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July 4, 2015

Futures Market Recap Week Ending July 3

INO.com  

Gold Futures

Gold futures in the August contract settled last Friday at 1,173 an ounce while currently trading at 1,163 as I’ve been recommending a short position when prices broke the 1,170 level while placing your stop loss above the 10 day high which stands at 1,201 risking around $31 or $1,000 per mini contract plus slippage and commission. Gold futures are trading below their 20 and 100 day moving average breaking out to a 3 ½ month low as a possible retest of the contract low of 1,144 is in the cards in my opinion as I was recommending a short position a month ago getting stopped out so here I’m trying again to the downside as I’m a trend follower and the trend clearly in my opinion is lower.

Gold prices have been very weak despite a possible Greece exit while as I remain very pessimistic as I see no reason to own gold at the current time as the stock market still looks strong and if Greece cannot rally gold I don’t know what can so take advantage of any rallies as the chart structure will start to improve in the next couple of days as the stop will be lowered to 1,187 as the long-term downtrend line is also intact. As a trader you must forget about your previous trade’s winners or losers and stick with your trading system as sticking to the rules over the course of time is the way to go instead of constantly flip-flopping.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Silver Futures

Silver futures in the September contract settled last Friday in New York at 15.77 an ounce while currently trading at 15.70 in a very nonvolatile shortened trading week as I’ve been recommending a short position when prices broke 15.80 and if you took that trade continue to place your stop above the 10 day high which stands at 16.26 risking around $560 per mini contract plus slippage and commission as the chart structure is very solid at the current time.

Silver futures are right at a four month low trading below their 20 and 100 day moving average telling you that the trend is to the downside as the chart structure will improve next week and will be lowered in Tuesdays trade to 16.04 so be patient as the monthly unemployment number was released today basically pretty neutral sending gold slightly lower and having very little impact on silver prices as the volatility has slowed down tremendously. Silver prices generally are one of the most volatile commodities in the world, however in recent months has been very quiet but something will happen in this market as I’m hoping it’s to the downside as I see no reason to own the precious metals at the current time as I still do believe all of the interest lies in the S&P 500 as money flows will continue to flow out of the precious metals and put into the stock market in my opinion.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Crude Oil Futures

Crude oil futures in the August contract are up $.25 this Thursday afternoon in New York as this is the last trading day of the week due to the Fourth of July holiday currently trading at 57.22 a barrel while settling last Friday at 59.63 hitting a 10 week low as I’ve been recommending a short position for over a month and if you took that trade you’ve been very patient as prices have gone nowhere except for yesterday’s trade finishing down over $2 so continue to place your stop above the 10 day high which stands at 61.57 as the chart structure will start to improve next week as well.

Crude oil prices are right at major support as the $57 level is critical in my opinion and if prices do break that I think we could head much lower so continue to play this to the downside as large supplies continue to put pressure on this market as a build in crude oil inventories surprised the market yesterday as the U.S dollar also remains stubbornly strong. Currently we are in the strong demand season for gasoline as many drivers will be on the road this weekend, however the trend is your friend and the trend no matter how stubborn it has been in recent weeks is to the downside in my opinion as I remain bearish.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Live Cattle Futures

Live cattle futures in the December contract settled last Friday in Chicago at 152.25 while currently trading at 154.50 up over 200 points for the trading week with high volatility as in Wednesdays trade prices went limit up which means the market went up 300 points and on Tuesday the market was down 200 points as traders continue to keep an eye on corn prices which have moved up dramatically this week hitting a six-month high which generally puts pressure on the live cattle market. Cattle prices are retesting their downtrend line as I’ve been recommending a short position when prices broke 153 & if you took that trade continue to place your stop loss above the 10 day high which currently stands at 156.17 as tomorrow the market is closed due to the Fourth of July weekend so we should see high volatility come Monday’s trade.

The chart structure in this market will start to improve later next week lowering monetary risk as the head and shoulders top is still intact in my opinion, however the volatility is extremely high so make sure you place the proper amount of contracts risking 2% of your account balance on any given trade as the next major level of support is this week’s low around 151.60 & if that level is broken I think the bear market is underway so continue to play by the rules.

TREND: LOWER

CHART STRUCTURE:EXCELLENT


Sugar Futures

Sugar futures in the October contract settled last Friday in New York at 11.95 a pound currently trading at 12.56 up about 60 points for the trading week hitting a 3 week high as I was recommending a short position for quite some time getting stopped out at the 10 day high in Monday’s trade around 12.17 as the trend is now mixed as now I remain neutral. Sugar futures are trading above their 20 day but below their 100 day moving average as harvest is underway in Brazil as a seasonal low could be in place; however my criteria to enter into a trade must be a four week high with solid chart structure so I’m sitting on the sidelines waiting for another breakout to occur.

The fundamentals in sugar have been bearish for several years as over production has kept prices on the defensive but when prices hit a two week high and I’m short it’s time to move on as everybody must have an exit strategy as holding on and never getting out is a very dangerous strategy in my opinion so move on and look at another market that’s beginning to trend as many of the commodity markets remain choppy.

TREND: MIXED

CHART STRUCTURE: SOLID

Corn Futures

Corn futures in the December contract settled last Friday in Chicago at 4.02 a bushel while currently trading at 4.38 retesting highs we haven’t seen since December 2014 as prices have rallied around 75 cents in the last two weeks or about 20% in an amazing move due to the fact of less acres planted and lower production numbers due to extremely cold and wet weather in the Midwestern part of the United States which seems to be relentless at this time. I am currently sitting on the sidelines in this market as the chart structure is terrible at the current time as the risk does not meet my criteria, however I am also recommending producers to start to piecemeal some of their crop as a hedge around 4.25/450 level as many times in the past July is the peak price due to weather so take advantage of this gift in my opinion.

Corn prices are trading above their 20 and 100 day moving average rallying about $.75 trading higher 8 out of the last 9 trading sessions as volatility is here to stay as production numbers seem to be getting lowered on a daily basis due to the less acres and poor quality especially in the states of Missouri, Kansas and Iowa due to wet conditions. Soybean prices were also sharply higher this week up 60 cents on the USDA crop report helping push corn prices higher as well as the trend in the short-term is higher as we are closed this Friday so Monday’s trade will show extreme volatility due to the long weekend and if you’re starting to get involved in this market make sure you respect volatility as a $.20 move could happen on a daily basis but this market is too rich for my blood as I need tight chart structure and I probably will not be involved in the corn market for at least a month.

TREND: HIGHER

CHART STRUCTURE: TERRIBLE

Lean Hog Futures

Lean hog futures in the December contract settled last Friday in Chicago at 61.22 while currently trading at 63.00 up around 180 points for the trading week as I’ve been recommending a short position from around the 69.00 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 64.32 as we were almost stopped out in Tuesday’s trade as the chart structure is outstanding at the current time. Hog prices are still trading far below their 20 and 100 day moving average as I believe this week’s rally was a relief rally due to oversold conditions as I still do believe with expansion occurring especially in the December contract that will continue to pressure prices, however we are an eyelash away from getting stopped out and if we are stopped out move on and look at other markets that are trending.

The volatility in the hog market is very high at the current time with large price swings as prices almost retraced 50% from the recent high to low as I still think the downtrend remains intact as we are closed tomorrow and reopen come Monday morning. Cattle and hogs are experiencing large price swings in recent weeks and I think that will continue as the high demand for meat over the Fourth of July weekend generally peaks sending prices lower but only time will tell to see if the seasonality factor comes into play once again.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

Coffee Futures

Coffee futures in the September contract are hitting a four week low continuing its grinding bearish trend settling last Friday at 133.45 a pound while currently trading at 127.25 down 600 points for the trading week looking to break the contract low of 126.30 as I’ve been sitting on the sidelines in this market for several months as the trend is lower to neutral at the current time.

As I’ve stated in previous blogs I think coffee is forming a bottoming pattern and if I was a producer I think prices are cheap enough to start accumulating, however as a speculator I see no reason to enter into this market at the current time. Coffee futures are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside, however the 10 day high as over 1000 points away risking about $4,000 from today’s price levels as that does not meet my criteria to enter into a trade so I remain neutral on this as I think the downside is limited in my opinion. Many of the agricultural markets have rallied including sugar which is also grown in Brazil but we have large supplies of coffee at the current time as I don’t see any large price movement here in the short-term as volatility remains relatively low especially for such a historically volatile commodity.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Wheat Futures

Wheat futures in the December contract settled last Friday at 5.76 while settling this Thursday in Chicago at 5.99 a bushel continuing its short-term bullish momentum as prices have rallied substantially in the last couple weeks and traded as high as 6.24 in Tuesday’s trade. I’m currently sitting on the sidelines in this market as the chart structure is terrible at the current time as the risk is far too high for me to be involved as I’m also stressing investors to avoid this market as every day is up or down $.20 as volatility is as high as I can remember as prices have rallied over $1 in two weeks due to poor quality wheat as weather conditions have hampered the crop.

Wheat prices were extremely choppy over the last six months as the true breakout was over 5.65, however the 10 day low was at 5.05 so I decided not to take the trade as I’m going to probably sit on the sidelines for at least a month and look for other markets with less risk. Weather in the Great Plains has been very wet and cold sending all grain prices sharply higher in the last couple of weeks as this is becoming a day trader market with huge volatility on a daily basis with price swings of $.20 and $.30 daily but I’m not a day trader but a position trader as volatility will remain high for the rest of the month of July and especially come Monday due to the long holiday weekend.

Wheat prices are trading far above their 20 and 100 day moving average and as a trader sometimes you will miss certain markets as I have missed the grain market to the upside but it’s all about risk/reward and I don’t see this in my favor at the current time. If you’re bearish wheat prices my recommendation would be to sell at today’s price while placing your stop above Tuesday’s high of 6.24 risking about $.25 or $1,300 per contract plus slippage and commission as a bearish trading strategy.

TREND: HIGHER

CHART STRUCTURE: TERRIBLE

Trading Theory

What Does Risk Management Mean To You? I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from. For example if a customer has $100,000 account in my opinion on any given trade he or she should risk 2% – 3% of the account value meaning if you are wrong the worst-case scenario is still a $97,000 remaining balance, however what I always see is traders risking ridiculous amounts of money and instead of the 3% stop loss will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar account could dwindle down to nothing very quickly and I’ve seen it many times throughout my career.

What many traders forget to realize is they might have 4 or 5 commodity positions on and if you have too many contracts on all at the same time and all of those trades go against you which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from and your still in the game.

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.

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

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters. © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle


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Item Reviewed: Futures Market Recap Week Ending July 3 Rating: 5 Reviewed By: EconMatters