutive trading session as I was recommending a short position in corn for the last couple of months getting stopped out earlier in the week as prices hit a 2 week high so currently I’m sitting on the sidelines frustrated as I think lower prices are still ahead but you must have an exit strategy just in case.

Traders are awaiting the June 30th crop report which will send high volatility and price direction into this market as we are off to a solid growing season in my opinion & as I write this article in the state of Illinois we are raining once again with outstanding weather but the question is did they get 100% planted as Missouri and Kansas still remain very wet.

Traders reacted negatively to this week’s USDA crop report sending prices down about 7 cents in Wednesdays trade as oversupply issues are still the problem which has kept a lid on prices over the last year or so as weather conditions for the next 7/10 days remain ideal with mild temperatures just like we experienced in 2014 when we had another record crop, however with less acres planted this year we are looking around 500 million bushels less then what was produced in 2014.

Volatility in corn certainly will increase as we enter the hot & dry season as we could be entering into a new position in this market soon so keep a close eye as the chart structure remains outstanding.

TREND: MIXED

CHART STRUCTURE: EXCELLENT

Lean Hog Futures

Lean hog futures in the December contract are sharply lower currently down 100 points at 65.20 hitting a 10 week low as I’ve been recommending a short position from 69.00 & if you took that trade continue to place your stop loss above the 10 day high which currently stands at 69.80 which is over 380 points away due to the fact that prices continue to move sharply lower on a daily basis as the chart structure is terrible at the current time.

Hog prices settled last Friday at 67.20 while currently trading around 200 points lower for the trading week as supplies in my opinion will become overwhelming in the latter half of 2015 which now is currently being reflected into the price, however if you have not entered this trade don’t because the risk/reward is not your favor so you’re going to have to sit on the sidelines and wait for some type price rally as I do believe we will test the contract low hit three months ago around 61.50 in the coming weeks so remain short in my opinion and be patient as more gains could be ahead.

Hog prices are trading far below their 20 and 100 day moving average topping out around the 70 level as the chart structure was outstanding at that time and that was the main reason for the original trade recommendation.

TREND: LOWER

CHART STRUCTURE: TERRIBLE

Wheat Futures

Wheat futures in the December contract settled last Friday in Chicago at 5.33 a bushel while trading at 5.30 slightly lower for the trading week with high volatility as prices are trading below their 20 and 100 day moving average, however I have been sitting on the sidelines in this market as prices have been extremely choppy as I continue to stress avoiding this market at the current time.

The chart structure in this market is absolutely terrible with huge price swings up and down with weak demand pushing prices lower this week but concerns about quality sending prices sharply higher as on Wednesday wheat traded as high as 5.57 a bushel looking breakout unable to cross the critical 5.65 level. In my opinion I think you have to be patient with this trade and wait for a tighter chart structure to develop with less volatility therefore allowing you to place a tight stop therefore reducing monetary risk as we enter the highly volatile summer season.

Corn Prices are continuing their bearish trend and I think that’s also pushing wheat prices lower here in the short-term, but this market remains too choppy and it does not meet my criteria to enter into a trade.

TREND: MIXED

CHART STRUCTURE: TERRIBLE

Trading Theory

This rule is extremely important and I witness it being abused constantly creating tremendous loses that are sometimes difficult to come back from. Never add to a losing position because if the position continues to go against you and now you have added even more contracts which are all losing money your account will suffer loses much more than 2% and in some case adding positions and never getting out of a losing trade has wiped peoples trading accounts down to zero because of 1 or 2 bad trades. Remember always play for another day you will have losing trades and the good traders manage losses and move on to the next possible trade.

Courtesy Michael Seery at www.seeryfutures.com via INO.com  


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Item Reviewed: Futures Market Recap Week Ending June 12 Rating: 5 Reviewed By: EconMatters