Mike Seery's Closing Commodity Comments & Trading Rules

in Seery Futures Exclusive Newsletter

Precious Metals—The precious metals in New York rallied today with gold up $12 an ounce at 1,392 in the August contract as the U.S dollar was down 40 points pushing the precious metals higher this afternoon, however in my opinion as I’ve stated in previous blogs I still believe that gold is headed lower with volatility starting to slow down a little bit but when volatility was high I was recommending selling puts and calls far out of the money and it’s been working because eventually are not have $30-$50 days every single day and volatility will contrast and that’s exactly what’s happening now. Silver futures for the July contract were up about $.22 at 22.42 an ounce still stuck in a sideways to lower trading pattern way below its 20 & 100 day moving average also losing some of its volatility that we saw last month and I think the sideways action will probably last a couple more weeks. Copper futures were down about 200 points today at 3.2950 a pound in the July contract still in a directionless trade so I’m still advising traders to stay away from copper and sit on the sidelines until a real trend develops but keep an eye on gold and silver still to the downside it does not look like the commodity selloff is over just yet.

There is extreme choppiness in the U.S dollar up at the 84 level with one day sharply higher and the next day like today sharply lower but I do think that the currencies are still in a bear market and that the dollar will continue its upward momentum which could push precious metals and energy prices lower in the short term. If you’re looking to go long or short the gold or silver market the chart structure is starting to improve dramatically which is allowing you to place your stop above the 10 day high or the 10 day low whichever side of the market you are on minimizing the risk in case the trend does change.

There has been a fundamental shift taking place in many of the markets including the U.S treasuries which are starting to fall out of bed with yields rising to multi-month highs which is also pushing up the dollar and putting pressure on many of the commodities and in my opinion I still believe that interest rates are headed higher at this point so we will have to wait & see what type of effect it will have on the precious metals. TREND: LOWER –CHART STRUCTURE: IMPROVING

Grain Futures--- The grain futures saw volatile trading action today after the release of the planting progress report yesterday afternoon which basically stated exactly what traders expected at this point so the report will have very little impact going forward with soybeans for the July contract were down $.06 at 15.02 still near the upper end of the trading range all because of the fact of a very low carryover or supply situation as farmers are complaining that there is very little old crop corn and beans to be sold. November soybeans were up $.02 at 12.88 as the spread between the July the November contract are starting to narrow as flooding across many parts of the Midwest are causing concerns that this is going to be a late crop and when late crops happen generally yields fall at harvest time. I have been recommending long positions in November and in July soybeans & I do believe prices are headed higher with excellent chart structure in the November contract at this point allowing you place a stop at around 12.05 a bushel, however the July contract has very little chart structure at this time so if you’re looking to enter a new position my advice would be to go into November contract.

Corn futures for the December contract rallied sharply up $.13 at 5.65 a bushel looking to retest the breakout above 5.70 a bushel and if that level is broken you have to think a bull market is underway in corn but at this point we are still in extreme choppiness and I’m advising traders to sit on the sidelines in the corn market until the trend does break out. Wheat futures for the July contract were up about $.06 right at $7 a bushel still in a 12 week consolidation with no trend in sight with the breakout at 7.40 today settling at $7 even which is still quite a distance away before the trend develops to the upside.

The U.S dollar was lower today but it did not lend very much support to the grain market as this market has turned into a weather market. I spoke about soybean oil yesterday which has excellent chart structure I was recommending a buy with a stop below the 10 day low, however soybean oil was down 75 points closing right near the lows as traders were buying soymeal & selling the soybean oil, however it has not hit the 10 day low in price just yet.

TREND: HIGHER–CHART STRUCTURE: EXCELLENT

Livestock Futures--- Cattle futures in Chicago were higher with live cattle for the August contract up 100 points currently trading at 120.40 a pound right near 2 week high with major resistance at 124.20 and it looks like to me that a possible double bottom may have been formed in the live cattle futures market. The low in live cattle for the June contract was 118.00 so if you are looking to get long this market I would buy a futures contract and place a stop loss below that level risking around $1,000 per contract.

 Lean hog futures were down about 20 points in the July contract still right at a 3 ½ month high trading above the 20 & 100 day moving average as Smithfield food which is the largest U.S pork producer was bought by a Chinese company spurring thoughts about future demand directly to China. If you’re looking to get long this market I would place my stop at the 10 day low which is at 89.75 risking around $1,300 per contract at this point and remember stop losses will be raised meaning that you will have trailing stops at $1,300 which is the worst-case scenario at this point in time. Feeder cattle prices for the August contract settled down 10 points at 145.40 still in a very choppy to bearish trade still below its 20 & 100 day moving average and I’m advising traders to sit on the sidelines in feeder cattle but I am bullish the live cattle and the lean hogs because there is a chance a bull market is underway especially in hogs.

The commodity markets are extremely volatile in recent weeks and today is no exception with huge moves in oil and the grain market which is having big moves up or down on a daily basis which will affect livestock futures at this point with all the money sloshing around the world there is a possibility that the commodity markets are bottoming here in the next couple of weeks like they did last year. TREND: –HIGHER--–CHART STRUCTURE: GOOD

5 Year Notes—The Five-year notes are continuing their bearish trend selling off again for the 3rd straight session today closing down 2 ticks at 123.04 rallying sharply off  session lows as a short term bottom might be in place. I have stated in many previous blogs to be selling the bonds and take advantage of Fed intervention trading far below its 20 & 100 day moving average nearing a 9 month low as the U.S dollar continues to move higher as a fundamental shift is now taking place in interest rates with a possible bullish dollar which we have not seen in years as investors are finally rotating out of bonds and putting those funds into the stock market.

In my opinion I might be sticking my neck out here if you look at the five-year note on a one-year chart it has been consolidating between 123-124 since last September which is now a 8 month consolidation and I do believe we will break the 123 level here in the next couple of days all due to the fact that I think there will be a rotation out treasuries headed into stocks and I do think stock markets around the world will continue to move higher. If you have a longer-term horizon I think selling the 5 year notes at this point in time yielding 1.01 and the yield has nearly doubled in 3 weeks as prices have crumbled on the fact that the QE3 are ending soon which is an excellent opportunity to take advantage selling near all-time highs while the all-time low in this market was 0.59 which happened last year and I don’t believe you will go down to those levels again and once U.S treasury stops purchasing treasuries yields could go much higher in my opinion.

The five-year note is probably one of the most conservative trades there is because since the fact that is yield is so small and it has little volatility a good move in the five-year note is about 10 ticks which is around $325 profit or loss on that day but there are many days were it moves 1 or 2 ticks so this is a very good investment vehicle for somebody who doesn’t like to take on a lot of volatility, however volatility has increased in recent weeks.. TREND: LOWER –CHART STRUCTURE: EXCELLENT

    

Double Bottom & Double Tops---This indicator is one of my favorite patterns that signals a trend reversal because its considered to be one of the most reliable and is commonly used by many technicians. These patterns are formed after a sustained trend and signal to chartists that the trend is about to reverse. The pattern is created when a price movement tests support or resistance levels twice and is unable to break through. This pattern is often used to signal intermediate and long-term trend reversals. Their also can be triple bottoms and triple tops which are in my opinion an excellent indicator that predicts bottoms and tops at a relatively high rate and if you look at some of the daily charts you will see some double and triple tops and bottoms. If you are using any indicator such as these make sure you place a stop loss to try and minimize your monetary loss because indicators do not work a 100 % percent of the time so you still need solid money management technique to cut loses. If you are looking for a futures or option  broker feel free to contact Michael Seery at 800-615-7649 and I will be more than happy to help you with your trading or visit www.seeryfutures.com   Skype Address: mike.seery3

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