Mike Seery’s Daily Commodity Comments For 8-16-19

Mike Seery’s Daily Commodity Comments For 8-16-19
Mike Seery’s Daily Commodity Comments For 8-16-19

S&P 500 Futures—The S&P 500 in the September contract settled last Friday in Chicago at 2919 while currently trading at 2875 down about 45 points for the trading week experiencing incredibly high volatility as that situation is going to become more violent in the coming months ahead in my opinion.

At the present time I’m not involved as I’m advising clients to avoid this market as it is like flipping a coin on a daily basis with no trend insight as there are better markets with a lot less risk at the current time.

The S&P 500 is trading below its 20 and 100 day moving average as the trend is to the downside as the month of August historically speaking and be very shaky and that is exactly what’s occurring at the present time as I will wait for the chart structure to improve which could take several more weeks.

Bond markets across the world are spooking the equity market as there are now 12 countries with a negative interest rate as the 10-year note which I do have a bullish recommendation which is currently yielding 1.50% &  looks to go much lower in my opinion, however eventually this will be bullish stock prices but at the current time the bond market might be telling you that a recession is around the bend. At the current time I am bearish most of the commodity markets except for the precious metals as weak demand continues to hamper prices.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: HIGH

 

 

Crude Oil Futures—Crude oil in the September contract settled last Friday in New York at  54.50 a barrel while now trading at 54.60 basically unchanged for the trading week experiencing extremely high volatility following the stock market up and down on a daily basis.

At the current time I am not involved in the energy sector as this market remains extremely choppy as prices hit a contract low last week and then rallied $7 after that so sit on the sidelines and wait for the volatility to be lowered as the risk/reward has to improve before taking a bullish or bearish trade.

At the current time prices are trading below their 20 and 100 day moving average as the trend is lower and the downtrend line remains intact on the daily basis, however fundamentally speaking crude oil prices also have negative carry-over from Wednesday’s weekly EIA report where crude oil inventories unexpectedly rose +1.58 million barrels more than expectations of -2.25 million.

In my opinion I think lower prices are ahead for most commodity sectors except for the precious metals with no trade deal with China and the fact that we have 12 countries worldwide that have negative interest rates it looks to me that demand will continue to shrink, however be patient as sometimes doing nothing is the best thing to do and that is the case at this time.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: HIGH

 

 

Sugar Futures–Sugar futures in the October contract settled last Friday in New York at 11.86 a pound while currently trading at 11.64 down about 22 points for the trading week continuing its bearish momentum as a descending triangle chart pattern has developed which predicts lower prices ahead.

At the current time I am not involved in this market as it has been very choppy as I don’t have any recommendations in the soft commodities at the current time but they all remain weak in my opinion so sit on the sidelines. Sugar prices are trading under their 20 and 100 day moving average as the trend is lower and if you look at the daily chart the downtrend line also remains intact as the volatility has come to a crawl over the last several weeks.

Fundamentally speaking an increase in monsoon rain in India is negative for sugar prices after India’s Meteorological Department last Thursday said India’s July monsoon rains were 298.4 mm up 4.6% more than the long-term average coupled with weak worldwide demand.

Sugar prices can follow crude oil which hit a contract low in last week’s trade as sugar is used is biodiesel so look at other markets with better potential so be patient as a longer-term bottom might be taking place, but there is no reason to buy at this time

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY: LOW

 

 

What Are Descending Triangles ?  CHART PATTERNS-–Descending triangles are a very popular chart pattern among traders because it clearly shows that the demand for an asset is weakening, and when the price breaks below the lower support, it is a clear cation that downside momentum is likely to continue or become stronger.

Descending triangles give technical traders the opportunity to make substantial profits over a brief period of time.

Most traders look to initiate a short position following a high volume breakdown from lower trend line support in a descending triangle chart pattern. In general, the price target for the chart pattern is equal to the entry price minus the vertical height between the two trend lines at the time of the breakdown.

The upper trend line resistance also serves as a stop loss level for traders to limit their potential losses. A descending triangle is the bearish counterpart of an ascending triangle which is one of the most reliable bullish chart patterns used by technical analysts.

 

 

 

Palladium Futures—Palladium futures in the September contract settled last Friday at 1,419 while currently trading at 1,445 up about $26 for the trading week as prices are right near a 2 week high.

Palladium prices have been bouncing off the 1,400 level over the last couple of weeks as I had a bullish recommendation a couple of months back which worked out very well as I’m keeping a close eye on another bullish position developing as the chart structure has turned outstanding due to the lower volatility.

I will wait for a 4 week high to develop as we will still not be involved for at least a couple more weeks, but it looks to me that higher prices are ahead despite the fact that we are trading right at their 20 and 100 day moving average as the trend is mixed at the present time.

A double top occurred at the 1,600 level on July 11th as this market fundamentally speaking is bullish with low carryover levels and strong demand, but I’m not willing to stick my toe in the water just yet as being patient is the best thing to do in my opinion.

TREND: MIXED

CHART STRUCTURE: SOLID

VOLATILITY: LOW

 

 

 

Wheat Futures—Wheat futures in the September contract settled last Friday in Chicago at 4.99 a bushel while currently trading at 4.69  down about $0.30 for the trading week hitting a 3 month low. Prices reacted negatively off of Monday’s crop report as fundamentally speaking this market remains on the defensive with ample supplies and excellent weather conditions as I have been recommending a bearish position from the 5.04 level and if you took the trade continue to place the stop loss on a hard basis only at 5.07 as an exit strategy.

Come next week’s trade we will have to roll over into the December contract due to expiration which is just around the bend as I still think prices will retest the May 13th contract low of 4.27 as the whole grain market remains bearish in my opinion.

Wheat prices are trading under their 20 and 100 day moving average as the trend is to the downside as the large money managed funds are short as well as they still believe lower prices are ahead with the next major level of support around the 4.60 area which I think will be tested in next week’s trade so stay short & continue to place the proper stop loss as I still think lower prices are ahead.

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY: AVERAGE

 

 

 

Corn Futures—Corn futures in the December contract is ending the week on a positive note up $0.05 at 3.76, however prices settled last Friday in Chicago at 4.17 down about $0.43 or 10% for the trading week as prices are right near a 4 month low. Corn prices reacted very negatively off of the USDA crop report which was released on Monday showing that we might produce almost 14 billion bushels which was quite a shock while also raising carry over levels by 600 million as fundamentally speaking this market remains on the defensive.

In my opinion that was a shocking report as they basically stated that there was no damage done by the floods as I have to disagree with that, but the main problem is that there is extremely weak demand for corn and ethanol at the current time as that is what’s really keeping a lid on prices.

Corn finally filled the price gap that was created on May 14th at 3.80 this week as I had been recommending a bullish position from the 4.00 level getting stopped out at the 3.80 level as I think it’s time to move on and look at other markets that are beginning to trend.

Corn prices are now trading under their 20 and 100 day moving average as the trend is to the downside, however I will not take a short position as my only recommendation at the current time out of the grain market is a bearish wheat trade which continues its negative momentum.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: HIGH

 

 

 

Orange Juice Futures—Orange juice futures in the September contract settled last Friday in New York at 102.30 while currently trading at 99.00 down about 300 points for the trading week still hovering right near a 4 month low.

I have been recommending a bearish position from around the 98.50 level and if you took that trade continue to place the stop loss above the August 7th high of 103.20 as an exit strategy as the chart structure is outstanding due to the low volatility.

This trade has been very stubborn as we continually go sideways despite the fact that we have broken out of an 8-week consolidation as there is very little fresh fundamental news to put volatility back into this market.

At the current time this is my only soft commodity recommendation as ideal growing conditions in the State of Florida and the country of Brazil continue to hamper prices in the short-term as traders are keeping a close eye on the 7/10 day weather forecast to see if any hurricanes enter the Atlantic ocean as that could possibly cause damage to the orange crop in Florida.

For the bearish momentum to continue we have to break the August 5th low of 95.85 and if that does occur I think the bearish trend could accelerate to the downside.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

 

Coffee Futures–-Coffee futures in the December contract are trading higher by 35 points at 98.25 a pound as prices are still hovering right near a 14-year low looking to retest major support around the 95 level which was touched on multiple occasions in the month of May only to rally every single time.

At the present time I am not involved as I’m sitting on the sidelines waiting for a bottom to occur, however fundamentally speaking coffee supplies are on the rise and continue to undercut coffee prices after the International Coffee Organization (ICO) last Monday raised its global 2018/19 coffee surplus estimate to 3.92 mln bags from a July estimate of a 3.11 mln bag surplus.

The Columbian Coffee Growers Federation reported last Monday that July coffee production in Columbia the world’s 2nd biggest arabica producer jumped +25% y/y to 1.3 million bags. Coffee prices are trading under their 20 and 100 day moving average telling you that the trend is to the downside as the chart structure is poor as I’m advising clients to avoid this market at this time as the commodities in general still remain week due to a recession developing in Europe and no trade agreement with China.

I see no reason to be a buyer at this time despite the fact that the Brazilian harvest is about 95% complete as that is a bullish fundamental factor going forward seasonably speaking.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: AVERAGE

 

 

 

10 Year Note Futures—The 10 year note in the September contract is trading at 130 /27 continuing its bullish momentum this week hitting a 3 year high. I have been recommending a bullish position from the 128 /00 level and if you took that trade the stop loss now stands at 128/27 as the chart structure will turn outstanding in next week’s trade therefor the monetary risk will be lowered.

There is so much uncertainty in the world at this time especially with the tension brewing between China and Hong Kong and if that comes to violence you’re going to see the bond market sharply higher in my opinion.

The yield at the current time is 1.53% and if you have been following any of my previous blogs you understand that I think we can go all the way down to the 1% level as I see no reason to be short the bond market as it is the strongest trend to the upside at the present time.

Gold prices are also higher once again in today’s trade as bonds and gold are used as a flight to quality and I still think there’s room to run so stay long as I will be looking at adding more contracts on any type of price retracement as the risk/reward will be more in your favor next week.

TREND: HIGHER

CHART STRUCTURE: SOLID

VOLATILITY: HIGH

 

 

 

 

Gold Futures—Gold futures in the December contract is currently trading at 1,525 an ounce continuing its bullish momentum this week experiencing high volatility in yesterday’s trade as money flows continue to enter silver and gold as a flight to quality.

Chaos in Hong Kong coupled with the fact of plunging interest rates worldwide continue to fuel gold prices higher, however I am not involved, but I do think there is no reason to be short this market as 1,600 in the cards in the coming weeks or possibly days ahead depending on what develops between China and Hong Kong.

At the current time I have bullish recommendations in platinum & silver as platinum has become the weak sister not able to rally due to the fact of a possible economic slowdown, but silver continues to march higher. For the bullish momentum to continue prices have to break yesterday’s high of 1,546 as the volatility will remain high as I see that continuing for quite some time as the U.S stock market is down over 700 points today.

If you are long a futures contract continue to place the stop loss under the 2 week low standing at 1,442 as an exit strategy as this trend is very strong and should not be sold.

TREND: HIGHER

CHART STRUCTURE: POOR

VOLATILITY: HIGH

 

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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