Mike Seery's Limit Up Commodity Report 12/8/17

08 Dec in Blog, Bonds, commodity consulting, commodity consulting commodities, commodity trading, corn, currencies, dow jones futures, futures, futures trading, heating oil futures, Mike Seery, NASDAQ 100 futures, natural gas futures, oats, option trading Crude oil futures, option trading S&P 500, seeryfutures, soybean meal, soybean oil, soybeans, unleaded gasoline futures, wheat

Wheat Futures---Wheat futures in the March contract settled last Friday in Chicago at 4.38 a bushel while currently trading at 4.24 down about $0.14 for the trading week hitting another contract low as this bearish trend continues on a month-to-month basis, as I am currently not involved in this market, but if you are short a futures contract place the stop loss at the 10 day high standing at 4.43 as an exit strategy.

The winter wheat is off to an excellent start in the Great Plains of the United States as that is whats putting pressure on prices here in the short term as were trading below its 20 and 100 day moving average as every time this market looks to be bottoming out it just continues to make new lows as the large money managed funds are still heavily short as they believe lower prices are ahead and have been right so far.

The next major level of support is down around the 3.95 area which I think could be tested in the next couple weeks as traders are awaiting the next USDA crop report which will be released next week which could put some volatility back into this market as we are just slowly grinding lower on a weekly basis with extremely low volatility.

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY---LOW

 

 

 

 

 

Corn Futures--- Corn futures in the March contract is currently trading at 3.53 a bushel after settling last Friday in Chicago at 3.58 down about 5 cents still experiencing extremely low volatility as I am currently not involved in this market, however I'm keeping a close eye on a bullish position in the coming weeks ahead.

Corn prices are stuck in a 4 week tight consolidation between 3.50/3.60 as the large money managed funds are still short about 230,000 contracts which is an all-time record as they clearly think lower prices are ahead. Corn currently is trading below its 20 and 100 day moving average as the trend is to the downside, but over the last month has basically been sideways as the chart structure is outstanding at the present time due to low volatility as I think that situation could turn once we enter 2018, but for the next several weeks I don't see anything exciting developing in this commodity.

The corn crop in South America is off to a good start as we will now focus on next year's crop with estimates around 94 million acres being planted which is 5 million more than what was planted in 2017 and could produce a crop near 15 billion bushels unless some type of weather event affects yields as we are still looking at abundant supplies for the foreseeable future.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY---LOW

 

 

 

 

Soybean Futures--- Soybean futures this week have experienced increased volatility which is a good thing to see in my opinion after settling last Friday at 9.94 while currently trading at 9.88 a bushel down about 6 cents for the week and traded as high as 10.15 in Wednesday's trade only come off that critical level as the true breakout on a closing basis stands at 10.13.

Prices are still trading above their 20 and 100 day moving average as the trend is higher as the trend is higher in soybean meal which is the strongest commodity out of the soy complex which is still trading at a multi month high as traders are keeping a close eye on South American weather as the soybean crop is off to a good start.

Estimates of this year's crop in Brazil is around 107.6 MTTs which would be another all-time record, however it is a long growing season and there are some concerns about dryness in certain parts of Brazil as you have to remember the weather phenomenon known as La Niña which could impact soybean yields, but at the current time weather conditions are solid.

The grain market in recent months really has gone nowhere as this has been an incredibly choppy trade in 2017 as we produced about 4.5 billion bushels which was another record as the main problem is that we continue to plant too many acres in the United States as we are awash in soybeans at the present time as that's why the volatility is limited to the upside.

TREND: MIXED

CHART STRUCTURE: SOLID

VOLATILITY---INCREASING

 

 

 

 

Lean Hog Futures--- Lean hog futures in the June contract settled last Friday in Chicago at 83.37 while currently trading at 82.00 down about 137 points for the trading week right near a 2 week low as I think hog prices have topped out roughly at the 84 level as I will be looking into a possible short position in the weeks ahead.

Hog prices are trading below their 20 day but far above their 100 day moving average which tells you how far prices have rallied over the last several months, however the chart structure is poor at the present time therefore the risk/reward is not in your favor so I will be patient and keep a close eye on this market.

The commodity markets this week sold off in many different sectors as the choppy and trend less markets continue as we are about to enter 2018 at the present time as I think hog prices are awfully expensive in the June contract as generally I trade the front month which is in the February contract, but the June situation looks more appealing in my opinion.

Cattle prices this week also finished lower putting pressure on hog prices as were entering the volatile winter season for hogs as I think prices are headed to the downside as the fundamental picture is more bearish than prices reflect in my opinion.

TREND: MIXED

CHART STRUCTURE: POOR

VOLATILITY---INCREASING

 

 

 

Coffee Futures--- Coffee futures in the March contract settled last Friday in New York at 129.55 a pound while currently trading at 123.20 down about 600 points for the trading week as I was stopped out in yesterday's trade around the 124 level in a disappointing trade as prices have now hit a contract low and a fresh yearly low.

Coffee prices are now trading under their 20 and 100 day moving average as the trend clearly is to the downside as the soft commodities except for cotton continued to move lower this week as the next major level of support is around the 110 level, however I will not take a short position as I will sit on the sidelines once again and look for some type of bullish trend to develop which probably will not happen until 2018.

Coffee prices broke the contract low which was hit on June 22nd at 122.65 as weather conditions in the country of Brazil which is the largest producer of coffee in the world are ideal putting pressure on prices coupled with the fact that the country of Honduras is having political problems as they are also a large producer of coffee and that is causing some concern as well so move on and let's look at other trends that are developing.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---INCREASING

 

 

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Cotton Futures--- Cotton futures in the March contract are currently trading at 74.23 after settling last Friday in New York at 73.28 up slightly for the trading week hitting an 8 month high looking to retest the March 20th contract high of 75.57 in next weeks trade.

I have been recommending a bullish position from around the 70.50 level & if you took that trade continue to place the stop loss under the 2 week low which now stands at 71.02 as that will also be raised in Tuesdays trade to 71.75 as the chart structure will turn outstanding due to the fact that prices are experiencing relatively low volatility over the last week or so.

Cotton prices are trading above their 20 and 100 day moving average as this trend clearly is to the upside as harvest in the southern part of the United States is almost complete as I think there is still room to run to the upside as strong demand has come back into this market as the fundamental situation still remains strong in my opinion.

Volatility in cotton as we enter 2018 certainly will expand as historically speaking this is an extremely volatile commodity and can have huge price swings on a daily basis as I don't see this low volatility lasting much longer as we continue to grind slowly higher to the upside on a weekly basis so continue to place the proper stop loss as who knows how high prices can actually trade.

TREND: HIGHER

CHART STRUCTURE: SOLID---IMPROVING

VOLATILITY---INCREASING

 

 

 

 

Orange Juice Futures--- Orange juice futures in the January contract are trading lower for the 3rd consecutive session right near a 5 week low as I have a bearish bias to the downside as I've written about in previous blogs I do think oranges prices are headed lower due to beneficial weather in the state of Florida & in the country of Brazil.

Juice prices settled last Friday in New York at 162.70 while currently trading at 151.90 down over 1000 points for the trading week looking to retest major support at the 150 level & if that is broken I think prices could head substantially lower so continue to play this to the downside as a bearish trend has developed.

Prices are trading below their 20 day moving average but slightly above their 100 day which stands at 149 as I also think there will be orders to sell this market if that level is breached and I do believe prices have topped out here in the short term as I will be looking at a recommendation on any type of price rally as the chart structure needs to improve.

Anything grown in the country Brazil right now continues to move lower including sugar, soybeans, coffee, and orange juice as this has been a tough week for many commodity sectors to the downside as I think it just might be year-end selling.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---INCREASING

 

 

 

 

Crude Oil Futures--- Crude oil futures in the January contract settled last Friday in New York at 58.36 a barrel while currently trading at 57.27 down about $1 for the week as I was recommending a bullish position from around the 53.15 level getting stopped out earlier in the week around 56.20 as prices hit a 2 week low as that is my exit strategy if I have a bullish position.

Crude oil prices are still trading right at their 20 day but above their 100 day moving average as the trend is mixed to higher in my opinion as heating oil and unleaded gas are both ending the week sharply higher as strong demand continues to push prices near contract highs.

The commodity markets in general this week saw some significant selling to the downside including crude oil over the last couple of days as I think a lot of this is just year-end selling as my only trade recommendation at the current time is a bullish position in cotton as many trends are mixed, however I do believe when we enter 2018 bullish trends across the board will come back as the U.S economy certainly is improving.

Volatility in crude oil has started to accelerate which is not surprising in my opinion as I think volatility in all of the commodities is going to expand significantly next year as that has been the problem in 2017 as we experienced low volatility across the board including the stock market despite the fact that we are at all-time highs so sit on the sidelines & let's wait for another trend & the risk/reward to become in your favor once again as I still think higher prices are ahead.

TREND: MIXED---HIGHER

CHART STRUCTURE: SOLID

VOLATILITY---INCREASING

 

 

 

Natural Gas Futures--- Natural gas futures in the January contract settled last Friday in New York at 3.06 while currently trading at 2.77 down nearly 30 points for the trading week hitting a contract low and a yearly low as this market continues to move lower on oversupply issues.

Over the last several trading sessions prices have dropped about 40 points & if you have been following my previous blogs you understand that I'm looking into a possible bullish position as I do think we could possibly go as low as 2.60, but if that does occur prices are limited to the downside after that as we have entered the extremely volatile winter season as cold temperatures are entering the Midwestern part of the United States.

Natural gas prices are trading under their 20 and 100 day moving average as short-term and longer-term trend are both bearish, however I think all of the bad fundamental news has already been dictated into the short-term price action as the volatility certainly has expanded over the last several weeks and that will even become more violent over the next several months.

Let's be patient & continue to look for a bullish position or final capitulation to the downside which could happen in next week's trade as I will take a shot at bottom feeding in this market because I've seen some tremendous moves to the upside during the winter months in years past as I urge you to look at the month charts.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---HIGH

 

 

 

Lumber Futures---Lumber futures in the January contract finished slightly higher currently at 429 as I have been recommending a short position from around the 426 level as I have not talked about for quite some time, but the risk/reward are in your favor in my opinion while placing the stop loss above the 10 day high standing at 439 risking around $1,400 per contract plus slippage and commission.

Lumber futures are extremely volatile as they hit all time highs just last month based on the fact that the housing market in the United States was on fire, however I think there is room to run to the downside.

Prices are trading under their 20 day but far above their 100 day moving average which tells you how far prices have come as we topped out around the 460 level as I will take a shot at the short side as historically speaking prices are extremely expensive especially if interest rates continue to climb slowly on a monthly basis as that affects the housing market more than any other fundamental indicator.

If prices due break the November 27th low of 416 I think we could head down to the 400 level very quickly so look the play this to the downside while making sure you risk 2% of your account balance on any given trade as this is a high risk situation.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY---HIGH

 

 

 

10 Year Note Futures---The 10 year note in the March contract settled last Friday in Chicago at 124/13 while currently trading at 124/10 as I have been writing about this market over the last several weeks looking for a possible sell if prices close under the critical 124.00 level in the coming days ahead as the 10 year note is currently yielding about 2.35% which is still historically extremely low especially as United States is starting to grow once again for the 1st time in nearly a decade.

The 10 year note is trading under their 20 and 100 day moving average as the trend is to the downside as the chart structure will also become outstanding next week therefore lowering the monetary risk as I truly do believe the U.S will start to experience a 4%/5% growth rate in 2018 as a tax cut should spur the economy and its certainly pushing the stock market to the upside as corporations are loving the fact that their tax rate has been cut almost in half.

If you jump the gun & are bearish this market as I would still place the stop loss above 125 as the risk is around $650 per contract plus slippage & commission from today's price level as I think the 10 year note could trade as high as 5% in 2018 as these ridiculously low rates are coming to an end in my opinion as higher interest rates are good for the economy not bad for the economy.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY---LOW

 

 

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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