Mike Seery's Daily Commodity Report 12-18-17

18 Dec in Blog

Sugar Futures---Sugar futures in the March contract is up 10 points at 13.76 a pound as this market has been in a free-for-all over the last several weeks looking at possibly retesting the June 28th contract low at 13.50, however at the current time I'm not involved and I will not take a short position as I do think the downside is limited at these very cheap prices in my opinion.

Sugar prices are at major support on the daily chart & almost every single time they've gone down to this level as then a rally has ensued soon afterwards despite the fact that we are still trading below the 20 and 100 day moving average which does tell you the trend is lower, but I will be patient & wait for some type of bottoming out pattern as we could be involved in early 2018.

My only soft commodity recommendation is a bullish trade in cotton which is slightly lower in today's trade as the soft commodities have been beaten down over the last several weeks I do think these markets will start to turn bullish in 2018 as cocoa, sugar, & coffee are all relatively cheap historically speaking especially with worldwide economies improving.

Wait for the chart structure to improve coupled with the fact that I'd like to see the risk/reward come into your favor so keep a close eye on sugar as the volatility still remains very low.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---LOW

 

 

 

Coffee Futures---Coffee futures in the March contract are trading higher for the 4th consecutive session up 210 points at 122.85 a pound still right near a contract low which was hit on December 12th at 118.30 as I am currently sitting on the sidelines waiting for a bottom to develop as I will looking for another bullish position ahead.

Coffee prices are trading under their 20 day moving average which stands at the 125 level & far below their 100 and moving average standing around the 133 level as I don't see much action for the rest of 2017, however the volatility certainly will pick up in 2018 as we will start to focus on crop conditions in the country of Brazil which is the largest producer in the world.

Volatility in coffee is very low for such a historically volatile commodity, however I think in 2018 that's going to change in a lot of different commodity sectors volatility speaking as 2017 was incredibly slow and dull and I would be very surprised if that happens for 2 consecutive years.

At the present time I'm advising clients to avoid coffee and just wait & be patient & look for a bottoming process which will take another 2 weeks in my opinion as I do think the soft commodities are starting to look attractive as the year-end selling is finally starting to come to an end which has affected most sectors across the board.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---LOW

 

 

 

 

Orange Juice Futures---Orange juice futures in the January contract have traded lower for the 9th consecutive session currently at 141.10 down another 345 points continuing its remarkable bearish trend to the downside as I written about this commodity of the last several weeks as I have been bearish, but I am a little surprised at how quickly prices have dropped.

As I talked about last week despite the fact that we traded lower for 8 consecutive sessions to the downside I thought there was more room to run as we broke major support as I think the 135.00 level could be touched in this weeks trade as we are now starting to experience oversold conditions due to the fact that prices have dropped out of bed over the last 2 weeks.

Orange juice prices are clearly trading under their 20 and 100 day moving average as this trend is getting stronger on a daily basis & if you are short I would stay short however if you are not involved in this market the risk/reward are not your favor so move on and look at other markets that are beginning to trend as there are very few and far between at this time, however once 2018 rolls around it will be a different story in my opinion as the holiday markets are upon us.

Excellent weather conditions in the country of Brazil and the state of Florida are the main reason for lower prices as there is no frost in sight as the price premium has started to come out this commodity as it looks to possibly produce another excellent crop.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---INCREASING

 

 

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Cotton Futures---Cotton futures in the March contract broke a 3 day winning streak finishing down 72 points at 75.20 blamed on profit taking as cotton prices are still right near a 1 year high.

I have been recommending a bullish position from around the 70.50 level & if you took that trade the stop loss remains at 72.10, however in Wednesday's trade will be raised to 72.76 as the chart structure will start to improve therefore lowering the monetary risk.

The main reason for the updraft in prices over the last several months after we broke out of a 9 week consolidation is the fact that we have strong worldwide demand coupled with the fact that the U.S crop doesn't look to be as solid as once thought with lower yields coming out of certain pockets pushing prices higher here in the short-term.

The next major level of resistance is last Friday's high of 76.75 & if that is broken I think we could touch the 80 level relatively soon, however you have to remember we are in holiday markets as we only have 7 trading days left in 2017 as that generally means sideways trading, but 2018 I do believe the commodity markets and cotton are all headed higher as economies worldwide will push up demand in my opinion.

Cotton prices are still trading far above their 20 and 100 day moving average as the trend clearly is to the upside as I will be looking at adding more contracts once the chart structure improves which could happen early next week as this by far is the strongest commodity out of the agricultural sector.

TREND: HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY---INCREASING

 

 

 

 

Lean Hog Futures---Lean hog futures in the June contract are unchanged this Monday afternoon in Chicago at 82.15 as I continue to look for a bearish position over the next couple of days as I do believe that hog prices topped out at the 84.40 level as prices have been very stubborn around the 81.00 level in recent days.

Volatility in the front month which is February has been high over the last several days with a 250 point trading range today which is a great to see as we should start to see that also in the back months so keep a close eye on this market for possible short position. Prices are trading under their 20 day but still above their 100 day moving average which stands around the 80 level as the chart structure and the risk/reward are improving on a daily basis as we could be involved possibly later this week.

Holiday markets are upon us as we don't have that many more trading days in 2017 as I do think the volatility across the board will expand tremendously in 2018 as I see good things happening, however at the present time many of the agricultural markets have continued to sell off as I think hogs prices will join the party to the downside in the short term.

Sometimes as a trader you just need to be patient and wait for a trend to develop just like what I've been talking about in the natural gas market as this is the same situation here so keep a close eye on hogs as I think the 80 level will be broken soon.

TREND: MIXED

CHART STRUCTURE: IMPROVING

VOLATILITY---INCREASING

 

 

 

 

Natural Gas Futures--- Natural gas in the January contract was sharply higher this Monday afternoon in New York up 13 points at 2.74 as I have been writing about this commodity for some time as prices hit the 2.60 level which did occur in Friday's trade, however I'm still not involved in a bullish position as I'm still not sure prices have bottomed out at this time.

Natural gas prices are still trading far below their 20 and 100 day moving average as this is the 3rd Monday that we have traded higher and then prices seem to decline for the rest of the week as it will be interesting to see what tomorrow's trade brings as there is a possibility that a spike bottom may have occurred.

Weather conditions in the state of Illinois and much of the Midwestern part of the United States is very warm once again today as natural gas prices are oversold as I think today was just a kickback as I think were in the midst of a bottoming out process as I would like to see 5/7 days of sideways trading action therefore confirming a bottom as we enter the highly volatile January and February months.

Natural gas prices dropped over 60 points over the last 3 weeks which was around a 18% selloff, but I will still continue to keep a close eye on a bullish trade in the days ahead & if you have any questions feel free to contact me anytime at 630-408-3325 as I will be more than happy to explain my concept.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---INCREASING

 

 

 

 

What Is A Pennant Flag Chart Pattern ? A technical charting pattern that looks like a flag with a mast on either side. Flags result from price fluctuations within a narrow range and mark a consolidation before the previous move resumes.

Likewise, "pennant" formations are usually treated like flag formations because they are very similar in appearance, tend to show up at the same place in an existing trend, and have the same volume and measuring criteria.

Flags and pennants are among the most reliable of continuation patterns and only rarely produce a trend reversal. The only difference between the two patterns is that a flag resembles a parallelogram (or rectangle) marked by two parallel trend lines that tend to slope against the prevailing trend. The pennant, however, is identified by two converging trend lines and more horizontal which resembles a small symmetrical triangle.

The important thing to remember is that they are both characterized by diminishing trade volume and though different, the measuring implications are the same for both patterns as demonstrated in the above illustration.  

 

 

 

If you are looking to contact Michael Seery (CTA—COMMODITY TRADING ADVISOR) at 1-630-408-3325 I will be more than happy to help you with your trading or visit www.seeryfutures.com

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