Mike Seery is back this week 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.
Crude oil futures in the August contract are trading lower for the 3rd consecutive trading session currently trading at 58.87 a barrel while settling last Friday in New York at 59.97 down about $1 for the trading week still stuck in nonvolatile sideways trend despite the fact that prices hit a two week low in today’s trade as I’ve been recommending a short position for over a month and if you took the original trade continue to place your stop loss above the 10 day high at 61.81 risking around $3 or $1,500 per mini contract plus slippage and commission. Crude oil is trading below its 20 day but still slightly above its 100 day moving average as I’ve traded crude oil for 20 years and I can’t remember such a nonvolatile stretch like we’ve had in the last several months consolidating the giant move to the upside. The next breakout level is below 57.00 and if that level is broken prices could move sharply lower but that’s a big if as volatility is extremely low at the current time. Next week is the 4th Of July holiday weekend as I think volatility will remain low until Friday’s monthly unemployment report which could dictate the short term trend.
Chart Structure: Improving
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Gold futures in the August contract settled last Friday in New York at 1,202 while currently trading at 1,170 an ounce down about $30 for the trading week remaining incredibly choppy as I was recommending a short position getting stopped out in last week’s trade when prices bumped up against 1,200 as I’m sitting on the sidelines at the current time waiting for another breakout to occur and that could happen soon as prices remain very weak. Gold futures are trading below their 20 and 100 day moving average looking to break the critical 1,170 level and the second critical level is 1,160 if that level is broken I would have to think that the bear market is underway as I see no reason to own gold at the current time as all the interest is in the stock market which is right near all time highs. Gold only seems to rally due to the fact that Greece could possibly exit the Euro Zone and that’s why I got stopped out in last week’s trade. The chart structure in gold is outstanding but if prices do break I will be recommending a short position while placing my stop above the 10 day high which 1,205 risking around $35 or $1,200 risk per mini contract plus slippage and commission so be patient and wait for the breakout to occur.
Chart Structure: Improving
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Coffee futures in the September contract are trading above their 20 but slightly below their 100 day moving average continuing its sideways trend settling last Friday in New York at 130 while currently trading at 136 as I do think prices have bottomed out around the 128 level, however prices have not hit a four week high so I’m waiting for a breakout to occur. The chart structure is improving dramatically as volatility remains relatively low as I do think a breakout to the upside is in the cards as prices hit a 2 week high in today’s trade as many of the agricultural markets have bottomed and are moving higher especially the grain market due to weather problems. The problem with coffee is the fact that we had huge production coming out of Brazil coupled with the fact that of a very weak Brazilian Real against the U.S dollar pushing many agricultural products that are grown in Brazil lower including orange juice, sugar and coffee in 2015, however everything comes to an end and it certainly looks to me that prices are going higher. I deal with many producers down in Brazil and in my opinion I would start to buy the actual cash coffee as I think prices are low enough but for speculators wait for the breakout which would be a 4 week high before entering which could happen in next week’s trade.
Chart Structure: Excellent
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Sugar futures in the October contract settled last Friday at 11.55 a pound while currently trading at 11.92 up about 37 points for the week as I’ve been recommending a short position over the last month and if you took that trade continue to place your stop loss above the 10 day high which is just an eyelash away at 12.12 risking around 20 points or $220 dollars per contract plus slippage and commission as the chart structure is outstanding at the current time. Sugar prices hit a 6 year low as I remember in 2010 prices were trading around 35 rallying with many of the commodity markets due to quantitative easing as that’s how far prices have dropped as production numbers in Brazil are relatively high. Harvest is underway which generally creates a seasonal low at harvest time, however I’m a technical trader and I will continue to stick to the rules and place my stop at the 10 day high as overproduction over the last several years has sent prices to multi year lows and if we are stopped out then look at other markets that are beginning to trend.
Chart Structure: Outstanding
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