Bearish Trends Continue– Commodity Comments For 5-3-19

Bearish Trends Continue– Commodity Comments For 5-3-19
Bearish Trends Continue– Commodity Comments For 5-3-19

S&P 500 Futures—The S&P 500 in the June contract settled last Friday in Chicago at 2941 while currently trading at 2939 basically unchanged for the trading week, but ending on a positive note up over 20 points due to the incredibly strong monthly unemployment number which was released this morning.

The economic figures that have been released in the last week have been impressive as we had a 3.2% first quarter GDP and now we added 263,000 jobs with an unemployment rate of 3.8% as I see further growth in the U.S economy and higher stock prices.

I have been talking about the S&P 500 for months and I still believe we will continue the bullish trend as 3000 is my next level of resistance and if you are long a futures contract I would continue to place the stop loss under the 2 week low standing at 2899, however the chart structure will not improve so you will have to accept the monetary risk.

The volatility in the S&P still remains historically low especially at these elevated prices as I see no reason to be short as the U.S economy is astonishing at the current time. The S&P 500 is trading far above its 20 and 100 day moving average telling you that the trend is to the upside, but for the bullish momentum to continue we have to break the May 1st high of 2961 which was also the all time high which I think will be breached possibly in next weeks trade.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

Copper Futures— Copper futures in the July contract settled last Friday in New York at 2.8940 while currently trading at 2.8240 as I have been recommending a bearish position from around the 2.8250 level and if you took that trade continue to place the stop loss above the 2 week high which now stands at 2.9240 as an exit strategy.

The commodity markets across the board are higher in today’s trade as the U.S dollar is lower as I’m also recommending a bullish position in that currency as today looks like a relief rally due to oversold conditions as I still remain bearish.

Copper prices are trading under their 20 and 100 day moving average as the trend remains to the downside, however today’s monthly unemployment number was so impressive it help push copper higher. Volatility in copper is relatively high at this time as copper historically speaking is a very volatile commodity with large price swings so if you are involved in this commodity make sure that you place the proper amount of contracts coupled with the fact that you must risk 2% of your account balance on any given trade.

The next major level of support is around 2.76 / 2.78 & if that is broken like I have talked about in many previous blogs I think then the bearish trend would accelerate to the downside.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: HIGH

 

Sugar Futures—Sugar futures in the July contract is currently trading at 12.04 after settling last Friday in New York at 12.65 a pound continuing its bearish momentum as I’ve been recommending a short position from the 12.25 level & if you took that trade continue to place the stop loss above the 2 week high which stands at 13.05 as an exit strategy.

The chart structure will not improve until later next week as the monetary risk will remain as I believe we will crack the contract low which was hit on January 3rd at 11.99 so stay short in my opinion.

The commodity markets remain in bearish trends despite today’s slight rally in most sectors as oversupply and weak demand continues to keep a lid on sugar prices in the short term. Sugar is trading below its 20 and 100 day moving average as the trend clearly has turned negative as the volatility still remains low as I will be looking at adding more contracts to the downside once the risk/reward become more in your favor.

At the present time I also have a short cotton recommendation as I think many sectors will remain bearish until some type of agreement with China on trade develops.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

Cotton Futures—Cotton futures in the July contract is currently trading at 75.80 after settling last Friday in New York at 77.70 down almost 200 points for the trading week as a rounding top chart pattern looks to have been formed in my opinion. I have been recommending a bearish position from around the 75.78 level and if you took that trade continue to place the stop loss at 79.57 as an exit strategy, however the chart structure will improve in next week’s trade therefor the monetary risk will also be lowered.

Cotton prices are trading under their 20 and 100 day moving average as the trend has turned to the downside with the next major level of resistance at the 74.00 level & if that is broken I think we could test the contract low which was hit on February 12th at 72.33 as the agricultural markets still remain bearish.

Spring planting is in full swing in the southern part of the United States as we have no complications yet, but it’s a long growing season as the trend is your friend & this trend and the risk/reward are in your favor to take a short position.

I will be looking at adding more contracts to the downside possibly in next week’s trade as we await the next crop report which will be released in early May and certainly will send volatility back into this market.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

Corn Futures—Corn futures in the July contract settled last Friday in Chicago at 3.61 while currently trading at 3.70 a bushel rallying due to excessive wet weather in the midwestern part of the country delaying planting.

Soybean prices have been going in the opposite direction of corn as it looks at this point in time that corn acres will be lowered while soybean acres will rise as we are exceptionally wet especially in the state of Illinois. On average by May 1st 35% of the corn crop has already been planted as we will see what the crop progress report states Monday, but it probably will not be even near that number.

Corn prices are now trading above their 20 day but still below their 100 day moving average as I am currently not recommending a trade in this commodity, however as I’ve written in the past if you are bullish I would place the stop loss under the contract low which was hit on April 25th at 3.51 as an exit strategy.

The volatility in corn will start to explode here as we enter the summer months as it looks to me that a spike bottom was created in the short-term. The agricultural markets almost across the board remain bearish as the rally in corn is all due to weather as that will dictate where short term price action goes over the next couple of months.

TREND: MIXED

CHART STRUCTURE: SOLID

VOLATILITY: INCREASING

 

Soybean Futures—Soybean futures settled last Friday in Chicago at 8.67 a bushel while currently trading at 8.44 down about $0.23 for the week as traders continue to sell soybeans and buy corn due to the excessive wet weather that we have witnessed in the Midwestern part of the United States over the last 2 weeks.

If you have been following any of my previous blogs you understand that I have been bearish for quite some time as I think prices will retest 8.10 and then possibly test the 7.75 level as I see no reason to be buying soybeans at this time as technically and fundamentally speaking this market remains bearish.

Soybean prices are trading under their 20 and 100 day moving average as the trend remains negative as the large money managed funds are short 155,000 contracts as they still believe lower prices are ahead.

The entire soy complex is negative as soy meal and soybean oil are right at contract lows once again as additional acres look to be planted for soybeans for 2019 as that is a negative influence on prices.

In my opinion until a trade agreement with China comes to fruition I think soybeans will continue to drift lower as a 900 million carryover number is way too high to absorb especially if we produce another excellent crop.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: INCREASING

 

Wheat Futures— Wheat futures in the July contract settled last Friday in Chicago at 4.42 a bushel while currently trading at 4.39 down about $0.03 for the trading week still hovering right near a multi year low.

The Wheat Quality Tour estimated that the Kansas wheat crop will be around 47 bushels per acre well above the 5 year average of 40 bushels as fundamentally & technically speaking this market still remains bearish in my opinion. Wheat prices are trading under their 20 and 100 day moving average as clearly the trend is to the downside, but for the bearish momentum to continue we have to break the April 30th low of 4.26 as I still see no reason to be a buyer of wheat as I still remain bearish the entire grain sector.

As I have talked about in previous blogs I think there is a chance that wheat prices can head down to the $4 level as weak demand is also hampering prices at the current time.

If you are short a futures contract I would place the stop loss above the 2 week high which stands at 4.48 as an exit strategy as the chart structure is outstanding at the present time, but if that does occur move on and wait for another situation to develop.

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY: AVERAGE

 

Live Cattle Futures—Live cattle futures in the June contract settled last Friday at 115.05 while currently trading at 113.65  down about 240 points for the trading week hitting a 5 month low and now has traded lower for 10 consecutive sessions as this market has turned on a dime.

Large money managed funds had record long positions as they have been liquidating as that is part of the reason why you have seen this collapse as I was bullish cattle about a month ago, but when prices hit the 2 week low as it was time to move on that’s why you must have an exit strategy.

The next major level of support is around the 110 / 112 level and if that is broken there could be problems ahead as the damage from the floods in the Midwestern part of the United States did not seem to have as big of an impact as once thought.

Cattle prices are now trading below their 20 and 100 day moving average as the trend clearly is to the downside, however the chart structure is poor as I’m advising clients to sit on the sidelines and wait for a better risk/reward situation to develop.

The agricultural markets still remain weak as I have several short recommendations at the present time as it looks to me that prices will try to test the contract low which was hit on November 13th around the 111.62 level.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: AVERAGE

 

TRADING THEORY—Trade with the short term trend, as the saying goes in futures trading the trend is your friend but sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade.

If it was up to me I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side.

I define a trend as a commodity hitting a 20 day high or low as a trendy market, if the market is in a consolidation stay away from it and find something that is trending.up or down and go in that direction remembering the money management rules of 2% maximum loss if you are wrong.

 

Dollar Index Futures—The U.S dollar broke a 2 day winning streak finishing lower by 30 points at 97.55 as I’ve been recommending a bullish position from around the 97.40 level and if you took that trade continue to place the stop loss under the 2 week low of 96.87 as an exit strategy. The U.S dollar is generally a non-volatile currency with lower risk due to the fact that it is known as a basket against all foreign currencies.

The United States economy is the strongest by far in the world in my opinion as king dollar is resurrecting so continue to play this to the upside as the risk / reward are in your favor as the commodity markets continue to go lower due to a resilient dollar.

The monthly unemployment number will be released in tomorrow’s trading session as that should send some volatility back into this currency as the chart structure is outstanding at the current time as I will be looking at adding more contracts to the upside if prices break the April 26th high of 98.80 as then 100 would be the next level that could be tested.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY: INCREASING

 

 

 

Orange Juice Futures—Orange juice futures in the July contract broke a 5 day losing streak finishing higher by 45 points at 93.90 hitting a 10 year low this week as I still think prices look expensive. I have talked about orange juice for quite some time and I do think prices could test major support on the yearly chart at the 75 level as I see no reason to be a buyer at this time as the trend is very strong to the downside.

At the present time I have short recommendations in cotton and in sugar as I also bearish the entire grain market as well as I see no reason to be a buyer at this time.

If you are short a futures contract I would place the stop loss at the 2 week high which in tomorrow’s trade will be 110.00 as an exit strategy, however the chart structure will start to improve on a daily basis next week therefor the monetary risk will also be reduced.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: INCREASING

 

 

 

Coffee Futures—Coffee futures in the July contract is currently trading at 90.60 a pound as prices are still stuck in a 3 week tight consolidation with very little fresh fundamental news to dictate short-term price action.

The chart structure in coffee is outstanding as we have traded in a 500 point range over the last 3 weeks as I am currently sitting on the sidelines waiting for a bullish position, however if you think a bottom has been formed I would buy it at today’s price level while placing the stop loss under the 14 year low at 89.00 as an exit strategy as the risk would be around $1,200 per contract plus slippage and commission.

At the present time I have short recommendations in sugar and cotton as I’m also bearish the orange juice market, but I do think the downside in coffee is limited, but I will be patient and wait for a breakout to occur which could happen soon.

We are now entering the frost season soon for coffee as in 1994 we had 2 touches of frost that sent coffee from around 75.00 to around 250,00 in a matter of a month as I think a price premium might start to be put into this market or at least the downside is limited until after the frost risk.

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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