Copper Futures—Copper futures in the July contract is currently trading lower by 300 points at 2.6660 hovering right near a 16 week low following the stock market to the downside. I have been recommending a bearish position over the last several weeks from the 2.8240 level and if you took that trade the stop loss has been lowered to 2.7530 as the chart structure will start to improve on a daily basis therefor the monetary risk will also be lowered.
Copper prices are trading far below their 20 & 100 day moving average as the trend remains negative as this is my only precious metal recommendation at the current time.
Copper prices are right at major support and as I’ve talked about in many previous blogs I still think we will test the January 3rd contract low of 2.5600 in my opinion as this trend is getting stronger on a daily and weekly basis.
Copper prices topped out on April 17th right at the 300 level as the trade war with China has certainly put pressure on prices as China’s is the largest importer of copper in the world as the trade agreement does not look to be solved anytime soon so stay short as the trend is your friend and there’s more room to run to the downside in my opinion.
CHART STRUCTURE: IMPROVING
10 Year Note Futures—The 10 year note is trading higher for the 2nd consecutive session up another 9 ticks at 125 / 22 continuing its bullish momentum hitting another contract high in today’s trading session. I have been recommending 2 bullish positions with an average price of 124 /25 and if you took those trades place the stop loss under the 2 week low which stands at 124 / 01 as the chart structure will not improve for another 6 trading sessions so you will have to accept the monetary risk at this time.
As I have talked about in many previous blogs I think the 10 year note could crack the 2% level as the yield at the present time is 2.23% as this trend is getting stronger on a weekly and monthly basis. The trade war with China certainly looks to be escalating as there does not seem to be any agreement anytime soon as that is a bullish fundamental factor towards the 10 year note as I see no reason to be short.
The 10 year note is trading above its 20 & 100 moving average as clearly this market looks to move higher as fundamentally speaking there is absolutely no inflation worldwide coupled with the fact that the Federal Reserve is not going to raise interest rates in 2019 so stay long.
CHART STRUCTURE: SOLID
Coffee Futures—Coffee futures in the July contract is trading higher for the 2nd consecutive session hitting a 7 week high up another 120 points at 97.25 a pound as I have been recommending a bullish position from the 95.80 level and if you took that trade continue to place the stop loss under the 14 year low which stands at 87.60 as an exit strategy.
There are some concerns about a frost in Minas Gerais which is Brazil’s biggest coffee growing region which could hurt coffee yields and has prompted short covering after Somar Meteorologia forecast the chance of frost in the higher elevations of Minas Gerais through the first week of June.
Coffee prices are trading above their 20 day but slightly below their 100 day moving average which now stands at 99.20 as I think that will be broken possibly in this week’s trade. Coffee volatility remains exceptionally low, however the agricultural markets especially the grain market have rallied sharply as we are witnessing floods in the midwestern part of the United States as I think that is helping to support coffee which could also have a tremendous problem if a real frost develops like it did in 1994.
Coffee is an extremely large contract with high risk and should only be traded with large trading accounts as this commodity can have huge price swings on a daily basis.
CHART STRUCTURE: SOLID
Soybean Meal Futures–Soybean meal is trading higher for the 3rd consecutive session up another 900 points at 321.70 hitting a 5 month high as this market has absolutely exploded due to the crop progress report which showed that only 29% of soybeans are planted as last year was 66% as heavy rains continue to pound the Midwestern part of the United States.
I had been recommending 2 bearish positions with an average price of 299 while getting stopped out yesterday around the 304 level as that is why you must have an exit strategy because you never know what can happen especially in the grain market due to weather conditions.
I have been trading the grains for over 25 years and I have never seen such poor conditions as there is a serious chance that we will not get a 100% of corn or soybeans in the ground in 2019. Traders are keeping a close eye on the 7/10 day weather forecast which still shows heavy rains and cool temperatures as I’ve talked to a lot of my farmer clients as they are really worried as their crops either aren’t in the ground or look absolutely terrible.
At the present time I’m going to sit on the sidelines as the chart structure is terrible, however I am witnessing this problem personally in the state of Illinois as I certainly will not recommend any short position at this time.
CHART STRUCTURE: POOR
Corn Futures—Corn futures in the July contract is now lower by 5 cents at 4.15 a bushel selling off from session highs which hit 4.38 as the volatility is sky-high at the present time all due to the fact of terrible weather conditions in the midwestern part of the United States.
The crop progress report was released yesterday showing that we’ve only planted 58% of the crop experiencing the slowest pace on record well behind the 90% average coupled with the fact that the emergence is only at 32% as the normal pace stands at 69% as I do not believe we will plant 100% of the corn crop in 2019.
As I write this article I am in the state of Illinois which rains every single day and we have heavy rain in the forecast over the next several days as there is no planting taking place in the area that I reside. The volatility in corn will certainly remain extremely high over the next several months as we are at a critical juncture for corn planting as I still believe there will be more acres shifted into soybeans, however soybean planting is only at 29% behind schedule as well as we have a real problem across the board.
If the rain does not stop over the next week look for higher prices ahead as I think the downside is very limited, however remember that the volatility is extremely high so make sure you place the proper amount of contracts while only risking 2% of your account balance on any given trade.
CHART STRUCTURE: POOR
U.S Dollar Index—The U.S dollar is trading higher for the 2nd consecutive session up 23 points at 98.08 as I’ve been recommending a bullish position from the 97.41 level as I will be adding more contracts if we close above this critical 98.08 level as the bullish momentum continues.
The U.S stock market is down 300 points today as that is sending money into the U.S dollar as it’s by far the strongest currency in the world as I also have a bearish Mexican Peso trade at the present time. The U.S Dollar is trading above its 20 & 100 moving average as the trend is to the upside as I would like to see the volatility start to increase as this has been a very slow grinding trend.
If you take both of these 2 recommendations the stop loss stands at 97.42 as the risk is outstanding due to the excellent chart structure so continue to play this to the upside in my opinion.
CHART STRUCTURE: EXCELLENT
Sugar Futures—Sugar futures in the July contract is trading higher for the 3rd consecutive session up 11 points at 11.86 a pound as prices are right near a 2 week high. I have been recommending 2 bearish positions with an average price of 12.06 & if you took those trades continue to place to stop loss at 12.06 on a hard basis only as an exit strategy.
Sugar prices have been going sideways over the last 3 weeks bouncing off the contract low which was hit on May 21st at 11.36 so let’s see what tomorrows trade brings as we’re hanging in there by the skin of our teeth.
Sugar prices are still trading under their 20 and 100 day moving average and if we are stopped out move on and look at other trades while at the current time I have a bullish coffee recommendation out of the soft commodities as many agricultural markets have rallied off recent lows.
The chart structure at the current time is outstanding due to the fact of the extremely low volatility so when I talk about a hard basis only that means you place it as a GTC or good till cancelled so it works on the night session as well.
CHART STRUCTURE: EXCELLENT
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