Saturday, March 19, 2016

Mike Seery's Weekly Futures Recap - Crude Oil, Natural Gas, Gold, Coffee, 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 in New York at 38.50 a barrel while currently trading 40.65 up over $2 for the trading week now trading above its 20 and 100 day moving average for the first time in 6 months. The selloff in the U.S dollar has pushed up oil prices tremendously over the last several weeks. Oil prices are trading higher for the 3rd consecutive day; however this rally has been based on very low volume which is a little concerning as I'm sitting on the sidelines in this market as I have missed the rally to the upside. The U.S dollar has hit a 6 month low and that has propped up many commodity prices and especially crude oil as gasoline and heating oil also have rallied substantially. You will notice this at your local gas station as you are paying much more than you were just three or four weeks ago as the tide has turned in the commodity markets. Rumors are circulating that Saudi Arabia is going to urge OPEC to start cutting production, therefore, pushing up prices even higher as their economy is struggling due to low prices. However, the chart structure is poor and sometimes you miss trades as this did not meet criteria to enter into and that's exactly what happened to me, as I am leery of this market in 42/45 level as I assume production will come back onto the table because of higher prices.
TREND: HIGHER
CHART STRUCTURE: POOR

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Natural gas futures in the April contract is now trading above its 20 day, but still below its 100 day moving average settling last Friday in New York at 182 while currently trading at 194. I was recommending a short position getting stopped out earlier in the week as now I'm currently sitting on the sidelines. Natural gas prices are trading at a 4 week high. However, the chart structure is poor meaning that the 10 day low it's too far away to meet my criteria to enter into a new trade so keep a close eye on this market as we could get involved to the upside soon. The fundamentals remain bearish. However, that has already been reflected in the price as supplies are huge at the present time, but the bearish short term trend has ended in my opinion. The energy sector has caught fire over the last several weeks as crude oil is now trading at 42 a barrel which has also supported gas prices in the short term, but look at other markets that are beginning to trend with higher potential.
TREND: MIXED
CHART STRUCTURE: POOR

Gold futures in the April contract settled last Friday in New York at 1,259 an ounce while currently trading at 1,254 down slightly for the trading week in a very highly volatile trading manner as prices reacted sharply to the upside off of the Federal Reserve statement of not raising interest rates sending prices up over $40 in Thursday's trade. At the current time, I'm sitting on the sidelines in this market as I have missed the upside. However, I am not bullish gold at this price level as I think prices are topping out. However I'm not recommending a short position, but if you believe my opinion, I would sell a mini contract while placing the stop loss above the most recent high of 1,287 risking $30 or $1,000 per mini contract plus slippage and commission. Negative interest rates throughout the world have spooked investors back into the gold market as commodities, in general, have rallied as a whole. However, I remain bullish the stock market which continues to move higher as I think money flows will come out of the precious metals here in the short term. Remember when trading commodities it’s all based on risk as the risk/reward on the short side I think is in your favor, but it does not meet my criteria for an official entry into a new trade which has to be a 4 week low, but decide for yourself what's best for your trading account.
TREND: HIGHER
CHART STRUCTURE: POOR

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Coffee futures in the May contract settled last Friday in New York at 125.80 a pound while currently trading at 134.50 trading higher for the 3rd consecutive trading session up around 900 points for the trading week hitting a 5 month high. I've been recommending a bullish position from around the 121.50 level and if you took that trade continue to place your stop loss below the 10 day low which currently stands at 119 as the chart structure is terrible at the present time due to the fact that coffee prices have exploded to the upside over the last week. The commodity markets, in general, have rallied substantially due to the fact that the U.S dollar has hit a 6 month low and it certainly looks to me that the bear markets are over with in the short term. However, if you have missed this trade the risk/reward is not your favor at the current time as you missed the boat so you must look at other markets that are beginning to trend. The next major level of resistance is the October high around 142 as I think prices could test that level next week as coffee prices are still cheap in my opinion as demand currently is strong. At the current time, I'm recommending a bullish position in cocoa and coffee as the soft commodity markets have certainly caught fire recently including the sugar market so start looking at the commodities to the upside.
TREND: HIGHER
CHART STRUCTURE: POOR

Sugar futures in the May contract settled last Friday in New York at 15.13 a pound while currently trading at 15.86 continuing its remarkable bullish run to the upside hitting a 14 month high as I'm sitting on the sidelines as the chart structure has not met my criteria towards entering into the trade. However, I'm certainly not recommending any type of short position as it looks to me that prices are headed even higher. Sugar futures are trading above their 20 and 100 day moving average telling you that the short term trend is to the upside as the commodity markets have caught fire as who knows how high sugar prices can actually go as production cuts throughout major growing regions throughout the world are causing concerns about carryover levels pushing prices up tremendously over the last 3 weeks. Remember when you trade commodities the trend is your friend and trading with the path of least resistance is the most successful way to trade in my opinion over the course of time so do not sell sugar at this point, but if you have missed this trade sit on the sidelines and look at other markets that are beginning to trend as the horse has left the barn in this market in the short term.
TREND: HIGHER
CHART STRUCTURE: POOR

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