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August 29, 2016

Futures Recap, Week Ending Aug. 27, 2016

Crude Oil Futures

Crude oil futures in the October contract are trading higher by 50 cents this Friday afternoon in New York after settling last Friday at 49.11 while currently trading at 47.85 down about $1.50 for the trading week still hovering right near a 7 high. Oil prices are trading above their 20 and 100-day moving average telling you that the short-term trend is higher as I’m currently sitting on the sidelines in this commodity as the chart structure is very poor at present as I’m waiting for the monetary risk to be lowered so I will be patient. The market today reacted off the Federal Reserve’s announcement that they probably will not raise interest rates sending many commodities higher while also sending the U.S dollar slightly lower today as it certainly looks to me that interest rates are going to be low for a long period of time. However, oversupply issues of crude oil is what is hampering this market at the current time. Presently I am only recommending one position, and that is a short gold trade as there are very few trends as we are finally going to exit the dog days of August next week. September historically speaking becomes very volatile with trends so have patience as we will have a lot of trade recommendations possibly in the next couple of weeks.

TREND: HIGHER - MIXED

CHART STRUCTURE: POOR

10-Year Note Futures

The 10 year note in the September contract settled last Friday in Chicago at 131.30 while currently trading at 131.20 down about 10 points for the trading week as I’m now recommending a short position while placing your stop loss above the 10 day high which stands at 132.21 risking around $1,000 per contract plus slippage and commission as prices have broken out of a 7 week tight consolidation. The Federal Reserve announced today that they will do basically nothing as usual as this is the biggest joke I have ever seen in my life as the Federal Reserve comes out on a daily basis and says nothing as I’ve never seen anything like this before in my life, but I’m a technical trader and prices have broken out as the risk/reward is in favor I’m going to take a short position while risking 1 point which equals $1,000 per contract. At the current time my only other recommendation is shorting the gold market which is also influenced by higher interest rates as the chart structure in the 10 year note will also improve over the next couple of days, therefore, lowering monetary risk so take a shot to the downside as the current yield at the present time is about 1.60% which is extremely low historically speaking.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Gold Futures

Gold futures in the December contract settled last Friday in New York at 1,346 an ounce while currently trading at 1,325 as I’ve been recommending a bearish position from around the 1,333 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 1,364 risking around $1,000 per mini contract plus slippage and commission. This Friday was a wild trading session as the Federal Reserve stated absolutely nothing sending gold prices as high as 1,346 up over $20 trading for the session only to sell off and finish basically unchanged which is a very negative influence in my opinion as I will be adding more positions to the downside when prices break 1,320 which could possibly happen in Monday’s trade as I don’t think the downside pressure is over with as I still think it’s just beginning. Gold prices are trading below their 20-day but still slightly above their 100-day moving average was stands at 1,300 and if that is broken I think we can absolutely fall out of bed testing the 1,260 level so continue to play this to the downside as this is my only recommendation at present as there are very few trends in the commodity markets in the month of August, but that will change come September.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Silver Futures

Silver futures in the December contract settled last Friday at 19.45 an ounce while currently trading at 18.70 down about $.75 for the trading week as I was recommending a bullish position getting stopped out last Friday as I’m currently sitting on the sidelines while recommending a short gold position at present. Silver prices are trading below their 20-day but above their 100-day moving average, but when prices broke the 19.50 level in the September contract it was time to move on as that broke major support as prices are right near an 8 week low. I’m certainly not recommending any type of bullish position in this market at present as the commodities, in general, look very weak in my opinion. The Federal Reserve announced today that they actually don’t know what they’re doing. Who knows when interest rates will actually rise sending silver prices up in early trade only to sell as I’m writing this article up only about 5 cents continuing its bearish momentum so avoid this market at present and get short gold in my opinion. The U.S dollar was up over 40 points and now is down 40 points as this has been a real seesaw trading session today, but clearly, in my opinion, the trend in the precious metals is lower at present & as a trend follower going against the path of least resistance is dangerous.

TREND: LOWER - MIXED

CHART STRUCTURE: POOR

S&P 500 Futures

The S&P 500 reversed earlier gains this Friday afternoon in Chicago as it was trading higher by 12 points but as I’m writing this article its down 9 points trading at 2165 as I’ve been writing about this commodity for quite some time as I do think a special situation is looming as I’m looking at a possible short position come next week. The S&P 500 is trading below its 20-day but still about 100-day moving average telling you that the short-term trend is mixed as volatility is very low as we have gone 34 straight trading sessions without a 1% move which is all-time record, but something will happen as we enter the month of September so keep a close eye on the downside as the true breakout is 2141, but the breakout next week could be raised to 2165 while placing your stop loss above the 10 day high as the chart structure is outstanding at present. The federal government has propped up equity prices over the last 7 years, and that’s why we are still hovering right near an all-time high, but eventually all things come to an end, but trading is all about risk/reward coupled with outstanding chart structure as this chart at present meets my criteria so keep a close eye on this market as we could be in a short position very soon.

TREND: HIGHER - MIXED

CHART STRUCTURE: OUTSTANDING

Natural Gas Futures

Natural gas futures in the October contract settled last Friday in New York at 2.62 while currently trading at 2.93 up sharply for the trading week looking to retest the July 29th high around 2.95 as I was recommending a bearish position in the mini contract around 2.71 getting stopped out around the 2.78 level risking around $200 plus slippage and commission as I’m currently sitting on the sidelines. Natural gas prices are now trading higher for the 5th consecutive day as that’s why you must have an exit strategy as when you are wrong you don’t know how high or how low prices can go as money management is the key to trading commodities in my opinion. Natural gas prices are now trading above their 20 and 100 day moving average reversing a multi-week low now looking retest possibly the contract high which was hit on July 1st around 302, however I will look at other markets that are beginning to trend while licking my wounds as this was a low-risk trade, to begin with as there are many markets as we enter the month of September that we could be involved in so let’s move on and let’s see what develops next week.

TREND: HIGHER

CHART STRUCTURE: POOR

Orange Juice Futures

Orange juice futures in the November contract settled last Friday at 180.20 while currently trading at 185.50 up about 500 points for the trading week as I’ve been sitting on the sidelines as it looks to me that prices are topping out here in the short-term as I will be recommending a short position if prices break 175 keeping the stop loss above the 10 day high which currently stands at 188.15 risking around $1,800 per contract plus slippage and commission. Orange juice is an extremely volatile commodity with high risk that’s why the risk is so high at this point, however that will change in the near future if prices do decline as there still a gap around the 130 level as I still think that could be filled as the highly volatile fall season is coming upon us, but keep a close eye on this market as I’m sitting on the sidelines as the chart structure is starting to improve on a daily basis. Orange juice prices have gone nowhere over the last 2 months with high volatility, and that volatility will increase as we go into all in the winter season as my only recommendation at the current time is shorting gold which looks very vulnerable to the downside so keep a close eye on this market could be entering any day.

TREND: LOWER

CHART STRUCTURE: IMPROVING

Cotton Futures

Cotton futures in the December contract settled last Friday in New York at 68.03 while currently trading at 67.90 basically unchanged for the trading week after absolutely collapsing from recent highs from around the 77 level as I was recommending a bullish position from around the 64.75 level getting stopped out 2 weeks ago around 71.65 as prices have just fallen out of bed. At the current time, I’m sitting on the sidelines as the chart structure is absolutely terrible, and I don’t think I’ll be involved in this market for some time as major support is at the 64 level which it looks to me that a possible retest could happen in the coming weeks. Prices are trading below their 20-day but still above their 100-day moving average as China put water on this fire selling some of their massive reserves onto the market as weather conditions also improved in the southern part of the United States as now there is absolutely no trend, and very few trends in the soft commodities as a whole is I have no trade recommendations in this sector at present.

TREND: MIXED - LOWER

CHART STRUCTURE: IMPROVING

Coffee Futures

Coffee futures in the December contract settled last Friday in New York at 141.60 a pound while currently trading at 147.20 up about 550 points for the trading week right near a 3 week high still remaining in a very choppy to sideways trend. Coffee prices seemed to have bottomed out around the 138 level last week as the true breakout does not occur until we break the 150 area as the chart structure is not very good at present as the 10 day low as to far away as I’m currently sitting on the sidelines in this market. The U.S dollar is sharply lower this Friday afternoon as the Federal Reserve certainly looks like they will not raise interest rates sending many commodities higher across the board also helping coffee prices to the upside. However, wait for a true trend to develop as the risk/reward is not your favor at the present time and if you have read any of my previous blogs you understand that I have an upward bias in this commodity as I still think higher prices are ahead especially as we enter the volatile fall and winter season for coffee prices.

TREND: HIGHER - MIXED

CHART STRUCTURE: POOR

Sugar Futures

Sugar futures in the October contract are lower by 10 points currently trading at 20.45 a pound after settling last Friday at 19.77 up about 65 points for the trading week continuing its bullish trend as I’m currently sitting on the sidelines at present as prices have gone nowhere over the last 2 months. Sugar prices are trading above their 20 and 100-day moving average telling you that the short-term trend is higher coupled with the fact that the longer-term trend is also higher with major resistance around the 21 level. If that is broken, you have to think that prices would have to move even higher. I would be looking at a bullish position to the upside at that time. Sugar prices have been chopping around between 19/21 over the last 2 months, and I don’t like to trade choppy markets as they are extremely difficult to trade successfully in my opinion. Something will develop relatively soon in my opinion so be patient and wait for a breakout to occur as I also need the chart structure to tighten up as this commodity is relatively volatile despite the fact that prices are stuck in a trading range.

TREND: HIGHER - MIXED

CHART STRUCTURE: SOLID

Trading Theory

When do you exit a trade? -- The biggest question that I have been asked is when do I exit a winning trade and when do I exit a losing trade? In my opinion, the rule of thumb that I use is placing my stop loss at the 10 day high if I’m short or a 10 day low if I’m long as the theory is that I do not want something to go against me for more than 2 weeks. The other rule of thumb is to place your stop loss at the 2% maximum loss allowed in your account for any given trade.

If you are looking for a futures broker feel free to contact Michael Seery at 312-224-8140 and he will be more than happy to help you with your trading or visit www.seeryfutures.com

Courtesy of Michael Seery, President, Seery Futures via INO.com

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.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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Item Reviewed: Futures Recap, Week Ending Aug. 27, 2016 Rating: 5 Reviewed By: EconMatters