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 January contract settled last Friday in New York at 46.06 a barrel while currently trading at 50.55 up about $4.50 for the trading week all due to the fact of OPEC cutting 4.5% of production sending prices in Wednesdays and Thursdays trade sharply higher now hitting a 5 week high. Prices bottomed out around November 14th at 42.74 & now has rallied about $8 as this market remains extremely choppy and has gone nowhere over the last 6 months as I am currently sitting on the sidelines as the chart structure is poor therefore the monetary risk is too high to enter in my opinion. The energy sector has caught fire including natural gas as winter is now upon us which is the high demand for heating oil as well, however I still think this market remains choppy for the rest of 2016 as a strong U.S dollar could limit prices to the upside in my opinion so look at other markets that are beginning to trend with less risk. Crude oil is now trading above its 20 and 100 day moving average with major resistance around the $52 level which was hit in the month of October on a couple of different occasions and if that level is broken you have to think that the bullish trend would continue, but at present I'm recommending no position.
Chart Structure: Poor
Natural gas futures in the January contract settled last Friday in New York at 3.20 while currently trading at 3.46 up significantly for the trading week hitting a 5 week high. At the current time, I'm sitting on the sidelines as I wrote about this market 2 weeks ago as I was looking to get into a bullish position. However, the chart structure did not meet my criteria as the monetary risk was too high at the time. Natural gas prices are trading above their 20 and 100 day moving average telling you that the short term trend is higher as prices look to retest the contract high which was hit on October 18th at 3.67 as we enter the extremely volatile winter season which can cause tremendous price spikes due to very cold weather in the Midwestern part of the United States. Natural gas has been on a wild roller coaster bottoming out on November 9th at 2.72 as I'm looking for a consolidation before entering as the entire energy sector has caught fire over the last several weeks. There is a price gap between 3.22/3.25 and that makes me nervous if you have a bullish position as I do think that gap will be closed within the next week so let's keep a close eye on that price level.
Chart Structure: Poor
Gold futures in the February contract settled last Friday in New York at 1,181 an ounce while now trading at 1,175 hitting a fresh 8 month low as prices continue to move southward on a weekly basis as I am kicking myself as I am not short, however, I have not been picking a bottom either. At present, I'm telling investors to avoid this market, but certainly, do not be buying this commodity as I do believe lower prices are ahead as I'm still very bullish the U.S dollar and the stock market as a whole since both of those are negative towards gold prices. The 10 year note today broke 2.40% which is the highest yield since January and I do believe interest rates are going higher which is not another negative influence towards gold prices. Gold futures continue to move lower despite the fact that crude oil is about $6 in the last 2 trading sessions which generally is very bullish most inflationary commodities, however, that shows you how weak gold is at present as demand is lacking.
Chart Structure: Poor
Silver futures in the March contract settled last Friday in New York at 16.55 an ounce while currently trading at 16.53 basically unchanged with the week trading in a very nonvolatile manner as prices are stuck in a two week consolidation after hitting a 5 month low. Silver prices are trading below their 20 and 100 day moving average telling you that the short term trend is lower as I'm currently sitting on the sidelines waiting for another trend to occur which could develop in the next couple of weeks as the chart structure is improving on a daily basis, therefore, lowering monetary risk. Gold prices have been falling rather dramatically ever since the Trump election as that has put severe pressure on silver prices ,however if we are going to expand the economy & do huge infrastructure stimulus I would think that silver prices look cheap as copper prices are still right near recent highs and sharply higher from their 2016 lows. Trading is all about risk/reward and at present I just don't see a trade in this commodity as trading to trade is a very dangerous over the course of time as you must be patient and wait for probabilities to improve in your favor.
Trend: Lower - Mixed
Chart Structure: Improving
Coffee futures in the March contract settled last Friday in New York at 155.0 a pound while currently trading at 145.60 down about 900 points from trading week with prices not seen since mid August as prices topped out last month around the 1.80 level, but at the current time I'm sitting on the sidelines as the chart structure has been poor in this market for months. Coffee prices are trading below their 20 and 100 day moving average for the 1st time in months & that tells you that the short term trend is lower with the next major level of support around the 140 level as I do believe coffee prices are getting cheap. A strong U.S dollar is certainly keeping a lid on many agricultural products including coffee, but my only short position in the soft commodities is a short sugar position which also continues to move lower. However, the volatility will be to the upside in coffee as were starting to enter the very volatile and critical winter growing season in the country of Brazil. Many of the commodity markets have been very choppy over the last several months, and that's why I only have 1 trade recommendation as I'm waiting for better chart structure to develop across many different sectors as that might take some time.
Chart Structure: Poor
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