Gold Futures
Gold futures in the December contract settled last Friday in New York at 1,512 an ounce while currently trading at 1,483 down nearly $30 for the trading week as prices look to head lower in my opinion as I see no reason to own gold at this time.
The U.S. stock market is up nearly 500 points today as a possible Chinese trade agreement could be at hand later this afternoon. If the market likes that situation, gold prices could drop significantly, in my opinion. Gold prices are trading under their 20-day but still above their 100-day moving average, however, if you look at the daily chart, the downtrend line remains intact as I think the only precious metal that will continue to rally is palladium.
The next major level of support is around the 1,450 level, and I think that will be touched possibly in next week's trade. The money will start to come out of the precious metals due to the trade agreement and then will begin to enter into the U.S. equity market. However, at the current time, I am not involved. Still, I do have a bearish bias to the downside.
Volatility in gold will remain high as if you have to remember part of the rally that we witnessed over the last several months was due to the Chinese problem and if that situation is eradicated, there's no reason to be involved in gold.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Copper Futures
Copper futures in the December contract settled last Friday in New York at 2.5625 a pound while currently trading at 2.625 up about 600 points for the trading week as prices are right near a 4 week high. In my opinion, I believe the 3 year low, which was hit on September 2nd at 2.4675, will hold as a possible trade agreement between the United States and China that could be announced later this afternoon as that would undoubtedly be a fundamental bullish factor towards higher prices.
I am looking at a bullish position in the coming days ahead, as I do think a longer-term bottom has taken place as the chart structure is excellent. Therefore, the risk/reward is in your favor.
Copper prices are trading above their 20-day but slightly below their 100-day moving average standing at 2.6400.
Volatility is starting to increase, and I have many bullish recommendations. I do think the commodity market across the board looks cheap, especially if a trade agreement comes about. I see no reason to be short copper at these depressed levels as I want to play this to the upside.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Natural Gas Futures
Natural gas futures in the November contract is currently trading at 2.22 while settling last Friday at 2.35 down about 12 points for the trading week as prices are right near a 3 year low.
I am not involved as fundamentally speaking gas fell to a 1-1/2 month low Thursday on a larger-than-expected increase in weekly EIA inventories. The EIA reported that nat-gas inventories rose by 98 bcf, slightly above expectations of 97 bcf and above the 5-year average of +89 bcf. Nat-gas prices have been under pressure this week after the EIA in its Winter Fuels Outlook report Tuesday projected that nat-gas inventories will rise to a surplus relative to the 5-year average by the end of October. That's due to strong U.S. output and projections from the National Oceanic and Atmospheric Administration.
If you are bullish and you want to jump the gun, you could buy at today's price level while placing the stop loss under the contract low, which was hit on August 5th at 213. The risk would be around $1,000 per contract plus slippage AND commission. However, that would be a counter-trend trade as I will be patient and wait for the chart structure to improve; therefore, the risk/reward would be more in your favor.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 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.
Corn Futures
Corn futures in the December contract settled last Friday in Chicago at 3.84 a bushel while currently trading at 3.87 up 3 cents for the week ending on a positive note as a possible trade agreement with China could be revealed later this afternoon.
Yesterday's crop report was construed as bearish. I've been looking at buying corn while waiting for the 3.80 level, which was hit yesterday, and if you took that trade place, the stop loss under contract low, which was hit on September 9th at 3.52 as an exit strategy. I want to give this trade some room.
I also have bullish recommendations in wheat and soybean meal as I think the whole complex is headed higher as corn prices are right near a 2 month high.
Corn prices are trading above their 20-day but still below their 100-day moving average, which stands at the 4.08 level. There's room to run to the upside as heavy snow has entered sections of the Midwestern part of the United States as that could hurt production numbers, so stay long and continue to place the proper stop loss as I see no reason to be short the grain market.
TREND: LOWER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY:
Cotton Futures
Cotton futures in the December contract settled last Friday in New York at 61.67 while currently trading at 62.65 up about 100 points for the trading week as prices have hit an 11-week high. A possible trade agreement with China might be revealed later this afternoon as that is sending many sectors higher. If that situation comes to fruition, cotton prices could rally significantly as China is the number one importer of U.S. cotton in the world.
I have been recommending a bullish position from around the 61.50 level and if you took that trade continue to place the stop loss under the August 26th low of 56.59 as an exit strategy. I will be looking at adding more contracts to the upside if prices break the September 13th high of 63.39 as the chart structure is outstanding, coupled with the fact that the risk/reward is in your favor. The daily chart looks to have established a rounding bottom over the last several weeks, so stay long as there is room to run to the upside.
I also had several grain recommendations as the agricultural markets have been depressed due to no trade deal; however, if that is reversed, significant gains will be ahead.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING
Soybean Meal Futures
Soybean meal futures in the December contract settled last Friday in Chicago at 303 while currently trading at 311 as prices have now hit an 11 week high continuing its bullish momentum.
Fundamentally speaking, NASS slashed its projected 2019 U.S. soybean yield by 1 bpa to 46.9 bpa. That helped their production estimate to fall 83 mbu from last month's report to 3,550 billion bushels helping lower carryover from 18/19 and a cut to production. 19/20 ending stocks were down 180 mbu from the last report at 460 mbu as last year's stocks estimate was nearly double that at 913 million.
I have been recommending a bullish position from around the 306 level and if you took that trade continue to place the stop loss under the contract low which stands at 291 as an exit strategy as this market certainly has turned bullish as the fundamental situation has changed dramatically so stay long and continue to place the proper stop loss.
The volatility should start to increase as prices are now trading above their 20 and 100-day moving average as this trend is higher, in my opinion.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING
Wheat Futures
Wheat futures in the December contract settled last Friday in Chicago at 4.90 a bushel while currently trading at 4.97 up about $0.07 for the week continuing it's bullish momentum as prices are right near a 2 month high.
Yesterday's crop report was construed as neutral as this market is now based on weather conditions, and at the current time, snow has entered key growing regions as that could be a positive for higher prices ahead. I have been recommending a bullish position from the 4.82 level andif you took that trade place the stop loss at 4.50 as an exit strategy, however, I will raise the stop loss in next week's trade. Therefore, monetary risk will be reduced.
Prices are trading above their 20-day but still below their 100-day moving average standing at the 5.02 level as I still think prices could head up to the 5.50 area in the coming weeks ahead as the whole grain market has turned bullish.
I also have bullish recommendations in corn and soybean meal. I do think soybeans will head higher as a trade agreement with China was revealed Friday afternoon. That certainly will have a positive impact on all agricultural markets, so stay long as I see no reason to be short.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Michael Seery, President
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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 rally in gold was not "due to the Chinese problem" - which by the way is light years from being resolved. While there is good reason to look for the correction in gold to continue (namely the very large net speculator long position in COMEX futures), it is important to be aware of what the macroeconomic fundamental drivers of the gold rally actually are. As an aside, two previously bearish fundamental drivers - the yield curve and the USD - are about to turn bullish (the yield curve is beginning to steepen and the USD is beginning to weaken).
It's too bad the futures market is so disconnected from reality. Reality might gain a toehold if we had to take or make delivery with physical commodity. But because the futures control the physical, everything will come crashing down at some point. I'm not involved in all the markets, but have interests in oil, gas, copper and gold/silver production. First off, there was no trade agreement. All the hype was just that. There won't be one, either, because China doesn't need us. They control enough copper production throughout the world, including ours (They are essentially the only market for copper concentrates.). As for oil and natural gas, most producers cannot make money at today's real prices ($49/bbl for oil and & 0.75/mmbtu for gas). As for gold and silver, they will at some point disconnect from the dollar. Then physical will be the currency for world and local trade. After all, GLD is not gold.
I still believe that Hun Sen was challenging with SP 500 in next 3 month during his post if cut his roof of power ( vietnam covered violence in Cambodia while arrest him. it will increase price of gold)