Commodities Market Summary for Monday October 13th - Crude Oil, Natural Gas, Gold, Coffee

November crude oil closed lower on Monday. The high range close sets the stage for a steady to higher opening when Tuesday's night session begins. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If November extends the decline off June's high, the 62% retracement level of the 2009-2011 rally crossing at 80.80 is the next downside target. Closes above the 20 day moving average crossing at 90.64 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 88.63. Second resistance is the 20 day moving average crossing at 90.64. First support is last Friday's low crossing at 83.15. Second support is the 62% retracement level of the 2009-2011 rally crossing at 80.80.

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November Henry natural gas closed higher on Monday as it consolidates some of last week's losses. The high range close sets the stage for a steady to higher opening when Tuesday's session begins trading. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If November extends last week's decline, September's low crossing at 3.812 is the next downside target. Multiple closes above the late August high crossing at 4.163 are needed to confirm an upside breakout of the late summer trading range. Closes below July's low crossing at 3.786 would confirm a downside breakout of the late summer trading range. First resistance is the reaction high crossing at 4.184. Second resistance is the reaction high crossing at 4.487. First support is September's low crossing at 3.812. Second support is July's low crossing at 3.786.

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December gold closed higher on Monday as it extends this month's short covering rally. The high range close sets the stage for a steady to higher opening when Tuesday's night session begins trading. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If December extends this month's rally, the 38% retracement level of the July-October decline crossing at 1246.00 is the next upside target. Closes below the 10 day moving average crossing at 1214.20 would confirm that a short term top has been posted. First resistance is the 38% retracement level of the July-October decline crossing at 1246.00 . Second resistance is the 50% retracement level of the July-October decline crossing at 1265.50 . First support is October's low crossing at 1183.30. Second support is monthly support crossing at 1179.40.

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December coffee closed lower due to profit taking on Monday. The low range close set the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off September's low, weekly resistance crossing at 24.30 is the next upside target. Closes below the 20 day moving average crossing at 19.79 are needed to confirm that a top has been posted.

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Weekly Coffee Futures Recap for Friday February 21st

It's time to check in with our trading partner Mike Seery for his take on where coffee ended the week.


Coffee futures in the May contract rallied 3000 points this week closing right near contract highs at 170 a pound all due to the fact of a major drought in central Brazil which is the largest grower of coffee in the world sending prices up about 60% in the year 2014 and I’m still recommending if your long this market to continue to stay long as I think 2.00 is coming relatively soon and could happen on Monday especially if no rain happens over the weekend. Volatility is very high in this market currently so if that scares you look at the July bull call option spreads limiting your risk to what the premium costs allowing you to live through these daily fluctuations as this volatility should continue for months to come.

Coffee futures are trading far above their 20 & 100 day moving average with awful chart structure currently, however if you are long a futures contract I would place my stop below the 10 day low which is around 135 a pound which is quite a distance away, however this stop will be raised on a daily basis and will become relatively tight in the next 5 days. When you trade the commodity markets you want to let your winners run and get out of your losers relatively quickly and this is the perfect example of one market like coffee that can make your entire year

Trend: Higher
Chart structure: Awful

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Mike Seery on Gold, Silver, Sugar and Coffee Futures

It's time to check in with our trading partner Mike Seery to get his take on where our favorite commodities are headed. Say what you want about the current pull back in the indexes we are glad to see the volatility, we finally have us a real market.

Gold Futures

Gold futures finished the week at 1,240 still continuing their choppy trade as investors sold off the precious metal later in the week despite the fact that the S&P 500 is having huge volatility which generally spooks investors into buying gold but the precious metal closed very poorly in my opinion. I have a hard time believing that gold is going to start to rally anytime soon as it might be stuck in the mud and could trade choppy for quite some time. The U.S dollar hit a 7 week high today which is bearish gold prices as the printing press here in the United States is starting to stop which is creating a higher U.S dollar versus the foreign currencies and that is bearish commodity prices in general. I’m recommending investors to sit on the sideline in the gold market at this time as there really is no trend as you have to look for a market that is trending up or down because if you screw around with markets that go up and down and have no trend with constant choppiness that will kill you in the long run. The trend in gold continues sideways and chart structure is very poor.

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Silver Futures

Silver futures continued their 9 week consolidation finishing at 19.12 an ounce in the March contract right near contract lows of 18.72 & if that level is broken you have to think prices would head lower in the short term. The emerging market crisis over the last couple of weeks I think is hurting silver prices here in the short term but this too will blow over, as if your long term investor I still think silver prices look attractive as eventually inflation will come back into this market it’s just a matter of when. Silver futures are trading below their 20 & 100 day moving average and the longer the consolidation in my opinion the stronger the move will be when prices truly break out while the breakout to the upside is at 20.67 & the breakout to the downside is 18.72 as prices were unable to rally despite the fact that there was panic selling in the S&P 500 as money poured out of the stock market into the bond market but not into the precious metals which tells me the market still currently looks weak. Silver trend remains to the down side, chart structure is excellent.

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Sugar Futures

Sugar futures in the March contract finished sharply higher for the 2nd consecutive trading session closing at 15.55 now trading above its 20 day but still below its 100 day moving average as I’ve been recommending a short position in sugar for quite some time getting stopped out as today as prices hit the 10 day high as funds liquidated huge short positions so sit on the sidelines and wait and see what develops. I’m a technical trader and I must have some exit strategies in place and my exit strategy is placing my stop at the 10 day high but you can have something different possibly a 15 day high or 7 day high so create some type of exit strategy for your personal account still maintaining the proper risk management as I do think prices are still headed lower but I can’t recommend a short position at this time as the trend has now turned neutral here in the short term. If you’re not a trend follower I would have to believe that you have to continue to sell sugar as supplies are too high as there are some dry areas in Brazil which is causing some concern possibly cutting some crop production, however I think today was massive short covering as the funds covered in today’s trading session. The trend for sugar remains mixed but the chart structure is excellent.

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Coffee Futures

Coffee futures exploded to the upside for the 3rd consecutive trading day hitting 5 month highs at 125.20 a pound up over 1100 points for the week as investors are pouring in thinking that the long term bottom in coffee has finally been hit in the last several months. Coffee is trading above its 20 and 100 day moving average telling you that the trend in the short term is higher but at this point this market has absolutely terrible chart structure so I have a hard time buying it because the 10 day low is at 114 risking around $4,400 per contract so I’m recommending to sit on the sidelines and wait for some better chart structure to develop as I do think there will be profit taking eventually. The U.S dollar hit a 7 week high today and I believe that eventually could start to pressure commodity prices especially with the emerging markets now having difficulties but the trend in some markets have been heading higher despite that headwind and coffee prices historically are still relatively cheap. Keep an eye on this market as the real volatility will start in the month of May when we begin frost season down in Brazil but it does look to me that coffee is in a bottoming process. While the coffee trend still appears to be higher the chart structure is well....awful.

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When it comes to coffee, at this point all that matters is Brazil

Well, the JO crowd finished the week on a positive note. But the bears are still in charge when it comes to coffee. As I have said before, we can pick apart what is going along across the globe but it looks like as Brazil coffee farmers go, so goes coffee futures pricing. Here's today's post on coffee from one of our trading partners Mike Seery......

Coffee futures finished this Friday afternoon on a positive note closing at 136 a pound up 200 points for the trading session finishing higher for the 3rd straight day but still right near 2 ½ year lows as the bear market continues finishing down around 100 points for the trading week.

Coffee futures on the daily chart has excellent chart structure so if you are willing to stick your neck out you will be able to place tight stops limiting your monetary loss in case you are wrong and at this point there is still talk of a tremendous crop coming out of Brazil which is keeping a lid on prices despite the fact of rust problems in Central America a bad drought in Vietnam which is reducing their crop forecast but Brazil’s crop could be so huge as traders are unwilling to stick their neck out on the upside at this point.

As I’ve stated in many previous blogs I was bullish coffee and I was wrong, however the longer we start to grind lower like we are at this point with no volatility going into the volatile frost season I still believe if you have deep enough pockets and you are willing to take a longer term view coffee prices I believe will reward you in the long run because I do believe prices will be higher 12 months from now than they are at these depressed levels.

Even producers in Brazil are starting to complain that prices are getting to low and are starting hold back some of their crop eventually that’s what happens with prices get to low and if prices get too high producers often produce too much sending prices lower but at this point prices are so low that production in my opinion will start to decrease.

Coffee trend? Lower. Chart structure? excellent.

We remain long coffee using ETF "JO"

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