Cotton Futures—Cotton futures in the December contract is currently trading higher for the 3rd consecutive session up sharply this Wednesday afternoon in New York currently trading at 62.20 up 132 points or 2.50% right near a 4 month high.
I am now recommending a bullish position while placing the stop-loss under the June 23rd low of 58.55 as the risk would be around $1,700 per contract plus slippage and commission as a breakout to the upside has occurred in my opinion. Yesterday’s crop report stated that the United States only planted 12.19 million acres as estimates were 13.15 as we should not produce a record crop in 2020 as the fundamental and technical picture for this commodity has turned to the upside coupled with the fact that demand is coming back from China.
Cotton prices are trading above their 20 & 100 day moving average as this trend has finally returned to the upside as the risk/reward is in your favor, however the chart structure will not improve for another 6 trading sessions so you will have to accept the monetary risk at this time.
CHART STRUCTURE: SOLID
Soybean Futures—Soybean futures in the November contract is trading sharply higher this Wednesday afternoon in Chicago up another $0.15 or 1.73% at 8.97 a bushel as prices are right near a 4 month high.
The USDA crop report that was released yesterday showed that around 83 million acres were planted as expectations were higher than that number sending prices higher as I had a bearish bias towards this commodity, but that report may have turned the tide. Soybean prices are now trading above its 20 and 100 day moving average as the trend has turned to the upside, but I will wait for better chart structure to develop as the risk/reward is not your favor in my opinion as we are still experiencing ideal weather conditions in the Midwestern part of the United States.
Corn prices have also rallied significantly as they had about 4 million less acres planted than expected sending prices near a 4 month high as historically speaking soybean prices are cheap, however I still don’t believe we are in a strong bullish trend at this time so be patient as the risk / reward needs to be more in your favor to take a bullish or bearish position.
CHART STRUCTURE: POOR
Silver Futures—Silver futures in the September contract is sharply lower reversing the gains that we witnessed in yesterday’s trade down $0.43 at 18.20 an ounce or 2.32% due to the possible hopes for a Coronavirus vaccine sending the entire precious metals sector lower.
I have been recommending a bullish position from around the 18.61 level and if you took that trade continue to place the stop loss at 17.17 as an exit strategy as the volatility certainly has come back into this commodities and it looks to stay that way for months to come.
Silver prices are still trading above their 20 and 100 day moving average as the trend remains to the upside as I think massive profit-taking has taken place in today’s trade, but I still remain bullish gold and silver as I still believe the contract high at 19.14 will be tested in the coming days ahead.
Traders are awaiting tomorrow’s highly-anticipated monthly unemployment report as you have to remember we will be closed on Friday due to the 4th of July holiday so expect a wild trading session tomorrow and if you did not take the trade I’m still recommending it at today’s price level as the risk would be around $1,100 per mini contract plus slippage & commission.
CHART STRUCTURE: EXCELLENT
WHEN IS IT TIME TO SELL ? In my opinion if you are long a futures contract and you have lost 2% of your account balance on that trade exit and move on and look at other trends that are beginning as the theory states.
Generally speaking if you long a futures contract I would place the stop loss under the 2 week low which is also the 10-day low as well as an exit strategy as the theory states if a market has been going against you for that time frame that means that you are probably wrong so it’s time to move on.
Successful traders exit losing trades very quickly as its a mathematical certainty that you will have losing trades so you must manage them well as no exit strategy is 100% correct, but that’s one that I’ve been following for many years and I think it works well.
S&P 500 Futures—The S&P 500 is trading higher for the 3rd consecutive session up another 16 points at 3106 as prices are now trading above their 20 and 100 day moving average telling you that the trend may have turned to the upside.
At the current time I’m sitting on the sidelines waiting for a breakout to occur which could happen any day, but if you are bullish and you are long a futures contract I would place the stop loss under the June 15th low at 2923 as an exit strategy as volatility continues to remain high.
In my opinion I have a bullish bias towards the equity markets as the Nasdaq-100 is right near all time highs once again as I think come year end we will be at all time highs as there’s know where to put your money except for stocks due to the fact that interest rates are at zero. Equities have rallied on news of positive trial results for a vaccine developed by Pfizer and BioNTech an effective and widely available vaccine could eventually return the U.S. and global economies back to normal which would be bullish for stock prices.
Another bullish fundamental factor towards the equity markets is the possibility of another round of massive stimulus packages being brought on by the Federal Reserve once again as they will do anything in their power to get the United States economy through the Coronavirus situation.
CHART STRUCTURE: SOLID
Source: Getty Images
Gold Futures— Gold futures in the August contract is trading lower by $20 an ounce or 1.08% at 1,781 reversing some of the sharp gains that we witnessed in yesterday’s trade blamed on profit taking coupled with the fact of a possible vaccine for the coronavirus being developed in the next couple of months.
At the current time I have a bullish silver recommendation, but I do believe gold prices are headed higher and if you are long a futures contact I would continue to place the stop-loss below the 10-day low at 1,728 as an exit strategy, however the chart structure will improve in next week’s trade therefor the monetary risk will be lowered.
Traders are awaiting tomorrow’s monthly unemployment number as we’re closed on Friday due to the 4th of July holiday as we certainly will experience a wild trading session tomorrow as I still think prices will break the $2,000 level as all of the Federal Reserve stimulus packages will start to make a major impact in the coming months ahead which is very bullish silver and gold.
Gold prices are trading far above their 20 and 100 day moving average as the trend remains to the upside, however for the bullish momentum to continue prices have to break yesterday’s high of 1,807 as the volatility certainly will continue to expand to the upside in my opinion as I see no reason to be short.
CHART STRUCTURE: SOLID
Live Cattle Futures—Cattle futures in the August contract settled higher by 100 points at 97.30 or 1.05% still stuck in a tight 8-week consolidation looking to break out in next week’s trade in my opinion.
I will be recommending a bullish position if prices close above the June 4th high of 98.25 and I also will be recommending a bearish position if prices break to the down side below the June 15th low of 93.75 as the longer the consolidation is the stronger the breakout as I’m not sure which direction this market is headed at the current time.
Cattle prices are trading right at their 20 and 100 day moving average as the trend is mixed as tomorrow will be the last trading day for the week as the 4th of July holiday is upon us as that should put some volatility in tomorrow’s trade.
At the current time I do not have any livestock recommendations, however the commodity sectors are starting to show signs of life as I do think the break out will be significant on either side so keep eye on this market as we could possibly be involved tomorrow.
CHART STRUCTURE: EXCELLENT
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