trading partner Michael Seery to give 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.
Here's Mikes call on crude oil, gold and silver. Read more of his calls for this week by visiting here.
Crude oil futures in the May contract are down $1.00 this Thursday afternoon currently trading at 49.00 a barrel after closing last Friday at 40.87 basically unchanged for the trading week with very volatile trading sessions including yesterday when prices were up about $3 dollars as I’m still sitting on the sidelines in this market as the trend remains mixed and very choppy. Crude oil futures have been consolidating between $45 – $55 for the last three months after falling out of bed from around $90 a barrel to around $45 and that doesn’t surprise me as we could see sideways action for several more months to come so be patient and look at another market that’s currently trending.
If you take a look at the daily chart there’s a possible double bottom being created around the $45 level and if you are bullish this market and think prices have bottomed I would probably take a shot at today’s price level while placing my stop loss below $45 risking around $4,000 per contract plus slippage and commission, however like I stated I’m currently waiting for a true breakout to occur. Traders are awaiting tomorrow’s monthly unemployment number, however markets will be closed so the reaction will happen on Sunday night and that will send high volatility into the market as expectations are 244,000 new jobs added as a stronger economy certainly creates stronger demand for gasoline and crude oil.
Chart Structure: Solid
Get our latest FREE eBook "Understanding Options"....Just Click Here!
Gold futures in the June contract are down $11 this Thursday afternoon in New York trading at 1,197 an ounce basically unchanged for the trading week as investors are awaiting tomorrow’s monthly appointment number which should send high volatility into this market as prices have rallied about $60 over the last three weeks as profit-taking ensued in today’s trading action. Gold futures are trading above their 20 day but still below their 100 day moving average telling you that the trend is mixed as I’m sitting on the sidelines waiting for better chart structure to develop as tomorrows trade should be very interesting.
Estimates are around 244,000 new jobs added so any number higher than that will probably send gold prices sharply lower as that might in turn tell the Federal Reserve that interest rates might have to be raised sooner rather than later. The next major resistance in gold prices is at 1,220 as that’s the true breakout to the upside in my opinion, however the chart structure remains poor at the current time so wait for a tighter trading range to develop allowing you to place your stop loss minimizing risk as much as possible and try to stick with trades that are trending as this market remains very choppy so avoid gold at the current time.
Chart structure: Poor
Three Fear Resistant Commodities That Look Tasty....Just Click Here!
Silver futures in the May contract settled last Friday at 17.07 an ounce while currently trading at 16.85 on this holiday shortened week due to the Good Friday holiday tomorrow the markets will be closed finishing down around 20 cents for the trading week still hovering near a 6 week high. Silver futures are trading below their 20 and 100 day moving average as I have been sitting on the sidelines in this market as the chart structure is poor at the current time, however if you are bullish silver prices and think prices have bottomed my recommendation would be to buy at today’s price while placing your stop loss at the 10 day low which currently stands at 16.47 risking about $.40 or $400 per mini contract plus slippage and commission.
Volatility in silver and the precious metals as a whole has come back as weakness in the S&P 500 is starting to put money back into the precious metals in the short term as the U.S dollar has been consolidating their recent run up as I still see choppiness ahead in silver as I’m waiting for a better chart pattern and tighter chart structure to develop therefore allowing you to place a tighter stop loss minimizing monetary risk.
CHART STRUCTURE: POOR
Coffee futures in the May contract are currently trading up 300 points at 137.80 a pound basically finishing unchanged for the trading week as volatility remains high despite the fact that prices remain in an extremely tight trading range over the last four weeks between 130 – 145 as a breakout is looming in my opinion as I’m currently sitting on the sidelines waiting for something to develop.
If you have been following my previous blogs I have very few recommendations at the current time as many of the commodity markets are consolidating in the sideways pattern just like the coffee market as a breakout will not occur until prices break above 145 or below 130 as we start to enter the frost season in Brazil which can occur in May and June like it did in 1994 sending prices from 60 all the way up to around 260 in a matter of weeks.
In my opinion coffee prices are on the verge of a bottoming pattern and we might go sideways for quite some time so keep a close eye on this market as this sleeping giant will wake up once again. Coffee prices traded as high as 230 just 6 months ago dropping dramatically as excellent weather conditions persisted throughout the growing year in Brazil but that has already been priced into the market as volatility certainly will increase.
Chart structure: Excellent
Money Will Rotate into These Dead Investments, Check out our Gold Forecast....Just Click Here!