Mike Seery Talks The Commodity Markets

Mike Seery Talks The Commodity Markets
Mike Seery Talks The Commodity Markets

S&P 500 Futures—The S&P 500 in the June contract is currently trading at 2906 down 4 points in a very quiet trade this Monday afternoon in Chicago as the volatility remains exceptionally low.

If you have followed any of my previous blogs you understand that I’m very bullish the U.S equity market despite today’s slight sell off as I do think all time highs will be breached in the next couple of days in my opinion as the U.S economy remains the envy of the world.

If you are long a futures contract I would place the stop loss under the 2 week low which stands at 2877 as the chart structure is outstanding at the current time as I still believe that we will break the all time high around 2961 as earnings season is upon us and should definitely send volatility back into this market.

The stock market at the current time  has the strongest bullish trend out of all sectors as money flows continue to come into this sector as the Nasdaq 100 is at all-time highs as I think the Dow Jones and S&P will start to catch up as Boeing has put pressure on the S&P due to the fact of the plane crashes that we have experienced in the last couple of months.

If you are long stay long in my opinion as there is still room to run to the upside as fundamentally and technically speaking this market remains bullish.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

 

Corn Futures—Corn futures in the July contract is currently trading lower by 2 cents at 3.65 a bushel as this would be a closing contract low as the entire grain market remains bearish. Large money managed funds are short about 370,000 contracts which is an all-time record as they still believe lower prices are ahead and if you take a look at the weekly chart the downtrend line remains intact.

The next major level of support is around the 3.60 area and if that is broken prices then look to test the 3.50 area as there is nothing bullish about corn at the present time.

The crop progress report will be released later this afternoon as estimates are between 6% / 8% planted which is slightly below the 5 year average, however at the current time weather conditions are ideal.

Corn prices are trading below its 20 and 100 day moving average as the trend clearly is to the downside as wheat prices are also near a contract low putting pressure on corn as I will be looking at a bullish position in the coming weeks ahead, but at the current time be patient as prices still remain weak. Volatility in corn is average, but that certainly will increase substantially as we enter the highly volatile growing season.

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY: AVERAGE

 

 

Wheat Futures—Wheat futures in the July contract is trading lower for the 2nd consecutive session down another $0.05 at 4.43 a bushel looking to retest the March 11th low of 4.35 in my opinion. The large money managed funds added another 8,000 short contracts last week as now they are short about 63,000 contracts as they still believe lower prices are ahead as they are also short the corn market.

Fundamentally and technically speaking wheat prices still look bearish as ideal weather conditions continue to put pressure on prices coupled with the fact of ample supplies as I do think prices could test the 4.00 level in the coming weeks ahead. If you take a look at the weekly chart the downtrend line remains intact as I see no reason to be a buyer of this commodity at this time.

The volatility in wheat will start to expand to the upside as the summer season is almost upon us as things can turn on a dime as weather conditions will be the main focus for prices over the next several months. Wheat is trading under their 20 and 100 day moving average as the trend remains to the downside and if you are short a futures contract stay short in my opinion as I still think there is room to run to the downside.

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY: AVERAGE

 

Soybean Futures–-Soybeans in the July contract is trading lower by 4 cents at 8.90 a bushel hitting a 6 month low as the grain market as a whole remains bearish across the board. In my opinion I think prices will retest the October 31st low of 8.83 and then test major support at the contract low at 8.65 in the coming days ahead as I see no reason to be bullish soybeans at this time.

Soybean prices are trading under their 20 and 100 day moving average as the trend remains negative as the first planting progress report will be released this afternoon as that should have very little impact on prices. Large money manage funds are short 91,000 contracts as they are short the entire grain market as they have been right so far and they still believe lower prices are ahead and I agree with them.

Fundamentally speaking soybeans remain very bearish as we have 900 million bushel carry over which is an all-time high coupled with the fact of weak demand due to the situation regarding trade with China & until that situation is fixed it will be very difficult for soybean prices to rally unless some type of weather event develops such as drought.

Volatility will certainly increase to the upside as the summer season is the most volatile for the grain market and especially for soybeans, but in the short-term lower prices look to be ahead so if you are short stay short.

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY: AVERAGE

 

 

Copper Futures—Copper futures in the May contract is trading lower by 160 points at 2.9040 a pound as prices hit a 9 month high in last week’s trade before profit taking has ensued.

In my opinion if you take a look at the daily chart there are several different ways you could play this commodity if you are bearish I would place the stop loss above last Thursday’s contract high of 299.60 as the risk would be around 600 points or $1,500 per contract plus slippage & commission, however if you are bullish place the stop loss at 2.8300 as the risk would be around 800 points or $2,000 as a breakout is looming in my opinion.

Prices have been stuck in the mud over the last 2 months experiencing a false breakout to the downside on March 22nd only then to resume trading back into the tight channel that we have been experiencing. Copper prices are trading slightly below their 20 day but still above their 100 day moving average as the trend is mixed, but I do believe that the risk / reward is in your favor if you have a bullish or bearish mentality.

Copper prices have rallied about 15% from their January 3rd low around 257 as lower interest rates and a stronger housing market have supported prices.

TREND: MIXED

CHART STRUCTURE: EXCELLENT

VOLATILITY: AVERAGE

 

 

Coffee Futures—Coffee futures in the July contract finished down 5 points at 92.85 a pound selling off from session highs as prices traded at 95.25 before profit taking took place.

The volatility in coffee over the last 3 trading sessions has been relatively high as this market has continually grinded lower for months as prices hit a 14 year low in last week’s trade.

Estimates of worldwide coffee supplies were raised recently as that has certainly put pressure on prices as fundamentally speaking there is nothing bullish about coffee at this time, however the chart structure remains outstanding due to the extremely low volatility that we’ve experienced for so long which has been amazing in my opinion.

Coffee is trading below its 20 on 100 day moving average as the trend remains negative as the downtrend line also remains intact, however that will be broken if prices crack the 100 level as that still is a possibility. For the bearish momentum to continue we have to break the 89.00 level which was hit on April 17th as the entire soft commodity sector remains bearish.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

TRADING THEORY—Never answer a margin call because you are probably over trading and most likely the position is going against you and probably have lost much more than 2% on that trade.

Never allow this to happen to you because you always want to have sufficient margin in your trading account just in case the exchange raises margin and that will not force you out of the position.

A great rule is to keep 50% of your total portfolio in cash and the other 50% in trades that way if something crazy happens and it does sometimes this helps in managing risk in a huge way.

 

 

 

 

Cattle Futures—Cattle futures in the June contract are sharply lower down 110 points at 121.57 reacting negatively off of the cattle on feed report which was released last Friday. I have been talking about cattle for quite some time and I still believe higher prices are ahead & if you are long a futures contract I would continue to place stop the loss under the 2 week low which now stands at 119.60 as an exit strategy on a closing basis only.

Large money managed funds are long around 152,000 contracts which is an all time record as they still believe higher prices are ahead and I agree with them at this time, however many of the agricultural markets were lower across the board in today’s trade.

Cattle prices are trading above their 20 & 100 day moving average as hog prices we’re almost limit down in today’s trade as that also put pressure on cattle prices.

If you take a look at the daily chart the uptrend line remains intact as the chart structure for such a volatile commodity remains excellent at the current time so continue to play this to the upside in my opinion.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

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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