We’ve asked Michael Seery of SEERYFUTURES.COM 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 Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.
10 Year Notes
The 10 year notes are trading below their 20 and 100 day moving averages in the June contract settling basically unchanged for the trading week around 123 – 14 yielding about 2.72% & I had been recommending a bearish position in the 10 year notes for a long time and I think you still sell a futures contract at today’s price placing your stop above the most recent high of 125 risking around $1,500 per contract as prices are right near 7 week lows. Interest rates are on the rise in my opinion as the federal government is starting the tapering program & eventually they will not be purchasing anymore bonds come September as I think rates are on the rise so continue to sell this market and if you have deep pockets and a long-term horizon I can’t stress enough that this is a special situation as you probably will never see these yields again as this bubble started during the financial crisis and is starting to unwind.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
5 Year Notes
The 5 year note finished unchanged for the trading week going out this Friday in Chicago down about 5 ticks at 118--28 trading below its 20 & 100 day moving average and I’m still recommending a short position in this market as I do believe that interest rates have finally bottomed and are on the rise so continue to sell the June contract in my opinion. If you have deep pockets this market is terrific due to the fact that of its high liquidity & the yield right now is 1.74% & in my opinion yields will eventually go back to 3% – 4% but that will take several years so you must have a long-term horizon as this bubble is starting to leak in my opinion as eventually markets can’t be manipulated forever.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures in the May contract finished slightly higher for the first time in 10 trading sessions hitting a 7 week low currently trading at 19.80 and is trading below its 20 and 100 day moving average as I’m sitting on the sidelines waiting for a better chart pattern to develop, however if you’re longer-term trader with deep pockets I would continue to look at buying silver in the $19 – $20 range as I think eventually prices go much higher but as a trader I must have an exit strategy. Sit on the sidelines and let’s see what develops as the U.S dollar rallied sharply off of the Federal Reserve comments that interest rates might rise therefore putting pressure on the precious metals this week.
TREND: LOWER
CHART STRUCTURE: SOLID
Coffee Futures
Coffee futures in the May contract are trading below their 20 but above their 100 day moving average as prices have dropped about 3000 points from contract highs as I talked about previous blogs I thought that a solid entry point be would be around 160 which was the 50% retracement but prices only went as low as 166 but at this time I’m still sitting on the sidelines waiting for better chart structure to develop. I’m hearing reports from Brazil from some of my connections that they think the crop is going to be worse than expected & expect higher prices as well as I do believe a retest of 2.10 in the cards. However I am a trend follower and the trend right now is neutral but if want to play this market to the upside my advice would be to buy at today’s price placing my stop below 166 risking around 5,200 as the coffee contract is very large.
TREND: MIXED
CHART STRUCTURE: SOLID
Sugar Futures
Sugar futures ended on a strong note this Friday afternoon finishing up about 10 points to close around 17.97 after settling last Friday at 16.83 up over 110 points on crop concerns in central Brazil as prices are now trading higher than their 20 and 100 day moving average telling you that the trend in the short term is higher. As I’ve stated in previous blogs I am neutral sugar at this time as I’m waiting for a trend to develop with better chart structure but if you’re bullish this market my advice would be to buy at today’s price placing your stop 4 week low of 16.67 risking around $1,400 per contract as the longer-term trend still is higher.
TREND: HIGHER
CHART STRUCTURE: SOLID
Soybean Futures
Soybean futures in the November contract finished the week at 11.88 this Friday afternoon in Chicago settling higher by about $.10 for the trading week still trading above their 20 and 100 day moving average stuck in a trading range between 11.70 – 12.00 as traders are awaiting Mondays USDA crop report which will send high volatility into this market and will probably dictate short-term price direction. If you have been reading any of my previous blogs you know I’ve been recommending a long position in November soybeans placing stops at the 10 day low of 11.68 as the market has outstanding chart structure at this time and as long as that report in my opinion isn’t overwhelmingly bearish I do believe that the trend will continue to move higher as the commodity markets continue to look bullish in my opinion.
Remember the difference between old crop and new crop as prices can swing in different directions as old crop was harvested last year while the new crop is always considered the November contract which will be harvested this year and that’s why you see such a price differential between the May contract and the November contract which has a difference of about $2.50 so be sure that you’re in the correct month. Chicago is suffering the coldest month of March in 54 years as many parts of the Midwest are still very wet as we enter April this Tuesday as the weather market will start to be in full force in the next couple of weeks and as it is critical that we have an outstanding crop estimated to be around 3.4 billion bushels but it’s a long growing season and remember trade with the trend as the price swings can be enormous.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Cotton Futures
Cotton futures are trading above their 20 and 100 day moving average having a very wild trading session on Wednesday with about a 700 point range hitting new contract highs at 97.35 but then settling around 91.00 but this market still remains bullish however, I’m sitting on the sidelines at the current time. If you are bullish this market as I do think cotton will retest 100 in the next several weeks I would place my stop below 90 risking around $1,500 per contract as the bullish trend is just intact as this is a very volatile commodity so make sure you have a solid money management system in place and the proper amount of contracts.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Orange Juice Futures
Orange juice prices are trading below their 20 but above their 100 day moving average telling you that the trend is mixed and neutral as I was bullish this commodity for several weeks but we were stopped out several days back and now I’m waiting for a trend to develop but I still do think the bullish trend is intact. Orange juice futures settled last Friday at 153 while going out today at about 150.75 slightly lower for the week and if you’re still bullish this commodity I would buy a futures contract at today’s price placing my stop at 144 risking around $800 per contract as the chart structure is very tight which allows you to minimize your risk by placing closer stops.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures in the December contract which is considered the new crop and will be harvested this fall finished slightly lower this afternoon in Chicago finishing at 4.87 a bushel still trading above its 20 and 100 day moving average which tells you that the trend is currently higher as corn finished up about $.07 for the trading week but unable to break 4.90 on a closing basis. Traders are awaiting the highly anticipated USDA crop report which comes out this Monday morning so if you want to lighten up on some contracts going into that report I would not disagree. I’ve been recommending a long position in corn for quite some time and in you have been following my recommendation I would place your stop below the 10 day low of 4.78 a bushel risking only 11 more cents or $500 per contract as prices have stalled out right near 4 month highs. If you are stopped out at 4.78 sit on the sidelines and wait for another trend to develop as the trend would then become mixed and as a commodity trader you want to find strong trends instead of markets that are choppy.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures in the May contract sold off this Friday afternoon by $.15 to close at 6.95 a bushel finishing basically unchanged as prices may have topped out in the short as traders await Monday USDA crop report which will send high volatility into the market as prices are still trading above its 20 and 100 day moving average and has been in a strong bull market recently rallying over $1. 60 in the last 2 months due to the fact of dryness in many parts of the Great Plains which is causing crop concerns pushing prices higher. If you are long a futures contract I would place my stop at the 2 week low which is at 6.70 risking around $.25 or $1,250 per contract as the chart structure is improving at this time. If you’re in the wheat market currently make sure you under trade because the price swings are very violent which will allow you to deal with daily fluctuations without risking too much of your account balance at the same time.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Cocoa Futures
Cocoa futures had a wild trading session this Friday afternoon trading as low as 2918 as I’ve been recommending a long futures contract for several weeks placing my stop at the 10 day low which is 2917 as we missed being stopped out of this market by 1 point this afternoon before rallying sharply to close around 2983 still stuck in a channel with major resistance which was hit on March 17th and also was the contract high at 3039. Cocoa settled last Friday at 2957 finishing higher by about 30 points continuing its slow bullish trend still trading above its 20 and 100 day moving average stating that the trend is higher so continue to play this market to the upside while keeping your stop at 2917.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Live Cattle Futures
Live cattle futures in the April contract closed up 240 points for the trading week awaiting this afternoons Cattle On Feed Report trading higher4 out of the last 5 trading sessions settling right near all-time highs and I continue to recommend getting long this market as I do think prices are headed to the 150 – 155 level possibly next week as there’s just a huge shortage of supply and tremendous demand at this time sending prices higher as live cattle prices are trading above their 20 and 100 day moving average telling you that the trend is higher and I’m recommending that you place your stop below the 10 day low at 143.00 risking around 350 points or $1,400 per contract. Volatility in the live cattle market is relatively low especially when you consider that prices are all-time highs as one of the reasons why I think prices will continue to move higher as we’ve not seen a blow off top in my opinion. If this report comes out bullish prices could then be off to the races just like what happened in hogs in the last couple of weeks.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Feeder Cattle Futures
Feeder cattle futures in the May contract settled up another 325 points this week closing around 179.75 hitting new all-time high closing higher 5 out of the last 6 trading sessions as traders are watching closely after the bell to see what the Cattle On Feed Report states continuing a remarkable bullish trend and I continue to recommend buying this market placing a stop below the 10 day low of 176.00 risking $2,000 as this is probably the strongest trend of any of the current commodity markets. Prices are trading far above their 20 and 100 day moving average as this market could possibly hit 200 in my opinion in the next couple of months as we have the smallest herds in over 60 years and demand is not weakening even at these high prices and lookout for higher prices as we enter the spring and summer months when demand is at its peak sending prices even higher in my opinion. If this report comes out bullish I think you will start to see action to the upside similar to the lean hog market.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Mexican Peso Futures
The Mexican Peso was up 70 points this week closing at 7595 trading higher 6 out of the last 7 trading sessions hitting 8 week highs breaking out to the upside in my opinion as I have been recommending a long position from 7550 but if you still want to get long the Mexican Peso buy at today’s price of 7595 placing your stop below the 10 day low which currently stands at 7450 risking 145 points or $725 per contract. As a technical trader the only reason I want to buy this market is because the risk /reward is in your favor and whenever that situation occurs I believe you have to take the trade even if you have doubts. The Mexican Peso is a very trendy currency just like many of the commodities as it will start a trend and go in that direction for quite some time as I’ve had experience with this in the past, so take a chance on this currency making sure that you place a tight stop.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
NASDAQ 100
I don’t talk about the NASDAQ 100 very much as prices hit a 7 week low this week finishing down about 60 points continuing its short term bearish momentum as I think there is a possibility that a short term high has been reached with a nice rounding top as prices hit 7 week lows in today’s trade so I was recommending a short futures when prices broke 3600 placing your stop above the 13 year high of 3733 risking around $2,500 per contract but if you are not currently short wait for a rally to enter as this market as it is very resilient.
The NASDAQ 100 is trading below its 20 but slightly above its 100 day moving average telling you that the trend is mixed, however I am selling this market on the hopes of picking a top while risking above 13 year highs and I think the probabilities or the risk/reward situation is in my favor currently. Everything that goes up must come down eventually as this market has been going up for the last 5 years so who knows as long as you limit your risk using 2% of your account balance on any given trade.
I am highly recommending a short position in the June mini NASDAQ contract currently as I do think a possible retest of 3400 which was hit in early February could be retested in the next couple of weeks as there are problems around the world as well such as Russia showing its dominance in Eastern Europe which should be concerning to the stock market in general.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Where Should You Place Your Stops? Identifying where stops exist in the market is an important lesson to learn because placing a correct stop loss that will improve your trading tremendously over the course of time. Nobody knows for sure where stops are located, however I have learned a couple of things over my 20 year career and I have a general idea where stops are placed and why. Buy stops are generally placed above the 10 day high as well as above contract highs as the bulls generally are buying more and the short selling are getting stopped out.
Sell stops are usually placed at the 10 day low as well as below contract lows which means the shorts are adding to their position and the longs are getting stopped out as they figure they are wrong. The other common places to have stops are at certain moving averages such as the 20 or 100 day moving average where traders think either the trend is turning bullish or the market is starting to break down. Placing stops to close or not at important price levels can get very frustrating because the market can stop you out and then go the direction that you thought leaving you behind and out of the market. Placing stops is one of the most important aspects of trading in my opinion.
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
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
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.
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: (800) 615-7649
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