Weekly Futures Recap with Mike Seery....Crude Oil, Gold, Coffee and More

Our trading partner Mike Seery is out with his calls for this week and he includes some of reliable rules to protect our profits.

Crude oil futures in the March contract settled last Friday at 49.00 while currently trading at 47.50 up about $.80 in early trade this Friday morning in New York as extreme volatility has occurred in recent days and if you’re still short this market I would now place my stop above yesterday’s high which currently stands at 51.73 risking around $4.25 or $4,250 per contract plus slippage and commission from today’s price levels. Crude oil futures are trading significantly below their 20 and 100 day moving average telling you that the trend still remains bearish as oversupply has decimated prices in recent weeks as who knows how far prices can actually go but stick to the rules as the 10 day high has tightened up considerably as prices have gone sideways in the last week or so with big trading ranges.

Crude oil prices have been dramatically cut in recent months due to the fact that Saudi Arabia refuses to cut supply coming out earlier this week reiterating that fact that they will not cut which keeps sending prices lower as they are trying to squeeze some American companies to get out of the business as the U.S is now a major producer which we weren’t just 5 years ago and that’s what’s changed the situation. The crude oil market I believe for the 1st time in history is not putting any price premium as in the past we always had a $10 or $20 price premium due to the fact of chaos in the Mideast but at this point problems in the Mideast are not affecting crude oil prices so this market still could remain bearish for some time to come especially with the U.S dollar hitting a 9 year high which is pessimistic all commodity prices.
Trend: Lower
Chart structure: Improving

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Gold futures in the February contract are slightly lower this Friday afternoon in New York after settling last Friday at 1,216 currently trading at 1,260 as I’m currently recommending a long futures position while placing your stop loss below the 10 day low which is around 1,209 risking around $50 or $1,650 on a mini contract plus slippage and commission. Gold futures are trading above their 20 and 100 day moving average hitting a 5 month high as the chart structure will also start to improve on a daily basis starting next week as the market has caught fire recently due to worldwide problems as money is pouring back into the precious metals and out of the S&P 500 in the beginning of 2015.

Yesterday the Swiss government announced they will let the Swiss Franc float rocketing that currency up while sending shock waves through the bond and currency markets and it certainly looks to me that problems are here to stay here for a while as Europe is a mess and this could push gold up to the next resistance level of 1,300 – 1,320 so take advantage of any price dip while maintaining the proper stop loss risking 2% of your account balance on any given trade as gold has finally turned into a short-term bull market once again.
Trend: Higher
Chart structure: Improving

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Coffee futures in the March contract have been extremely volatile in recent weeks due to the fact of concerns of lack of rain down in Brazil pushing prices up in over the last several weeks as I’m currently sitting on the sidelines in this market as coffee prices are trading above their 20 but still below their 100 day moving average telling you the trend is mixed. Coffee prices settled last Friday at 180 and are currently trading at 175.30 topping out around the 185 area as volatility should increase as the next 3 weeks are very critical to the coffee crop as traders are keeping a close eye on Brazilian weather.

As I’ve talked about in many previous blogs I think it’s very difficult historically speaking to have back to back droughts, but you never know as the weather is unpredictable, however this market has been choppy so wait for a better trend to develop and avoid any type of futures position at this time in my opinion. Many of the commodity markets are still heading lower because of the U.S dollar hitting a 9 year high and if adequate rain comes to key coffee growing regions over the next 3 weeks I would have to think that a retest of the 160 level would be in the cards so have patience and wait for a trend to develop.
Trend: Mixed
Chart structure: Poor

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Weekly Crude Oil, Dollar and Gold Market Summary for Week Ending Friday November 28th

Crude oil futures in the January contract are down $6 a barrel as OPEC announced on Thanksgiving that they will not cut production as the trade was expecting 1 million barrels to be cut sending prices to a 5 year low with the next major level of support all the way back to May 24th of the year 2010 at 67.15 and I still do believe with OPEC and Saudi Arabia definitely wanting lower prices that they will get their wish as prices remain bearish in my opinion. Crude oil futures are trading far below their 20 and 100 day moving average telling you that trend is lower and if you’re still short this market I would place my stop loss above the 10 day high which currently stands at 77.83 which is around 1000 points or $10,000 risk per contract plus slippage and commission as the chart structure now has turned terrible. The chart structure before today’s activity was very solid as the 10 day high was very close to where prices were trading, however when you move $5 lower in one day that’s what’s going to happen. If you’re not short this market I would sit on the sidelines because I think the risk is too high but definitely do not try and pick a bottom because who knows how low prices can actually go. The U.S dollar continues its bullish momentum up another 60 points today also contributing to a weaker energy market as the world is awash with energy supplies at the current time and you have to remember in 2008 prices traded around $35 a barrel and that was with a weak U.S dollar so prices still can head lower.
Trend: Lower
Chart Structure: Terrible

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The U.S dollar is rallying sharply this Friday afternoon currently trading at 88.42 in the December contract as I’ve been recommending a bullish position in the U.S dollar while placing your stop loss below the 10 day low which currently stands at 87.23 risking around $1,200 dollars plus commission and slippage per contract as the chart structure is outstanding at the current time. The U.S dollar is trading above its 20 & 100 day moving average telling you that the trend is to the upside as crude oil prices are down nearly $5 which is really putting pressure on several of the foreign currencies such as the Canadian dollar which is down 150 points and I still do believe we’re in a longer-term secular bull market in the U.S dollar. The European countries look to head into recession as the trend is your friend in the commodity markets so continue to play this to the upside while placing the proper stop loss while using the proper amount of contracts risking only 2% of your account balance on any given trade in case you are wrong. The strong U.S dollar is pressuring many commodity prices to the downside as the next major resistance is at 88.51 which was the most recent high hit last week and I do think prices will continue to move higher as investors feel much safer buying the U.S dollar than buying any other currency which are all seemingly in turmoil at the current time.
Trend: Higher
Chart Structure: Excellent

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Gold futures this Friday afternoon after the Thanksgiving holiday are sharply lower due to the fact that crude oil prices are down nearly $5 also pressuring the precious metals to the downside as gold in the February contract is currently trading down $29 at 1,167 after settling last Friday at 1,198 as I still remain neutral in this market as prices are trading above their 20 day but still below their 100 day moving average so avoid this market at the current time. In my opinion choppy markets are difficult to trade as the longer term downtrend line in gold is still intact in my opinion as a strong U.S dollar and S&P 500 continue to take money out of gold as the money flow continues to go into those 2 sectors as I still think there’s a possible retest of 1,130 in the month of December and if you remember in 2013 December was also a negative month to the downside as the stock market in my opinion will continue to climb higher throughout the rest of the year. The chart structure in gold is poor at the current time as prices have been choppy in recent weeks so look for a better market to trade and keep an eye on this and hopefully better chart structure will develop over the course of the next several weeks but I’m feeling that we will not be involved in the gold market until at least early 2015.
Trend: Mixed
Chart Structure: Poor

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Crude Oil Climbs From a Three Week Low on Forecast of U.S. Stockpile Drop

Oil rose from a three week low on speculation a report tomorrow will show crude stockpiles in the U.S., the world’s biggest energy consumer, declined for a second week and as rising equity prices buoyed investor sentiment. Inventories in the U.S. probably fell 600,000 barrels last week, a Bloomberg News survey showed. U.S. stocks yesterday reversed losses as Citigroup Inc. beat profit estimates and Bloomberg reported that the Securities and Exchange Commission was divided in its decision to sue Goldman Sachs Group Inc. Asian stocks rose today, led by finance companies.

“The market ran a little hard on the downside,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “Oil has come back quite a bit” and people are reconsidering some of the impact they were expecting from the action against Goldman, he said. Crude oil for May delivery rose as much as 93 cents, or 1.1 percent, to $82.38 a barrel on the New York Mercantile Exchange. It was at $81.96 at 12:13 p.m. Singapore time. Yesterday, the contract dropped 2.2 percent to $81.45, the lowest settlement since March 26. The more actively traded June contract climbed 32 cents to $83.45. Futures have gained 3.3 percent this year.

Oil tumbled yesterday after the SEC sued Goldman, prompting investors to step away from risky assets such as commodities. Air traffic disruptions caused by a volcanic eruption under Iceland’s Eyjafjallajökull glacier cut jet fuel demand in Europe by about two thirds, according to Deutsche Bank.

Crude Stockpiles
Oil has fallen in eight of the nine sessions since April 6, when the market reached an 18 month high of $87.06. Prices rose on April 14 after the Energy Department reported an unexpected 2.2 million barrel decline in U.S. crude oil inventories. It was the first drawdown in 11 weeks. Tomorrow’s report will probably show a second decline as refiners increased operating rates for a fifth week to meet summer gasoline demand, according to the Bloomberg survey. Stockpiles of the motor fuel probably rose 140,000 barrels, based on the median estimate from 11 analysts polled.

U.S. oil stockpiles remain high and many commodities have “moved ahead of their fundamentals,” said Moore at Commonwealth Bank of Australia. Brent crude oil for June settlement climbed as much as 57 cents, or 0.7 percent, to $84.80 a barrel on the London based ICE Futures Europe exchange. It was at $84.64 at 12:17 p.m. Singapore time. Yesterday, the contract settled at $84.23 after losing 2.1 percent, the most since Feb. 25.

Reporters Gavin Evans and Yee Kai Pin can be reached at gavinevans@bloomberg.net and kyee13@bloomberg.net





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