Mike Seery's Daily Commodity Comments 2-13-18

13 Feb in Blog, commodity consulting, commodity trading, corn, dow jones futures, futures, futures trading, heating oil futures, Mike Seery, NASDAQ 100 futures, natural gas futures, oats, option trading Crude oil futures, option trading S&P 500, seeryfutures, soybean meal, soybean oil, soybeans, unleaded gasoline futures, wheat

Cocoa Futures--- Cocoa futures in the March contract are trading higher by 22 points currently at 1992 reversing some of the sharp declines that we witnessed in yesterday's trade as I have been recommending a bullish position over the last month from around the 1990 level if you took the trade place the stop loss under yesterday's low of 1953 as the chart structure is outstanding at the current time.

If you are not stopped out of cocoa today roll over into the May contract as expiration is almost upon us as cocoa prices have had a very difficult time crossing the 2070 level as at the current time we are in a directionless trade.

Cocoa prices are trading right at their 20 day moving average, but now below the 100 day, however I will not 2nd guess & will keep the proper stop loss & if we are stopped out we will look at other markets that are beginning to trend as the commodity markets have come to life in 2018 as the U.S economy & around the world are improving as growth is upon us for the 1st time in 10 years.

The soft commodity markets continue to move sideways to lower as I don't have any recommendations other than cocoa at the present time while keeping a close eye on the coffee market which is right near contract lows once again as I will write about the May contract tomorrow with the proper stop loss & if you have any questions feel free to contact me anytime.

TREND: HIGHER--MIXED

CHART STRUCTURE: EXCELLENT

VOLATILITY---INCREASING

 

 

 

Silver Futures--- Silver futures in the March contract are trading lower by $0.15 at 16.42 an ounce continuing its sideways to bearish trend as I still think historically speaking silver prices look very compelling down at these cheap price levels in my opinion, however at the current time I'm not involved as I'm waiting for a trend or true breakout to occur.

Silver prices are still trading below their 20 and 100 day moving average as the trend is to the downside despite the fact of extremely high volatility in the U.S stock market which usually sends money into the precious metals, but that is not the case at this time.

The chart structure in silver is poor as prices have fallen from 17.70 just 3 weeks ago to last Friday's low around 16.13 as I still think will be at higher prices come year-end, but look at other markets with a better risk/reward scenario at the current time.

Volatility in silver is starting to increase as historically speaking silver can be outrageously volatile with huge price swings on a daily basis with tremendous risk as I still think that scenario will occur sometime this year just like what happened to the equity markets in recent weeks.

For silver to regain its bullish momentum we have to break last months high of 17.70 as that could take some time so be patient and keep close eye on this market as I will not take a short position as I think the downside is very limited & if your a long-term investor I would still be buying at today's price levels.

TREND: LOWER--MIXED

CHART STRUCTURE: POOR

VOLATILITY---INCREASING

 

 

 

 

Natural Gas Futures--- Natural gas futures in the March contract is trading higher by 7 points at 2.62 breaking a 4 day losing streak as I'm currently keeping a close eye on this market for a possible bullish position which would be counter trend trading, however I think the downside is very limited from these depressed levels.

If you take a look at the daily chart there is a possible double bottom that may have been formed in yesterday's trade at the 2.53 level which was also hit on December 21st as this market has dropped over 60 points in the last 2 trading weeks as I think we are in oversold territory.

Natural gas prices are still trading under their 20 and 100 day moving average as clearly the trend is to the downside, however we still have several more weeks of winter as cold temperatures could come back to the Midwestern part of the United States as I can still see prices cracking the 3.00 level in the weeks ahead so I will possibly be looking at a bullish trade tomorrow while making sure that you risk 2% of your account balance on any given trade as a proper money management technique.

If you have read any of my previous blogs you understand that I'm clearly a trend trader, however once in a while there is a special opportunity to counter trend trade as I took a natural gas trade several weeks ago right near the bottom as well as that turned out to be successful as I might try this one more time to the upside if the right situation occurs this week.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY---INCREASING

 

 

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Oat Futures--- Oat futures in the March contract is heading into expiration as I had been recommending a bullish position from the 2.60 level while exiting around the 2.74 level then rolling over into the May contract at the 2.73 level and if you took the new trade place the stop loss under the 2 week low standing at 2.64 as the chart structure is outstanding at the present time as the risk on the new trade is 9 cents or $450 per contract plus slippage and commission.

Wheat & corn will start to rollover from the March contracts into the May contract possibly tomorrow if you have any questions about the situation please feel free to call me anytime as I will be more than happy to explain how to proceed.

Corn and wheat were both lower today on profit-taking, however soybean meal hit a fresh contract high as there are still major concerns about growing conditions in the country of Argentina as I think that will start to help support the rest of the grain sector here in the short term.

Prices are trading above their 20 and 100 day moving average selling off from session highs on profit-taking in my opinion, but I do think the May contract could trade above the $3 dollar level due to many fundamental reasons such as a weaker dollar and strong demand coming out of the country of Canada so continue to play this to the upside as the risk/reward are in your favor due to the fact of outstanding chart structure.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY---INCREASING

 

 

 

 

When Should You Enter Into A Trade ? I have been asked this question many times throughout my career and my opinion is simply to buy on a 20-25 day high breakout in price on a closing basis only or sell on a 20-25 day low breakout to the downside also on a closing basis.

Many times the price will break the 25 day high and sell off later in the day only to have your trade be negative very quickly. I would rather buy the commodity at a higher price on the close because that gives me more confidence that the market has truly broken out.

However there are more ways to skin a cat and this is not the only answer because some other trading systems might rely on different breakout rules that have also been reliable.

Remember always keeping a 1%-2% risk loss on any given trade therefore minimizing risks because the entry system I use always goes with the trend because I have learned over the course of time the trend is truly your friend in the long run. I also look for tight chart structure meaning a tight trading range over a period of time with relatively low volatility. I try to stay away from a crazy market that hit a 25 day high in 2 trading sessions versus the 25 high that actually took 25 days to create

 

 

 

 

Sugar Futures--- Sugar futures in the May contract finished down 17 points to close at 13.44 a pound continuing it's choppy to sideways action as I'm currently not involved in this market as I will be patient and wait for the trend to the upside to develop which will take a close above the 14.02 level in my opinion.

Prices are still trading below their 20 and 100 day moving average bottoming out around the 13.00 level as prices are right near a 3 week low as I will not take a short position as I do think the downside is very limited.

Crude oil prices have been hammered over the last week dropping about $7 as that is also keeping a lid on sugar which is used as a bio diesel product, as I think this might be stuck in the mud for several more weeks as remember my consolidation theory states the longer the consolidation the more powerful the breakout can occur, but this will take time to develop.

At the present time my only soft commodity recommendation is cocoa which had a nice up day today, but the rest of the sector still remains neutral to lower so I will keep a close eye on sugar to the upside as prices historically look very cheap coupled with the fact that volatility is very low at the present time so look to play this to the upside in the coming weeks ahead.

Remember when you trade the commodity markets look for trends as trading markets in consolidations is very difficult to trade successfully in my opinion and can become extremely frustrating as one day is up & the next day is down as prices seem to go nowhere.

TREND: LOWER

CHART STRUCTURE: IMPROVING

VOLATILITY---INCREASING

 

 

 

 

Cotton Futures---Cotton futures in the May contract rallied from session lows finishing down 5 points at 77.50 trading near a 7 week low as I'm currently not involved in this market, but I do think prices could trade as low as the 75 level in the coming weeks ahead as a buying opportunity could be upon us soon.

Prices broke major support at the 77 level earlier in the session before rallying on profit-taking as prices are still trading below their 20 day but above their 100 day moving average as the trend is mixed in my opinion as prices topped out on January 12th around 84.45 as prices remain on the defensive despite the fact that the grain market hit a multi-month high which is a great thing to see as the agricultural sector I think has finally bottomed out.

The problem with cotton is that there were a lot of cancellations with several countries around the world creating weaker demand as strong demand was one of the main reasons why prices had a significant rally over the last 5 months as I think that demand will come back as we enter spring planting in the next couple of months as the volatility certainly will expand and it will be very interesting to see how many acres of cotton will be planted in the southern part of the United States in 2018.

The chart structure in cotton still is relatively solid as the volatility remains low as I look forward to entering into a bullish position once my criteria is met and the risk/reward meets criteria which still probably is a couple of weeks away so keep this commodity on your bucket list.

TREND: LOWER

CHART STRUCTURE: IMPROVING

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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