We’ve asked Michael Seery of SEERYFUTURES.COM an IB of Peregrine Finanial Group to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.
Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Busines, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.
Precious Metal Futures--- The precious metals this morning were severely pressured by lower stock and commodity prices around the world this week with gold futures leading the way down another $7 dollars an ounce currently trading at 1, 588 down over $60 this week hitting a new five month low with the next major support at 1,528 and if that level is broken you could possibly see gold go all the way back down to the low 1400’s while silver futures started the week at 30.43 down nearly 1.40 for the trading week and trading down 30 cents at 28.90 with the next major support all the way down to 26.50 which is still over $2 dollars away also hitting a new five month low. As I've been stated in previous blogs am very bearish the commodity sector due to the fact that demand has definitely weakened due to the recession which is happening in Europe and the problems now in China and I believe that silver and gold will drop substantially from these levels in the next coming weeks. Copper futures which have been the strongest precious metal lately down 300 points currently trading at 365.50 a pound with major support at 357.75 a pound and if that level is broken you will see a five-month low created and bear markets across the board in the precious metals. One of the biggest bear markets in the precious metals which has not been talked about a whole lot is the platinum futures which are down another $32 dollars an ounce down over $70 dollars this week alone currently trading at 1,450 an ounce also hitting a new five month low with the next support all the way down the 1,400 which is still a good distance from these trading levels. In my opinion I would stay short all of the precious metals because I do think they are headed lower with many of the other commodities and now you are seeing cracks in the S&P 500 for the first time in a while and remember the old saying which is been true in the last three years sell in May and go away because this could be déjà vu all over again.
Cotton Futures-- Cotton futures plunged yesterday afternoon in New York finishing limit down nearly 400 points to close at new contract lows once again settling right around 79.40 a bale with the next yearly low at around 77.50 and then after that you're looking at prices going back to possibly 2009 levels. Cotton futures for the December contract are lower once again by 280 points currently trading at 76.57 hitting a fresh 2 year low and looking at going even lower from these levels due to record supply coming on the market. The average pre-report trade estimates for the 2012 crop report this morning was one 16.8 million bales while exports were expected to increase slightly 11.7 million bales which also leaves the ending stocks for 2010 – 2013 at around 4.9 million bales an increase of around 50% from last year's levels. However the report came in very bearish with all of the numbers higher than expected across the board pushing prices substantially lower in corn and in cotton due to the fact that demand is waning and cotton prices even at these levels are considered expensive at this time. Cotton futures are near a two year low going all the way back the July 2010 and if that level is broken which is at 76.40 you could see cotton prices head back down into the 60s over the next several months.
Energy Futures--- Energy futures are lower once again today on pessimism concerning the European recession as well as a slowdown in China causing crude oil prices in early trading in New York to be down another $.85 in the June contract trading at $96.22 a barrel also in sympathy with the stock market the rest the commodity markets all lower this morning putting crude oil down nearly $2.00 dollars for the week right at 5 month low after selling off more than $8 dollars last week while unleaded gasoline futures are also at a five-month low down 250 points at 2.985 in the June contract continuing its bearish momentum on the fact that OPEC came out and said supplies are very excessive at this point and abundant. Heating oil futures for the June contract are down nearly 200 points also near five-month low currently trading at 2.97 a gallon while natural gas futures which have been up four days a row are down slightly trading around 2.47 down around two points for the trading session in real quiet light volume so far this morning. The U.S dollar is basically unchanged for the trading day not having much impact on energy prices this morning, however with an adequate supply in the market and with the rising dollar and slowing European countries I still think crude oil could break 90 dollars a barrel in the next coming weeks and I'm pessimistic on all of the commodities and as I've been stating in many blogs in the last several weeks because demand is slowing down tremendously at this point.
Grain Futures--- Soybean futures for the July contract are lower by 16 cents on the night session trading at 14.39 in sympathy with all the other commodities and stocks which are lower today on European concerns once again today. Yesterday soybean futures for the July contract shot up 27 cents closing right on the highs of the trading session at 14.57 due to the fact of a bullish USDA crop report which came out yesterday lowering the ending stocks for the next marketing year down to 145 million bushels which is below the average analyst estimate of one 170 million bushels while suggesting that farmers this year are likely to produce 3.20 5 billion bushels up around 5% from last year but that's overshadowed by exports in this next marketing year which are rising a whopping 14% to 1.50 billion bushels. Corn futures are lower by another 3 cents in the July contract trading at new lows of 5.85 a bushel while yesterday corn futures were absolutely crushed down 20 cents yesterday to close right around 5.87 a bushel due to corn production that is expected to rise this year to a record 14.79 billion bushels that is up from last year's level which was only one 12.35 billion bushels and are expecting 166 bushels an acre which is much higher than last year's 147 bushels an acre and in my opinion I remember when corn would produce 8.5 billion bushels and now were almost doing 15 billion bushels that is unheard of and could absolutely flood the market with corn if we don't have any weather problems. The record corn production was in 2009 harvesting 13 billion bushels however if the USDA is correct at harvesting 15 billion bushels this year we are talking about a breaking the record by 2 billion bushels which is astonishing. What a difference in price and fundamentals between corn and soybean prices of late where soybeans continue a bullish trend, however I am starting to think that soybeans may have topped out in the short term especially if corn prices continue to slide and I expect that they will. Wheat prices for the July contract are at new lows down 4 cents at 5.96 continuing its bear market. 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.
Meat Futures---Live cattle futures today are lower in the June contract trading down 50 points at 115.35 a pound basically unchanged for the trading week still hovering right near contract lows while feeder cattle prices for the August contract are down 65 points at 158.25 after a tremendous rally in the last couple of weeks but basically finishing unchanged for the week as well being supported by lower grain and corn prices. Lean hogs futures are down about 60 points for the week and today are unchanged still hovering right near contract lows and in my opinion is going to continue its down trend in the next couple of weeks due to the fact of waning demand and weakness in most of the commodity sectors plus a rising U.S dollar which hurts our commodity exports
Bond Futures-- The bond market hit fresh all-time lows in yield once again today with new lows in the 5-year and 10 year notes with the five-year note yielding 0.76% while the 10 year note yield 1.81% is near all-time lows. The S&P 500 on the night session is down 10 points on bad news about JP Morgan Chase losing money for the quarter on heavy trading loses causing investors to seek cover and buy treasuries. The 30 year bond is higher by 20 points today in the June contract currently trading at 144 – 27 with the yield of 3.02% which is not an all-time low but closing in very quickly. The bond market my opinion is telling you something is coming in the next couple of months which will be a market mover in commodities and stocks while countries and large investors are betting that the yields are going to stay incredibly low due to an economy that is not improving but only time will tell and if an event in Europe does happen you will see the flight to quality happen again pushing yields to an all-time low and probably taking money out of the stock market and commodity markets as well. In my opinion I still believe the economy is not doing as well as is being advertised and I also believe the unemployment rate is much higher than 8.1% however the trend in the stock market is higher at this point but the bond traders are telling everybody who is watching that there could be trouble looming ahead.
Currency Futures--- The U.S dollar today hit a fresh 8 week high climbing another 13 points in early trading in New York in the June contract trading at 80.39 while the British Pound is down 80 points trading at 1.6072 blamed on profit taking due to the fact that most commodities and stock markets around the world are lower this morning on the J.P. Morgan announcement of losing $2 billion instead of making a profit last quarter due to erroneous trading. The Euro Currency is lower again by 30 points trading at a 4 month low of 129.32 and looking to re test the 126 level in the next couple of weeks. The Canadian Dollar is higher trying to break out to the upside by 23 points at 1.0020 reversing and 80 point down day earlier in the trading session while the Australian Dollar in the June contract is down another 70 points trading at 9990 hitting a new fresh six month low against the U.S dollar. The Mexican Peso continues its bearish momentum breaking all major support hitting a fresh four month low at 7352 down another 50 points and in my opinion I am bearish all of the commodities and I am bearish all of the currencies because of the fact that there is an economic slowdown in Europe I see the U.S dollar rising due to the fact that is a flight to quality currency as well as the reserve currency for the world.
Orange Juice Futures-- Orange juice futures traded higher by 100 points today to close right around 122.00 in a pretty uneventful week only finishing down about 200 points for the entire week however if you look at the daily chart over the last two months OJ prices have dropped 6000 points which is around 9, 000 dollars per contract that is how much profit or loss you would have had depending on your position. In my opinion I think one juice prices are going to chop around at these levels due to the fact that prices have come down so quickly with the easy money already being made and in my opinion if I were short orange juice futures at this point I would be exiting and sitting on the side-lines.
Coffee Futures--- Coffee futures are down around 50 points for the trading session currently trading right around 178.25 a pound after a pretty quiet week where coffee futures are up only 200 points after hitting contract lows on Wednesday, however rallying towards the end of the day to settle above contract lows with stiff support right around the 175.00 level and if that is broken on a closing basis the downtrend could continue. Volatility right now in coffee futures are very low historically going into Frost season and the summer months when volatility is very high, however it’s not the case this year so if you're looking to speculate in coffee futures you might want to look at the option market on either buying a put or call depending on what direction you think the market is headed in the near-term.
Stock Futures—The S&P 500 is trading higher by 4 points today at 1360.25 rallying sharply from the lows despite the news of JP Morgan losing 2 billion dollars on erroneous trades also on renewed pessimism in Europe and mostly in Spain with their stock market keeps going lower near new lows. Economic slowdowns are not a good thing for stock and commodity prices in the short term and I do believe prices are headed lower remembering the old saying sell in May and go away and that is exactly what is happening once again. The last 3 years have had the same pattern where we rallied significantly into the month of May and then the summer months come and trouble arises and it looks to me that the same scenario is unfolding right before our eyes. The NASDAQ futures are higher by 15 points trading near 2635 rallying nearly 35 points from the lows of the day while the Dow Jones industrial futures for the June contract were down 110 points at 12,723 then rallying from session lows in early trading to trade higher by 35 points. As I've stated in many blogs in the past I am bearish everything at this point and I think investors should be short most of the commodities including the stock market remembering always using stop losses because you do get those government intervention rallies which can be swift and brutal to the upside so limit yourself to a 2% risk of your trading balance on any given trade.
Sugar Futures--- Sugar futures in New York today traded near its contract lows trading higher by 8 points in the July contract currently trading at 20.58 a pound continuing its bearish momentum with the rest of the soft commodities. Crude oil futures and many of the commodities lately have been trading lower this past week including corn which has helped push sugar prices to a new 1 1/2 year low recently and in my opinion is going sharply lower due to high surplus in supply and lack of demand and I think we have a chance to go back down to the 2010 lows of 15.50 in the next coming months. Sugar volatility is at a recent low and if you're interested in participating in this market you might want to look at put or call options due to the fact that premiums are relatively cheap at this point and time because volatility is historically low for these high prices.
Milk Futures—Milk futures traded negative trading lower by 3 points 14.38 in the June contract still hovering right near contract lows that were struck last Monday at around 14.00 with major resistance at 15.00 which also happened just seven trading days ago. Milk futures are still in a serious downtrend along with many other commodities and I have to believe at least in the short term that prices are headed lower in my opinion. Demand for milk is low at this time as well as a glut of supply pushing prices lower. 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.
Michael Seery, President
Seery Futures
Twitter–@seeryfutures
Phone # (800) 615-7649
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Excellent summary. And being short totally makes sense, but lets wait for the TT's to confirm before we go all in.