Weekly Futures Market Recap - SP 500, Bonds, Gold, Coffee

It's the weekend and that means it's time to check in with Michael Seery of INO.com for his weekly recap of the Futures market. Seery has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets......


The S&P 500 rose sharply this Friday afternoon after finishing lower for 5 consecutive trading days which is very rare in the month of December as this Friday afternoon prices finished up 19 points at 1803 and remember the fact we have not have a down day on a Friday since early October as Friday generally is a positive up day going into the weekend.

I’ve been recommending a long position in the S&P 500 for quite some time I do believe we will continue to move higher possibly up to the 1850 level here by New Year’s as there’s no other game in town with excellent earnings and the possibility of tapering coming after the monthly unemployment number which showed 203, 000 new jobs with an unemployment rate of 7.0% which was considered very bullish despite the fact that there could be tapering of US bonds soon , but that story is becoming old sending prices sharply higher right near all time highs once again.

The NASDAQ 100 is up 25 points at 3503 despite the fact that Apple Computer was down nearly $8 as investors are still in love with the technology sector especially after a minor setback that it had the last week and I still suggest you be bullish either with options or outright futures positions. The NASDAQ 100 cash index I believe will break 4500 which is the next stop which will take a couple of months in my opinion but prices remain strong.

Both of these markets are still trading above their 20 and 100 day moving average despite the five day losing streak & that just shows you how far prices have comes to the upside and I do think there’s more good news around the world which should prop up stock prices especially with low interest rates in Europe and the Japanese continuing their QE programs which will prop up the Nikkei so across the world bullish news will continue to push equity prices higher.

Bond Futures

The 5 year note sold off sharply this Friday afternoon hitting a 6 week low before rallying to finish down 3 ticks at 120-08 as the monthly unemployment was construed bullish the stock market and bearish bonds because of the possibility of tapering. I'm recommending a short position in the five year note as the government cannot continue to print forever and one day if you're a long-term investor this will pay off as interest rates will start to rise eventually as the five year note is only yielding 1.50% at the present time. This is an excellent market with low volatility compared to many of the other commodity markets and it has excellent chart structure and I'm recommending outright futures contract to the downside & If you are long term investor I would continue to sell the five year note futures and I would not place a stop because I would hold on continuing to rollover for years to come because the five year note eventually could go back up to 4% or 5% which would be a huge gain if you are short the futures for the entire time and that could take several years but will pay you off in the long run in my opinion. The five year note is now trading below its 20 and 100 day moving average and it looks like a possible head and shoulders top has been formed so take a shot at the downside.

The 10 year note is currently trading at 124-09 in the March contract finishing lower for the 3rd straight trading session and it also looks like its topped out so I'm recommending a short position placing your stop above 125.20 risking around $1,500 per contract as I do think prices will retest at 120 level down the road as the yield on the 10 year stands at 2.89% as people are rotating out of bonds and continue to pour money into the S&P 500 which I think will continue for the rest of the year so sell rallies in the bond market. Trend....mixed. Chart Structure....excellent.

Gold Futures

The monthly unemployment report came out at this morning stating that we added 203, 000 new jobs which was construed very bullish sending the stock market higher and gold lower due to the fact of tapering possibly happening as soon as March as the unemployment rate is now 7.0% as traders see no reasonable to own gold as the economy here in the United States and around the world are improving dramatically sending the S&P right near record highs once again today and selling off gold by $4 at 1,228 currently here on the night session this Friday afternoon in New York. Gold is trading below its 20 & 100 day moving average continuing its bearish trend hitting a 5 month low with major support at 1,210 which was hit twice this week and rebounded but it looks to me that we almost certainly have to retest 1,180 which was last summer’s low. Trend lower....Chart structure....excellant.

Coffee Futures

Coffee in the March contract closed down over 450 points this week at 106.40 reversing earlier gains hitting a 4 week high at 1 point trading up at 112.90 on Wednesday before a major reversal sent it right back down into its recent trading range as many the commodity markets were sharply higher this week but the coffee fundamentals still at this time remain bearish. If your bullish coffee prices as we’ve have had a nice sideways channel for over 4 weeks and that’s what to look for in a bottoming pattern so my recommendation would be to buy a futures contract at today’s price placing a stop below the contract low at 104 risking around $1,100 per contract but I remain neutral on coffee because there really is no trend right now. It would not surprise me if you get a snap back to the upside like we’ve gotten in oil, gold, and silver prices today as massive short covering is taking place and that could happen in coffee as well because of the short interest currently. Trend....neutral. Chart structure excellent.

Check out more of Mike's calls and subscribe to his newsletter at INO.com


Sign up for our three part training session "Diversify, use history,trade gold"

Is it Too Late to Get into this Monster UNG Trade?

Natural gas looks to be breaking out and it has John's attention. With monthly and weekly charts breaking out he is looking at futures contracts having the possibility of easily moving up to the 4.48 level which means there is a lot of options open for us options traders. And if you have been following us this week you know John is on a roll.

John has put together a detailed free video to show us just exactly how to play UNG and natural gas while limiting our risk, just click here to watch "Is it Too Late to Get into this Monster UNG Trade?"


And if you haven't had a chance to see it yet take a few minutes to watch John's wildly popular webinar replay....."Nine Reasons Why You Should Trade Options on ETFs"

See you in the markets, the natural gas markets!

Ray @ The Crude Oil Trader 

Are You Trading Gold? Two Compelling Reasons To Consider It

Here's a great trading quote you may not have heard:

"It is better to trade two complementary strategies that make less, than one strategy that makes more"

Yes, it is almost always true. Traders can make more profits (over the long term) by trading two conservative, complementary strategies that have lower, combined profit potential than trading one aggressive strategy that has a higher profit potential.

The reason is not obvious and frequently over-looked until it is too late: The single, higher profit strategy will often endure larger, deeper draw downs (periods of losing trades and unprofitability in which account equity is reduced) in order to achieve the greater returns. Deep draw downs are stressful and cause the trader to second guess his strategy, skip trades, reduce position size, cut winners short and so on, all of which are detrimental to the long term profit potential of the strategy. Dreams of riches often end in a nightmare of losses.

To minimize these self-destructive behaviors and maximize the odds of long term, consistent profitability, it is better to diversify and trade strategies and / or markets that are not related or similar. The goal is to achieve no or low correlation, so that when strategy A is struggling, strategy B is performing and vice versa.

Join us this Thursday for a free one hour educational event where we will discuss not only the power of diversification, but also why trading with historical data is so important.

Diversify, use history, trade Gold!

Applying your favorite strategy to just about any new market will certainly provide many of the benefits of diversification. But to maximize the power of diversifying, it is best to trade a market that "moves to its own beat." Meaning, one that does not move up and down in sync with the equity markets or instrument that you might trade. This is called low correlation.

A great uncorrelated market is Gold. It can be traded using stocks, ETF, options or futures. Furthermore, it moves a lot on a daily basis - much more than the major U.S. indices such as the Dow and S&P.

Want to learn about trading Gold using various instruments, tips for getting started, a simple strategy, etc.?

Check out our free training event next Thursday
 

Diversify, use history, trade Gold!


See you in the market, the gold market!
Ray @ The Crude Oil Trader


Here's our Introduction into Trading the Gold Market


 

Are You Going to Catch the Next Big Move in Crude Oil? USO

It looks like a very powerful setup in crude oil, especially ticker USO, is right around the corner. We are looking for price action to move higher with a squeeze on higher volume in the making.

And here's how our trading partner John Carter of Simpler Options is playing the coming move.

In todays video John will show us his trade in detail and again this is a trade that can be done with any size account with limited risk. 

Click here to watch todays video "Are You Going to Catch the Next Big Move in Crude Oil?"

Using Options to Capitalize on Strong Fundamentals for Gold

Our trading partners J.W. and Chris had a great discussion the other day which spurred to the creation of this interesting and educational gold futures trading article we wanted to share with you.

Throughout most of 2013, gold futures have been under major selling pressure. Gold opened the year trading around $1,675 per ounce. As of the 12/02/13 close, gold futures were trading around $1,220 per ounce which would mean that thus far in 2013, gold futures have lost more than 27% of their value.

Looking back to September of 2011, gold’s all time high came in around $1,923 per ounce. In a little more than 2 years, gold prices have dropped around $700 per ounce representing a total loss of more than 36% based on the 12/02/13 closing price. I would say most analysts would agree that gold has been in a bear market over the past two years.

Before we begin looking at a few ways to use the gold etf GLD option structures to take advantage of higher future prices in the yellow metal, I thought I would focus readers’ attention on some bullish fundamental data for gold. Let us begin with a chart of the Federal Reserve’s Total Assets which is shown here......

Read "Using Options to Capitalize on Strong Fundamentals for Gold"



Here's the Replay of this weeks free webinar "How to Boost Your Returns With One Secret ETF"

Evidence on Why Gold Is Falling on the Verge of a Dollar Implosion

By Bud Conrad, Chief Economist

Bud Conrad, Casey Research chief economist, predicts in this fascinating interview with Future Money Trends that the U.S. dollar will implode and be replaced with a new currency, quite possibly one backed by gold. Then why is the gold price dropping like a brick in the face of dollar devaluation?

Watch the video for Bud's eye-opening answer…

Is now a good time to load up on gold—and how should you invest?

Get all the details in our FREE Special Report, The 2014 Gold Investor's Guide.

Click Here to Read it Now.

Are the Arsonists Running the Fire Brigade?

By John Mauldin

The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.

– Alan Greenspan

If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.

– John Maynard Keynes

And He spoke a parable to them: "Can the blind lead the blind? Will they not both fall into the ditch?"

– Luke 6:39-40

Six years ago I hosted my first Thanksgiving in a Dallas high rise, and my then 90 year old mother came to celebrate, along with about 25 other family members and friends. We were ensconced in the 21^st floor penthouse, carousing merrily, when the fire alarms went off and fire trucks began to descend on the building. There was indeed a fire, and we had to carry my poor mother down 21 flights of stairs through smoke and chaos as the firemen rushed to put out the fire. So much for the advanced fire sprinkler system, which failed to work correctly.

I wrote one of my better letters that week, called "The Financial Fire Trucks Are Gathering." You can read all about it here, if you like. I led off by forming an analogy to my Thanksgiving Day experience:

I rather think the stock market is acting like we did at dinner. When the alarms go off, we note that we have heard them several times over the past few months, and there has never been a real fire. Sure, we had a credit crisis in August, but the Fed came to the rescue. Yes, the subprime market is nonexistent. And the housing market is in free-fall. But the economy is weathering the various crises quite well. Wasn't GDP at an almost inexplicably high 4.9% last quarter, when we were in the middle of the credit crisis? And Abu Dhabi injects $7.5 billion in capital into Citigroup, setting the market's mind at ease. All is well. So party on like it's 1999.

However, I think when we look out the window from the lofty market heights, we see a few fire trucks starting to gather, and those sirens are telling us that more are on the way. There is smoke coming from the building. Attention must be paid.

I was wrong when I took the (decidedly contrarian) position that we were in for a mild recession. It turned out to be much worse than even I thought it would be, though I had the direction right. Sadly, it usually turns out that I have been overly optimistic.

This year we again brought my now-96-year-old mother to my new, not-quite-finished high-rise apartment to share Thanksgiving with 60 people; only this time we had to contract with a private ambulance, as she is, sadly, bedridden, although mentally still with us. And I couldn't help pondering, do we now have an economy and a market that must be totally taken care of by an ever-watchful central bank, which can no longer move on its own?

I am becoming increasingly exercised that the new direction of the US Federal Reserve, which is shaping up as "extended forward rate guidance" of a zero-interest-rate policy (ZIRP) through 2017, is going to have significant unintended consequences. My London partner, Niels Jensen, reminded me in his November client letter that,

In his masterpiece The General Theory of Employment, Interest and Money, John Maynard Keynes referred to what he called the "euthanasia of the rentier". Keynes argued that interest rates should be lowered to the point where it secures full employment (through an increase in investments). At the same time he recognized that such a policy would probably destroy the livelihoods of those who lived off of their investment income, hence the expression. Published in 1936, little did he know that his book referred to the implications of a policy which, three quarters of a century later, would be on everybody's lips. Welcome to QE.

It is this neo-Keynesian fetish that low interest rates can somehow spur consumer spending and increase employment and should thus be promoted even at the expense of savers and retirees that is at the heart of today's central banking policies. The counterproductive fact that savers and retirees have less to spend and therefore less propensity to consume seems to be lost in the equation. It is financial repression of the most serious variety, done in the name of the greater good; and it is hurting those who played by the rules, working and saving all their lives, only to see the goal posts moved as the game nears its end.

Central banks around the world have engineered multiple bubbles over the last few decades, only to protest innocence and ask for further regulatory authority and more freedom to perform untested operations on our economic body without benefit of anesthesia. Their justifications are theoretical in nature, derived from limited variable models that are supposed to somehow predict the behavior of a massively variable economy. The fact that their models have been stunningly wrong for decades seems to not diminish the vigor with which central bankers attempt to micromanage the economy.

The destruction of future returns of pension funds is evident and will require massive restructuring by both beneficiaries and taxpayers. People who have made retirement plans based on past return assumptions will not be happy. Does anyone truly understand the implications of making the world's reserve currency a carry-trade currency for an extended period of time? I can see how this is good for bankers and the financial industry, and any intelligent investor will try to take advantage of it; but dear gods, the distortions in the economic landscape are mind-boggling. We can only hope there will be a net benefit, but we have no true way of knowing, and the track records of those in the driver's seats are decidedly discouraging.

To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best-selling author, and Chairman of Mauldin Economics – Please Click Here.

© 2013 Mauldin Economics. All Rights Reserved.

Here's the complete schedule for our upcoming FREE Trading Webinars

Mid Week Market Commentary - Crude Oil, Natural Gas and Gold for Tuesday Evening December 3rd

Crude oil closed sharply higher on Tuesday and above the reaction high crossing at 95.63 confirming that a low has been posted. The high range close sets the stage for a steady to higher opening when Wednesday's night session begins. Stochastics and the RSI are diverging and have turned bullish signaling that sideways to higher prices are possible near term. If January extends the rebound off last week's low, the 38% retracement level of the August-November decline crossing at 97.96 is the next upside target. If January renews the decline off August's high, the 75% retracement level of the April-August rally crossing at 91.18 is the next downside target. First resistance is today's high crossing at 96.19. Second resistance is the 38% retracement level of the August-November decline crossing at 97.96. First support is last Wednesday's low crossing at 91.77. Second support is the 75% retracement level of the April-August rally crossing at 91.18.

Natural gas closed lower due to profit taking on Tuesday as it consolidates some of the rally off October's low. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If January extends the rally off November's low, the reaction high crossing at 4.045 is the next upside target. Closes below the 20 day moving average crossing at 3.731 would confirm that a short term top has been posted. First resistance is the reaction high crossing at 4.045. Second resistance is October's high crossing at 4.092. First support is the 10 day moving average crossing at 3.838. Second support is the 20 day moving average crossing at 3.731.

Gold closed lower on Tuesday as it extends the decline off August's high. The mid range close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI are oversold, diverging but remain neutral to bearish signaling that additional weakness is still possible near term. If February extends the decline off August's high, June's low crossing at 1187.90 is the next downside target. Closes above the 20 day moving average crossing at 1266.60 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 1243.60. Second resistance is the 20 day moving average crossing at 1266.60. First support is today's low crossing at 1214.60. Second support is June's low crossing at 1187.90.

Get our "Gold and Crude Oil Trade Ideas"

It's on tonight!....Limited seating for this free webinar. So please, serious traders only

Join our trading partner John Carter of Simpler Options tonight, Tuesday evening December 3rd, for his FREE webinar "How to Boost Your Returns With One Secret ETF Strategy".

It all gets started at 8:00 p.m. eastern but get registered right now as there is limited seating and Johns wildly popular webinars always fill up right away.

If you watched this weeks new video you have an idea of what we are up to. And how we are trading ETF's in such a way that the market makers can not get the upper hand on us. In this weeks class John will be taking his methods to another level. And he is sharing it ALL with you.

In this free online class John will share with you....

    •     A Powerful Simple Strategy for Trading Options on ETFs

    •     The SAFE Levels to Take Trades

    •     How to Minimize Your Risk

    •     The Very Best ETFs to use

    •     Which ETFs You Have to Avoid Like the Plague

           And much more...

Simply click here and visit the registration page, fill in your info and you'll be registered for Tuesdays FREE webinar.

See you on tonight,
Ray @ The Crude Oil Trader


Watch "How to Boost Your Returns With One Secret ETF Strategy"

 




Get our "Gold and Crude Oil Trade Ideas"

Limited Video Re-Release: Nine Reasons to Trade ETF Options

We just found out that John Carter and the staff at "Simpler Options" still have this weeks video up and LIVE. We thought it would come down as John gets ready for this weeks free webinar.

Here's what traders are learning in John's latest video.....

    *   Why ETFs are his Favorite Instrument for Options Trading

    *   The Best ETFs for Trading Options Most Traders Have Never Heard of

    *   How he wires $34k every week from his trading to personal account

    *   Why Trading Options on ETFs is Perfect for Small Accounts

    *   Why Market Makers Can't Screw you with ETFs

And a LOT more!

Watch the video HERE

Please feel free to leave a comment and let us know what you think about these simple ETF trading methods.


Click here to get your seat at this weeks free webinar.