728x90 AdSpace

Latest News
December 19, 2015

Futures Market Recap Week Ending Dec. 18

INO.com
Crude Oil Futures

Crude oil futures in the January contract settled last Friday in New York at 36.62 a barrel while currently trading at 34.88 down slightly for the trading week continuing its bearish trend as I was recommending a short position in heating oil offsetting that position last Monday as I’m currently sitting on the sidelines in the energy complex. At the current time crude oil prices are trading far below their 20 and 100 day moving average as this market seems to be headed lower in my opinion, but I am a little concerned that everybody is extremely bearish and generally when everybody’s on one side of the boat that can be a dangerous indicator in my opinion. The commodity markets in general look very weak as there is the possibility in my opinion that prices can trade down to $25 as OPEC not only did not cut production they increased production as they are playing chicken with world production trying to push prices lower sending many other countries including the United States out of producing oil as Saudi Arabia can still be profitable even if these lower levels as many other countries cannot as they will have to slow down production. If you have not been involved in crude oil look at other markets that are beginning to trend as clearly you missed the boat but I’m not certainly recommending any type of bullish position as I do think prices are going lower as the trend is your friend and this trend is getting stronger on a weekly and monthly basis

TREND: LOWER

CHART STRUCTURE: POOR

Gold Futures

Gold futures in the February contract settled last Friday in New York at 1,075 an ounce while currently trading at 1,065 up $16 this Friday afternoon reversing some sharp losses in Thursdays trade as the stock market is sharply lower for the 2nd consecutive day sending the shorts covering. Gold futures are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as a possible double bottom may have been formed around the 1,050 level as high volatility certainly has entered the precious metals at the current time, as my only recommendation is still in silver but I’m certainly not bullish gold prices. The U.S dollar was sharply higher in Thursday’s trade reversing this afternoon down about 50 points as Japan did not do as much quantitative easing as thought sending the Japanese Yen sharply higher, however I’m still bearish the commodity sector as one day does not make a trend. At the current time I’m sitting on the sidelines in this market as gold prices have gone nowhere over the last six weeks as I don’t like to trade choppy markets as its extremely difficult to trade successfully as I want to look at trends right now and this trend is sideways to lower at this point. In my opinion I think there’s a high probability that gold prices break 1,000 in the next 6 to 8 weeks as the stock market will rebound eventually as it’s still feeling the effects of the interest rate hike but eventually I see no reason to own gold especially with even higher interest rates coming in 2016.

TREND: MIXED

CHART STRUCTURE: SOLID

Silver Futures

Silver futures in the March contract settled last Friday in New York at 13.88 an ounce while currently trading at 14.15 up slightly for the trading week with the last 3 trading sessions experiencing a $.40 move higher or lower with extreme volatility. I have been recommending a short position from around the 14.20 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 14.64, however the chart structure will improve in Monday’s trade therefore lowering monetary risk as prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside. Volatility in the commodity markets has been very intense in recent weeks as many of the commodity are sharply higher today reversing yesterday’s losses as I’m currently recommending a short position in many sectors, but today was just one of those days in my opinion so make sure you place the proper stop loss risking 2% of your account balance on any given trade. Gold prices are up $19 today as I think that’s just a kickback due to oversold conditions so remain short in silver as I still see no reason to own commodities at the current time as demand is very weak. The next major level of support is the contract low around 13.60 as that will have to be broken to resume the bearish trend as the entire precious metals sector is sharply higher in today’s trade.

TREND: LOWER

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

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.

Cattle Futures

Cattle futures in the February contract are up 300 points which is concerned limit up in today’s trading action currently at 125.52 as I’ve been recommending a short position from 133.20 and if you took that trade continue to place your stop loss at the 10 day high which stands at 128.90 as traders are awaiting the highly anticipated cattle on feed report which comes out this afternoon after the closing bell. Prices are trading far below their 20 and 100 day moving average as I’ve been very pessimistic the commodity markets and the livestock market as a whole as I’m currently short cattle and hogs as I don’t think a bottom has been created, but I can’t understand what was created in today’s trade with a limit up before the report, but it’s one day and that does not make a trend. If you have not taken the cattle trade over the last several months move on as the risk/reward is not in your favor as you must look at other trades that are beginning to trend with less risk as there are several out there just read my commentary on many other blogs such as sugar, cocoa and corn at the current time as the risk/reward is certainly in your favor. The problem with cattle is heavyweights plus more cattle out there than expected as expansion is occurring right before our eyes as I’m not a fundamental trader but a technical trader but you cannot ignore the fundamentals as we are headed into the Christmas season which is generally high demand but I look for lower prices come January.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Cocoa Futures

Cocoa futures in the March contract are trading lower for the 4th consecutive trading session after settling last Friday in New York at 3353 while currently trading at 3233 down about 120 points for the trading week as I’ve been recommending a short position from 3350 and if you took that trade continue to place your stop loss above the 10 day high which stands at 3430 as the chart structure is poor at the current time due to the fact that prices have dropped dramatically. Cocoa prices are trading below their 20 day but right at their 100 day moving average hitting a 5 week low in today’s trade with the next major level of support around 3200 as I think a top has been created in this market as we enter the Christmas holiday. At the current time I’m recommending a short position in cocoa and sugar as I think the commodity markets in general are still headed lower due to a very strong U.S dollar which is slightly lower this Friday afternoon, but trade with the trend and the trend in cocoa in the short-term is lower. If you have missed this trade look at other markets that are beginning to trend as you have missed the boat as the risk/reward is not your favor at the current time as I’m looking to add more contracts on any type of rebound as the 10 day high will be lowered in next week’s trade therefore lowering monetary risk.

TREND: LOWER

CHART STRUCTURE: POOR

Corn Futures

Corn futures in the March contract had a wild trading session yesterday with a 12 cent trading range closing at session highs up 4 cents while this Friday currently is unchanged at 3.74 a bushel as I’ve been sitting on the sidelines in this market over the last several weeks as this remains choppy and if you have been following my blogs you understand that I only like to trade trending markets. Prices are trading right at their 20 day but still below their 100 day moving average with major resistance around 3.80 as I think price gains are limited to the upside as the commodity markets in general still look very weak at the current time due to the fact of a very strong U.S dollar. A private forecaster came out yesterday lowering 2016 acres slightly to around 88.5 million which could produce a crop around 13.6 billion bushels slightly lower than what was produced in 2015, but that is a long ways away as this market has very little fresh fundamental news to dictate short-term price action at the current time. If corn prices trade at 3.78 I might be recommending a short position as the risk/reward would be highly in your favor as you would only be risking $150 per contract plus slippage and commission so keep a close eye on this market as a possible short could be undertaken soon.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

Coffee Futures

Coffee futures in the March contract settled last Friday in New York at 121.20 a pound while currently trading at 119.10 down about 300 points for the trading week as I'm currently sitting on the sidelines in this market as prices have gone nowhere in recent time, however as I've written about in many previous blogs I think coffee prices are in the midst of bottoming. Coffee prices are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside, however every single time coffee prices trade around the 1.16/1.18 level prices have rallied as that is acting as major support as I think the downside is certainly limited, but I'm not recommending any type of position at the current time. The soft commodities remain relatively weak as I'm currently recommending a short position in cocoa and in sugar as the U.S dollar is certainly keeping a lid on commodity prices here in the short-term so be patient and wait for a trend to develop in this market as we are starting to enter the very volatile months of January and February as a possible drought can break out in the country of Brazil which happened in 2014 sending a prices up about 70% in a matter of weeks.

TREND: MIXED

CHART STRUCTURE: SOLID

Soybean Futures

Soybean futures in the January contract are trading higher for the 2nd consecutive trading session up 3 cents at 8.80 a bushel after a sharp reversal in yesterday's trade rallying towards the closing bell and traded as low as 8.54 while then settling at 8.77 up $.23 from session lows in a highly volatile trading session. At the current time I'm sitting on the sidelines in this market as soybean prices remain extremely choppy over the last several months as I think price gains are limited and price declines are also limited so avoid this market at the current time. The U.S dollar was up by 145 points yesterday which was very surprising to see a rally in the grain market, but that’s what happens in choppy markets as it’s very difficult to trade successfully in my opinion so look at other markets that are beginning to trend. South American weather is outstanding at the current time and they should produce around 103MMTs which would be another record crop. Soybean prices are trading right at their 20 day but still below their 100 day moving average telling you that the trend is mixed as there is very little fundamental news to dictate short-term price action.

TREND: MIXED

CHART STRUCTURE: POOR

Sugar Futures

Sugar futures in the March contract are up sharply this Friday afternoon in New York currently trading at 15.20 after settling last Friday at 14.58 up over 60 points for the trading week as I have been recommending a short position from around the 14.70 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 15.62. The commodity markets in general today are sharply higher across-the-board as the shorts are running for the exits, however I will stick to my trading philosophy and keep the proper stop loss and hope better trade action come Monday. Sugar futures are now trading above their 20 and 100 day moving average telling you that the short-term trend is higher, but when I decided to sell prices hit a four week low, but things have reversed very quickly. Sugar futures have been very stubborn at the 14.50 level despite the fact that crude oil prices continued to move lower this week but are higher in today’s trade as it looks to me that massive short covering across-the-board is pushing prices higher ,however I still remain pessimistic as one day does not make a trend. If you have not taken this trade I’m still recommending it even at today’s price levels as the risk/reward is in your favor risking around 50 points or $550 per contract plus slippage and commission from today’s price level.

TREND: MIXED

CHART STRUCTURE: SOLID

Lean Hog Futures

Lean hog futures in the June contract are trading at 75.55 trading in a very volatile manner over the last several days as I’m recommending a short position from around 76.00 as I’m going counter trend which I don’t do very often throughout the trading year as I’m that confident that prices are headed lower despite the fact that cattle and feeder cattle prices are locked limit up in today’s trade. Hog prices have rallied around 500 points over the last 4 weeks in an astonishing move in my opinion as expansion is occurring at a rapid pace throughout the United States as there are a lot of hogs available at the current time as I do think prices will move lower from today’s price level so continue to sell while placing the proper stop loss risking 2% of your account balance on any given trade. At the current time I do not have a stop in on this trade as I’m waiting for better chart structure to develop as I cannot stress this enough that I’m extremely bearish this market as I think lower prices are ahead as today’s price was just a kickback in many of the commodities due to short covering, but I’m certainly not bullish any of the commodity sectors at the current time. The U.S dollar is down about 50 points lending support to many of the commodities, but basically what’s occurring today is short covering as the entire commodity sector across-the-board is higher so take advantage of higher prices in my opinion as this is a one-day phenomenon as there is no reason to own anything at the current time.

TREND: MIXED

CHART STRUCTURE: SOLID

Trading Theory

The last rule is very simple and it states that one must have a game plan and use it consistently even during periods of loses which will happen to you over the course of time. Do not suddenly start to risk 5-10% because you have to catch up and get your loses back quickly, stick with the game plan and over the course of time this will help improve your percentages of success. If you have an unproven system that has not been tested then I would look to paper trade the account until you see success and you are comfortable with loses and daily volatility.


Courtesy of 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


  • Blogger Comments
  • Facebook Comments
Item Reviewed: Futures Market Recap Week Ending Dec. 18 Rating: 5 Reviewed By: Econ Matters