Gold Futures
Gold futures in the December contract settled last Friday in New York at 1,962 an ounce while currently trading at 1,860, down over $100 for the trading week, experiencing one of their worst percentage loss in months.
I'm not involved, but if you look at the daily chart, it looks like lower prices are ahead as the downtrend line remains intact, with prices now trading below their 20 and 100-day moving average for the first time in months. It looks to me that prices will test major support around the 1,800 level in the coming days. The U.S. dollar has hit a 2 month high as that has negatively influenced the precious metals that have fallen out of bed this week.
Gold prices are experiencing high volatility as that situation will not change anytime soon. I am advising clients to sit on the sidelines as I will be looking at a bullish position down the road. Fundamentally speaking, the Federal Reserve will implement trillions and trillions of stimulus dollars into this economy. Eventually, it will push all asset classes higher as I think this is just a consolidation of the massive run-up that we witnessed over the last 6 months, but I do not believe the long term trend is over with just the short-term trend has turned negative.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE
Silver Futures
Silver futures in the December contract absolutely collapsed this week after settling last Friday, New York at 27.12 an ounce while currently trading at 22.85, down about $4.25 for the week as prices have now hit a 2 week low.
I am not involved in silver as my only recommendation was copper and platinum as the whole sector had a tremendous wash out this week. I will be looking at a bullish position if prices can test the $20 level in the coming weeks ahead. Silver is now trading below its 20 and 100-day moving average as the trend is to the downside as. Fundamentally speaking, the U.S. dollar hit a 10-month high as that is a negative factor for silver prices.
I think silver prices are headed slightly lower in the coming weeks ahead, but I will be looking at a bullish position, as I stated before. I do not think the $30 level will be the high in 2021, especially with all of this Federal stimulus money being put into action as prices are looking cheap, in my opinion. The volatility at the current time is extremely high. If you are involved, make sure that you only risk 2% of your account balance on any given trade as I will be lying in the weeds waiting for a special opportunity to come about.
TREND: LOWER - MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Copper Futures
Copper futures in the December contract settled last Friday in New York around the 3.1100 level while currently trading at 2.9600, down about 1500 points for the week, hitting a 2 week low.
I had been recommending a bullish position from around the 3.0140 level, getting stopped out earlier in the week around the 2.9560 level. The entire precious metal sector absolutely fell out of bed this week due to a strengthening dollar coupled with massive profit-taking. The stock market volatility is high, especially to the downside, spooking many other commodity sectors. The trend remains mixed at the current time, but I do believe a copper bottom will be formed soon.
Copper prices are trading right at their 20-day but still above their 100-day as the trend is mixed in the short-term, so be patient as we could be involved soon as I think higher prices are ahead despite this recent setback. I do not have any precious metal recommendations as I was stopped out of platinum, which also fell out of bed earlier in the week. There's a lot of uncertainty out there due to the Coronavirus and the U.S. election sending shockwaves throughout the markets this week.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Live Cattle Futures
Cattle futures in the December contract is currently trading at 112.15 after settling last Friday in Chicago at 111.85, basically unchanged for the week still looking to continue its bullish trend in my opinion.
The volatility has come to a crawl over the last several weeks as we are awaiting some fresh fundamental news to dictate short term price action. Prices are trading above their 20 and 100-day moving average. The trend is to the upside as I'm keeping a close eye on this market looking to enter into a bullish position on some type of price pullback, therefore lowering the monetary risk. If you are long a futures contract, I would place the stop loss under the 2 week low standing at the September 22nd low of 109.80 as an exit strategy. For the bullish momentum to continue, prices after break the 112.47 in my opinion, and if that does occur, I think the 115 level will be touched soon as I see no reason to be short cattle.
I do not have any livestock recommendations. I'm also keeping a very close eye on a possible bullish position in the hog market, but the chart structure is terrible; therefore, the monetary risk is too high. However, the cattle situation is completely different as the chart structure is excellent, so look to play this to the upside.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
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Coffee Futures
Coffee futures in the December contract is currently trading at 111.65 a pound as prices continue to hover right near a 14 year low. I believe the 100 level will hold as I'm looking at a possible bullish position once the risk/reward becomes more in your favor. I will not go short as I think the downside is very limited.
Coffee prices are trading below their 20 and 100-day moving average as the trend is lower to mixed as I would like to see this market trade down to the 105 level while then keeping a close eye on the possible bullish position, so be patient as I still think there's a little weakness ahead.
Demand concerns continue to weigh on coffee prices as a resurgence of the global COVID pandemic may prompt countries to re-impose lockdowns that curb economic growth and coffee consumption. Coffee prices remain on the defensive on signs of bigger coffee supplies as well after Conab on Tuesday said it sees Brazil 2020 arabica coffee output at 47.4 mln bags, up +38% y/y and above a previous estimate of 46 mln bags. I do not have any soft commodity recommendations as these markets remain choppy; however, I think once the U.S. election is finished, the bullish trends will arrive once again.
TREND: LOWER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE
Wheat Futures
Wheat futures in the December contract settled last Friday in Chicago at 5.75 a bushel while currently trading at 5.47, down about $0.28 for the trading week experiencing high volatility as we have wild trading swings daily.
I have been recommending a bullish position from around the 5 .40 level, and if you took that trade, continue to place the stop loss under the 10 day low, which stands at 5.33 on a hard basis only as I'm not willing to risk any more than that level as an exit strategy. The volatility will continue to remain high as we enter the highly volatile seasons of autumn and winter as wheat can experience tremendous swings, especially if a drought or any type of weather problem develops in any of the key growing wheat countries worldwide.
For the bullish momentum to continue, prices have to break last Fridays high of 5.75. I will not second guess as the trend remains higher coupled with the fact that the uptrend line remains intact, and if the 5.33 level is broken, that situation would also have been breached as then, it would be time to move on.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH
Soybean Futures
Soybean futures in the November contract settled last Friday in Chicago at 10.43 a bushel while currently trading at 10.01, down about $0.42 for the trading week. Prices are right near a 2 week low as the entire grain market was lower across the board blamed on overbought conditions and profit-taking.
I have been recommending a bullish position over the last month or so from around the 9.14 level & if you took that trade, continue to place the stop loss on a hard basis only under the 2 week low, which now stands at 9.85 as I'm not willing to risk any more than that price level. The volatility in soybeans certainly has expanded as we are experiencing multiple $0.20 trading ranges daily. That situation will remain for the foreseeable future as we await the next crop report, which will be released in 3 weeks. That will certainly send high volatility back into this market.
Even if we are stopped out, I think the lows in the grain markets have occurred. I think we are now starting to enter a secular bullish trend going into 2021, which is excellent news for the farming community as the giant bearish trends finally have capitulated.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH
Soybean Meal Futures
Soybean meal in the December contract settled last Friday in Chicago at 342 a ton while currently trading at 339, down slightly for the trading week as prices hit a 2 year high in Wednesday's trade as the trend remains to the upside.
I have been recommending a bullish position from around the 299 level. If you took that trade, continue to place the stop loss under the 2 week low, which stands at 317, as an exit strategy. However, the chart structure will improve tremendously in 2 trading sessions; therefore, the monetary risk will be reduced dramatically. Soybean meal prices are still trading far above their 20 and 100-day moving average as the trend is strong to the upside. Fundamentally speaking, China has come back with large purchases of U.S. soybeans coupled with the fact that production numbers continue to decline into harvest as this market remains bullish despite the recent setback over the last couple of days.
For the bullish momentum to continue, prices have to break last Wednesday's high of 348. If that does occur, I think prices could trade as high as 375 in the coming weeks ahead, so stay long as the risk/reward remains in your favor due to the improving chart structure.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
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.
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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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.
