Sunday, March 9, 2014

Weekly Futures Recap With Mike Seery

The U.S dollar sold off slightly this week finishing at 79.70 hitting a 12 week low looking to retest the contract lows which were hit 4 months ago around 79.40 as I’m recommending a short position in the U.S Dollar Index placing my stop above the 10 day high which currently stands at 80.60 risking around $800 per contract as the trend now has turned bearish in my opinion. The commodity markets certainly like the fact that the U.S dollar is headed lower as well as the bond market rallying sending interest rates to new recent lows as it reminds me of 2006 all over again when stocks and commodities moved higher as the U.S equity market hit all time highs in the S&P 500.

Remember when you trade you want to try to keep it simple and this trade is extremely simple by recommending selling one futures contract and continuing to place your stop at the 10 day low as I do think contract lows will be breached next week as the Euro currency finished up over 100 points in the last 2 days to close above 1.3870 also hitting new recent highs with 1.40 next resistance point.

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The bond market finished lower for the 3rd straight trading session on Friday especially the five-year notes finishing down 12 ticks to close at 119 – 06 in the June contract having one of its weakest 3 days in over 2 months as the unemployment number came in at 175,000 which was construed as extremely bullish the economy sending bond yields higher. I have been advising a short position in the five year note for several months and I still believe if you’re a longer term investor and not necessarily a trader who gets in and out these are terrific selling opportunities as next month’s unemployment number in my opinion will improve and I think this is just an up day that you should be taking advantage of to get short.

The five year note is trading below its 20 & 100 day moving average hitting a 5 week low on Friday with large volume and if you’ve followed me on any of my previous blogs I generally place my stop at the 10 day high or low as an exit strategy, but as I stated earlier I am a long term investor on the five year note as I think rates are moving higher over the course of time and this is a trade you might stay in for 2 years but take advantage of historically low rates because eventually the Federal Government will stop there bond purchases it’s just a matter of when. If you have any questions on how to structure a portfolio to getting short the bond market while taking advantage of historically low rates feel free to contact me anytime will be more than happy to help.

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Coffee Futures in the May contract are trading above their 20 day moving average and are trading 8000 points higher than their 100 day moving average that’s how far prices have come in the last 6 weeks as the drought in central Brazil continues its stranglehold on coffee growing regions pushing prices sharply higher currently trading at 198 in the May contract and I’ve been recommending a long position in coffee and if you’re still in this market I would place my stop below the 10 day low which is currently 170 as the chart structure is starting to improve & if you been reading my previous blogs I received a very interesting email last week from one of the largest coffee producers in Brazil and he was stating that there crop was absolutely devastated and there could be long term ramifications into next year as well and he also showed me many pictures of coffee trees and they were decimated too so I continue to remain bullish this market, however this market is extremely volatile at the current time so look at some July bull call option spreads as my next level is up to 2.50/2.75 as a possible target.

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Sugar futures in the May contract sold off 31 points this Friday afternoon in New York but still finished higher by about 40 points for the trading week continuing its bullish trend as the drought in central Brazil is pushing up prices in recent weeks and I continue to recommend a bullish position in sugar while placing your stop loss at the 10 day low which currently stands at 17.00 which is about 100 points away or $1,100 per contract. This is the 3rd consecutive week that sugar has traded higher and has turned from a bear market into a bull market with the next major resistance around 19/1950 which was hit last October and I do believe prices could go back up to those levels as the commodity markets in general have turned higher as the CRB index its trading at its highest level since October 2012 as many commodities are at all time highs. Anything grown in Brazil at this time due to the drought seems to be moving higher so I remain bullish the entire soft commodity complex just make sure that you do have an exit strategy in case prices turn around. Sugar futures are still trading above their 20 and 100 day moving average telling you that the trend currently is higher.

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Corn futures in the December contract which is the new crop which will be harvested this fall was down $.05 at 4.84 but rallied about $.13 for the trading week closing on a disappointing note in Chicago and I’ve been recommending a bullish position in corn for quite some time while placing my stop at the 10 day low which currently stands at 4.60 risking around $.24 from today’s level or $1,200 per contract as traders are awaiting Mondays USDA crop report. The chart structure in corn is outstanding at this time and that is why am recommending this trade as prices are trading above their 20 and 100 day moving average continuing the bullish trend as Spring is right around the corner here in Chicago as there is still large amounts of snow in the fields but we are starting to warm up this week with 40/50° days and this should be an extremely volatile year in corn as prices will have tremendous fluctuations due to weather conditions.

The whisper number for Monday’s crop report is around 92 million acres as last year was 97 million acres planted so the crop probably will not be a record this year as we harvested nearly 14 billion last year but this will be a long growing season but at the current time. I’m recommending buying on weakness making sure that you have some type of exit strategy as I think commodities as a whole are going higher.

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