Natural Gas Futures
Natural gas futures in the March contract settled last Friday in New York at 1.91 while currently trading at 1.71 lower for the 3rd consecutive session while hitting a 4 year low. Fundamentally speaking, according to Energy Weather Group, the U.S. winter through January is the 2nd warmest winter season in 70 years, which has reduced heating demand for natural gas coupled with elevated inventories.
All commodity sectors, including U.S. equities, are on the decline as nobody wants to own anything until the Coronavirus shows more clarity. The next major level of support is down at the 150 level. I see no reason to be a buyer at this time as the entire energy sector is experiencing bearish trends, and if you are short, stay short as gas prices are trading far below their 20 and 100-day moving average as the trend clearly is to the downside.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE
Silver Futures
Absolute panic has entered all commodity and stock sectors this week because the Coronavirus is spreading worldwide, sending huge volatility across-the-board. Silver prices hit a 5 month high on Monday as now prices are at a 2 month low after settling last Friday in New York at 18.61 an ounce while currently trading at 17.20 down about $1.40 for the week.
I have been recommending a bullish position from around the 18.13 level while getting stopped out around the 17.20 area as it is time to move on and wait for some sanity to come back into these markets.
Silver prices are now trading below their 20 and 100-day moving average as the trend is lower to mixed. We have now traded substantially lower for the 4th consecutive session even though the Dow Jones Industrial Average is down over 3,200 points this week. You would think the precious metals would rally, but this is a risk-off trade at the current time, and margin calls are to blame.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
10-Year Note Futures
The 10-year note in the March contract settled last Friday in Chicago at 131/24 while currently trading at 134/16 up sharply for the trading week hitting an all-time high. The U.S. stock market has plunged, sending money flows into the entire bond sector.
I have been recommending a bullish position over the last month from the 129/18 level. If you took that trade continue to place the stop loss under the 10-day low, which stands at 130/23 as the chart structure will not improve for another two trading sessions, so you will have to accept the monetary risk at this time.
The yield stands at 1.17%, which is remarkable in my opinion as we have now traded higher for 7 consecutive sessions as there is absolute sheer panic in world markets, and until some clarity about the Coronavirus comes about bonds still look to move higher.
In my opinion, we could trade below the 1% level in the coming weeks ahead as the Federal Reserve certainly is going to lower interest rates, so stay long as this is the strongest trend.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Platinum Futures
Platinum futures in the April contract settled last Friday in New York at 976 an ounce while currently trading at 860 down about $116 for the week hitting a 6-month low. The entire precious metal sector is falling out of bed. I had been recommending a bullish position from the 883 level while getting stopped out around the 874 area as the only thing surviving this Coronavirus scare is the bond market as everything else has sold off rather dramatically.
Margin calls are to blame because the S&P 500 has collapsed this week, sending traders scrambling to stay in positions while liquidating many other commodities, including platinum. So sit on the sidelines as probably we will not be involved in this commodity for some time as the chart structure is terrible. V
Volatility in platinum and the precious metals is exceptionally high, and I don't think that the situation is going to change anytime soon until some clarity comes about on the Coronavirus, which could take some time.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
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.
Live Cattle Futures
Cattle futures in the April contract settled last Friday in Chicago at 118.25 while currently trading at 107.85 down over 1000 points for the trading week as prices have collapsed, hitting a 6-month low.
I have been recommending a bearish position from the 124.50 level, and if you took that trade, continue to place the stop loss above the 10-day high standing at 121.17 as the chart structure is terrible at the current time and will not improve for another four trading sessions. Volatility certainly has expanded as I thought the 110 level would be touched as that did happen this week. Still, now I think we can go as low as 100 level as the chart structure is horrible, and if you're not short this market sit on the sidelines as the risk/reward is not in your favor.
The Coronavirus is the main culprit for depressed prices as all of the commodity markets are sharply lower once again. The Dow Jones Industrial Average is down 3200 points for the week as nobody wants to own anything, so stay short as I still believe there is more room to run.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Oat Futures
Oat futures in the May contract settled last Friday in Chicago at 2.98 a bushel while currently trading at 2.71 down about $0.27 for the trading week hitting a 6-month low. I have been recommending a bearish position initially in the March contract from the 2.97 level rolling over into May, and if you took that trade continue to place the stop loss above the 10-day high, which stands at 3.03 as an exit strategy. However, the chart structure will not improve for another four trading sessions.
Oat prices are trading below their 20 and 100-day moving average as this trend is strong to the downside. I also have a bearish wheat position, and I see no reason to own anything except bonds as there is massive panic worldwide about the Coronavirus. The next major level of support is around the 2.60 level. I think that could be touched in next week's trade as the volatility is also starting to increase to the downside, so stay short.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING
Rice Futures
Rice futures in the May contract settled last Friday in Chicago at 13.59 while currently trading at 13.56 unchanged for the trading week stuck in a 2-week consolidation as prices are looking for some fresh fundamental news to dictate short-term price action.
I will be recommending a short position if prices close, and I want to emphasize that the situation strictly as close only at 13.46 as that level has been breached on multiple times only to rally. Place the stop loss at 13.86 as the risk is around $800 per contract plus slippage and commission.
At the current time, I have two bearish recommendations, which include oats and wheat, as the agricultural markets remain very weak. Rice prices, in my opinion, look very expensive, as this has been one of the strongest bullish trends in 2020. Prices seem to have topped out around the $14 level, in my opinion, however, wait for the breakout to occur 1st before initiating a short position as the risk/reward is in your favor.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE
Wheat Futures
Wheat futures in the March contract settled last Friday in Chicago at 5.51 a bushel while currently trading at 5.21. I have been recommending a bearish position from the 5.44 level while getting out at the 5.21 areal as expiration is upon us as we have to roll over into the May contract.
I will be recommending to sell the May contract at the current price of 5.19 while placing the stop loss above the 10-day high standing at 5.68 as an exit strategy as this market still looks to head lower, in my opinion. The Coronavirus certainly is curbing worldwide demand. All commodity sectors have been hammered this week, including the U.S. equity market, which is down nearly 4,000 points as nobody wants to own anything as I think the $5 level could be touched in next week's trade. At the current time, I also have a bearish oat position which continues to bleed daily as China certainly is a mess at this time as economies are certainly going to slow down as that means demand will remain weak, so stay short.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE
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
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