Saturday, February 20, 2016

Mike Seery's Weekly Futures Recap - Crude Oil, Natural Gas, U.S. Dollar, Gold, Silver, Sugar

It's Saturday and that means it is time for a heads up from our trading partner Michael Seery. We've asked him to give our readers a recap of the this weeks futures markets and give us some insight on where he sees these markets headed. Mike 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 April contract settled last Friday at 31.91 a barrel while currently trading at 32.00 basically unchanged for the trading week with a possible double bottom being created around $29 the level occurring. Crude oil prices are still trading below their 20 and 100 day moving average telling you that the short term trend is to the downside as the long term trend is also to the downside despite the fact that several countries decided to freeze production this week, but that still leaves production at record levels as investors found that as another negative situation.

The volatility in crude oil is extremely high at the current time as I’m looking to possibly enter into a short position on any type of rally as the chart structure has improved tremendously, therefore, lowering monetary risk, but at this point I’m sitting on the sidelines waiting for an opportunity which could develop any day. The commodity markets in general still look weak as I still have many short positions in several different commodity sectors including natural gas which is hitting another contract low today as supplies are just too high across the board despite the fact that the U.S dollar may have topped out.
Trend: Lower
Chart Structure: Poor

Natural gas prices in the April contract settled last Friday in New York at 2.03 while currently trading at 1.89 trading lower 7 out of the last 8 trading sessions as the original recommendation was a short position in the March contract as we rolled over and if you took that trade continue to place your stop loss above the 10 day high which stands at 2.23 as the chart structure is very poor at the present time.

Natural gas prices continue to move lower on a weekly basis as this trade has gone straight down from the original recommendation so continue to place the proper stop loss as the chart structure will start to improve on a daily basis, as I still see lower prices ahead possibly retesting 1.75 and if that is broken I think we can test 1.50 as extremely warm weather in the Midwestern part of the United States continues to plague this commodity.

The fundamentals in natural gas are extremely bearish with all time high inventories as we were producing too many products especially in the energy sector including natural gas so continue to play this to the downside as I'm looking at adding more contracts once some type of price kickback develops, as I still see no reason to own natural gas especially as we enter the month of March, as springtime is upon us.
Trend: Lower
Chart Structure: Poor

The U.S dollar in the March contract settled last Friday at 95.98 while currently trading at 96.92 up around 100 points for the trading week as I’m currently recommending a short position from around the 96.90 level while placing my stop loss above the 10 day high at 97.50 risking around 60 points or $600 per contract plus slippage and commission.

The dollar is trading below its 20 and 100 day moving average telling you that the short term trend is to the downside as prices are near a 4 month low due to the fact that the interest rates in the United States have been dropping dramatically, as lower rates mean a lower U.S dollar generally. Volatility in the dollar certainly has increased because of the stock market which is on a roller coaster ride daily sending shockwaves into currency markets.

The next major level of support is around the 95.00 level and if that is broken I think we can retest the 93 level in the coming weeks as it certainly looks to me that interest rates are even going lower as worldwide rates have turned negative in certain countries which is an amazing situation in my opinion as the risk/reward is in your favor at the present time as I am still recommending this trade even if you did not take the original advice.
Trend: Lower
Chart Structure: Poor

Gold futures in the April contract settled last Friday in New York at 1,239 an ounce while currently trading at 1,231 down about $8 for the trading week trading in a highly volatile manner. Gold prices are trading above their 20 and 100 day moving average telling you that the short term trend is to the upside as prices have skyrocketed from the contract low around 1,050 and now have rallied over $200 in a matter of weeks as panic around the world is sending gold prices sharply higher.

At the current time, I am sitting on the sidelines as the risk is too much for me to tolerate as the only recommendation in the precious metals currently is the silver market as the gold chart structure is terrible. The S&P 500 has been extremely volatile in the year 2016 and that has supported gold prices however the S&P has rallied significantly over the last week, but it has not been a negative influence on gold as there is demand for gold at the current time and I’m certainly not recommending any type of bearish position as that would be counter trend and poor trading in my opinion so avoid this market at the present time.

Trading is all about risk as I see other opportunities in the commodity markets where the risk/reward is in your favor coupled with outstanding chart structure as gold does not meet any of my criteria to enter into a trade as sometimes you miss trades and that’s exactly what has occurred in this situation.
Trend: Higher
Chart Structure: Poor

Silver futures in the March contract settled last Friday in New York at 15.79 an ounce while currently trading at 15.47 down about $.30 in a highly volatile trading week with large swings on a daily basis as I have been recommending a bullish position from around 14.80 and if you took that trade continue to place your stop loss below the 10 day low which now stands at 14.90 a chart structure has improved tremendously over the last several days.

The next major level of resistance in silver is around the $16 level as we will have to roll out of the March contract into the May contract early next week due to expiration as I will give the new stop loss in that blog as well. Silver prices are trading above their 20 and 100 day moving average telling you that the short term trend is to the upside as money flows continue to go back into the precious metals for the first time in several years as the precious metals have fallen tremendously from their highs just hit in the year 2011.

In my opinion, the U.S dollar has topped out which is bullish the precious metals so stay long this market while placing the proper stop loss as volatility has certainly come back into this market which is generally a bullish indicator.
Trend: Higher
Chart Structure: Improving

Sugar futures in the May contract settled last Friday in New York at 13.12 while currently trading at 12.64 a pound hitting a fresh 5 month low as I’ve been recommending a short position originally in the March contract as we rolled over into the May contract and if you took that trade place your stop loss above the 10 day high which stands at 13.50 as the chart structure is poor.

Sugar prices are trading lower for the 3rd consecutive day as I still think there’s a probability that prices will fill the gap at 11.80 which is still another 85 points away as prices are still trading far below their 20 and 100 day moving average telling you that the trend is getting stronger to the downside on a weekly basis so stay short in my opinion while placing the proper stop loss.

Sugar prices experienced a rounding top which I’ve talked about in many previous blogs over the last several weeks peeking out around 15.50 as being nimble is a major key to success in my opinion as waiting for the trade to develop is definitely beneficial in the long run so stay short as I’m looking to add more contracts once the chart structure and the risk/reward meet my criteria as lower prices are ahead in my opinion.
Trend: Lower
Chart Structure: Poor

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