Saturday, May 3, 2014

Commodities Market Recap and this Weeks Stops and Trading Numbers

Today our trading partner Michael Seery gives our readers a weekly recap of the Futures market. He has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.....

Crude oil futures in the June contract finished up around $.35 this Friday afternoon in New York as prices were down about $2.00 for the trading week right near 4 week lows and I am neutral in this market currently and waiting for a better trend to develop as supplies are at 85 year highs here in the United States which is a bearish factor however you also have problems in the Ukrainian region which is a bullish indicator so this market could remain choppy so wait for better chart structure to develop. Crude oil futures are trading below their 20 day moving average but above their 100 day moving average telling you that the trend is mixed so look for a better trending market to get involved with.

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Natural gas futures in the June contract finished lower for the 3rd consecutive trading session finishing higher by 3 points for the trading week to close around 4.69 as I’m recommending a long position in this contract placing my stop loss below the 10 day low which stands at 4.50 risking around 20 points or $500 per contract as the trend is still higher in my opinion as the risk reward situation is highly in your favor as we enter the demand season of summer.

Natural gas prices have been in a bull market for quite some time and if you read some of my previous blogs several months back when prices were in the low $3 I was recommending if you have deep pockets and a longer term horizon to buy natural gas as prices were extremely cheap due to the fact of large supplies, however we had an extremely cold winter which reduced supplies dramatically and I do think natural gas prices will be sharply higher from today’s level in the next year as prices have bottomed out in my opinion.

As a trader I focus on today and tomorrow only so when I can buy a natural gas contract and risk 1,500 I will take that trade even if I don’t believe the trade. Natural gas prices are trading above their 20 and 100 day moving average telling you that the trend is higher after we consolidated in the month March after the big run-up in early winter as prices seem to be resuming back up to the upside so play this market to the upside using my stop loss and proper risk management.

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Gold prices had a volatile trading week basically finishing unchanged to settle around 1,298 in the June contract after having a tremendous reversal selling off down to 1,272 when the monthly unemployment number was released adding 280,000 jobs which is bullish the economy and bearish gold but then turned on a dime with the Ukrainian problems escalating sending gold finishing up $14 this Friday right near session highs as prices have been consolidating in recent weeks. I’ve been sitting on the sidelines in the gold market for quite some time as this market remains choppy and it might be bottoming at the current price levels as gold rallied $200 to start the year but now has given back over $100 so were at about the 50% retracement so if your bullish gold I would buy a futures contract at today’s price while placing my stop at the 10 day low which is also the 10 week low of 1,268 an ounce risking around $3,000 per contract. I’ve lived through many of these political escalations including one last August with Syria and they always seem to fizzle away so we will see if today’s rally will do the same but sit on the sidelines and see what develops. The one thing gold does have going for it is trading above its 20 and 100 day moving average which is telling you that the trend might be turning higher as prices could be bottoming out.

Why Are So Many Boomers Working Longer?

Silver futures are trading below their 20 and 100 day moving average as volatility has come back into this market in the last week as prices reversed sharply off of yesterday’s contract lows of 18.66 to go out this Friday afternoon at 19.47 an ounce and if you been reading any of my previous blogs for months I’ve been talking about the possibility of silver bottoming at the $19 level and if you have deep pockets and you’re a longer-term investor I’m recommending that you buy silver as I think prices are cheap. I am bullish silver not because of the Ukrainian problems but because of the fact that the commodity markets are in a bullish trend and silver will catch up eventually as this is a highly inflationary commodity with a lot of demand as silver is used in smart phones unlike gold which really has no purpose except for a flight to quality and jewelry. Prices reversed today because of the Ukrainian situation seems to be escalating and it sent prices sharply higher but the true breakout in this market is at 20.40 that’s where I really would be recommending to get long and if you are in a futures contract already I would be adding to my position if prices break that level as a spike bottom may have occurred in yesterday’s price action.

Here's our Critical Line in the Sand for Silver

Coffee futures settled last Friday at 207 while going out this afternoon in New York at 203 continuing its high volatility as prices are still trading above their 20 and 100 day moving average as the chart structure is starting to improve with the 10 day low currently standing at 194 which is about 1000 points away or $3,500 risk. As I’ve talked about in previous blogs coffee is a very large contract and should not be traded with a small trading account due to its high volatility as prices remain strong in my opinion so I’m sticking with my previous recommendation and just keep my stop at the 2 week low as will start to see some estimates on the Brazilian crop which should give us some short term price direction. Prices have basically stalled out in the low 200s in recent weeks as prices are still consolidating the giant move up we had earlier in the year as coffee prices are about 80% in the year 2014 as the drought in Brazil really took its toll so I remain bullish.

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