S&P 500 Futures
The S&P 500 futures in the June contract settled last Friday in Chicago at 2829 while currently trading at 2822, basically unchanged for the trading week. However, that is not telling you the whole story as the volatility remains exceptionally high as the Dow Jones is down over 600 points ending the week at a very sour note.
I am not involved as the volatility, and the risk/reward is not in your favor to take a bullish or bearish position. However, I do think the stock market will head higher due to all the stimulus programs. I still see light at the end of the tunnel because many states have started to open up their economies, which is a great thing to see, in my opinion. However, if you are long a futures contract, I would place the stop loss under the 10-day low standing at 2717 as an exit strategy.
There is so much uncertainty at the current time. Until the Coronavirus situation is figured out, you’re going to continue to see this market flip flop daily. I am an optimist, and I think that the United States economy will come back strong in the coming weeks. I would take advantage of price weakness to enter into a bullish position. I think many individual stocks are incredibly cheap and should be looked into substantially.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Mexican Peso Futures
The Mexican Peso in the June contract settled last Friday at 3959 while currently trading at 4035 up about 75 points for the trading week still stuck in a 6-week tight consolidation as prices look to have bottomed out in my opinion as prices have absolutely collapsed over the last couple of months due to the Coronavirus situation.
I will be looking at a bullish position if prices break the April 13th high of 4254 while then placing the stop-loss below the multi-year low of 3835 as the risk would be around $2,000 per contract plus slippage and commission. The chart structure will improve tremendously in the next couple of days. Therefore, the monetary risk will be lowered as the Peso follows crude oil prices as that is Mexico’s number one export. It looks to me that oil prices have finally bottomed out as the downside in this currency is very limited as the risk/reward is to the upside, so keep a close eye on this market as we could be involved next week.
TREND: LOWER – MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Sugar Futures
Sugar futures in the July contract settled last Friday in New York at 9.81 while currently trading at 10.65 up around 85 points for the trading week hitting a 4 week high after trading as low as 9.21 earlier in the week following crude oil higher. A possible long-term bottom might be at hand.
Sugar prices are now trading above their 20-day but still below their 100-day moving average, experiencing one of the best weeks to the upside in months. I’m keeping a close eye on a bullish position once the chart structure improves as prices are still hovering near a 12-year low.
Historically speaking, prices are incredibly cheap, and my only soft commodity recommendation is a bullish cocoa trade. Many commodities have started to rally slightly as the United States is beginning to open up its economy, which is a terrific thing to see and should start to spark demand. I will not take a short position as I think the downside is limited.
Fundamentally speaking, stronger fuel demand in Brazil was supportive for ethanol prices after Fecombustiveis, the federation that represents Brazil gas stations, reported on Thursday that Brazil’s fuel consumption during Apr 20-25 rose +2.3% w/w as stay-at-home restrictions were eased.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE
Cotton Futures
Cotton futures in the July contract settled last Friday in New York at 55.63 while currently trading at 55.60 basically unchanged for the week ending on a sour note as prices are currently down 173 points blamed on profit-taking. I have been recommending a bullish position from around the 55.50 level. If you took that trade, continue to place to stop loss under the 10-day low standing around the 52.00 area. However, the chart structure will not improve for another 3 trading sessions, so you will have to accept the monetary risk at this time.
Fundamentally speaking, weather conditions in the southern part of the United States remain ideal as cotton planting is in full swing. However, many states have opened up their economies, which is a fundamental bullish factor. Still, there is so much uncertainty out there at the current time, and that is why you’re seeing prices continually flip-flopping daily, but I do think a long-term bottom is at hand. For the bullish momentum to continue, prices have to break the 6-week high, which was created yesterday at 57.98 as the volatility is starting to come to life. It could get much more explosive in the coming months ahead, especially if some type of weather event happens, such as drought, so stay long and continue to place the proper stop loss.
TREND: HIGHER – MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market allowing you to place a stop loss relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure as I like to place my stops at 10-day highs or 10-day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loss.
Corn Futures
Corn futures in the July contract, which is considered the old crop settled last Friday in Chicago at 3.23 a bushel while currently trading at 3.17 down about $0.06 for the trading week. Prices continue to hover right near a 3 year low, and if you have been following my previous blogs, you understand that I am bearish. I still think the $3 level will be broken soon. Excellent weather conditions in the Midwestern part of the United States should propel planting. I think we could possibly be at 50% planted as this is an entirely different year than what we experienced in the flood season of 2019 as we are off to an outstanding start to the 2020 crop.
Corn prices are trading far below their 20 and 100-day moving average as the trend is to the downside as these rallies are based on oversold conditions, and if you take a look at the daily chart, the down trend line remains remarkably intact so stay short. I still think prices look expensive, at least for May as then things can change due to the weather conditions as a possible drought can develop, sending prices sharply higher. Still, I don’t see that situation happening anytime in the next couple of weeks.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Cocoa Futures
Cocoa futures in the July contract settled last Friday in New York at 2323 while currently trading at 2405 as prices have now hit a 6 week high breaking out of a tight consolidation pattern that we’ve experienced over the last 2 months.
I have been recommending a bullish position from around the 2410 level, and if you took that trade, continue to place the stop loss under the contract low standing at 2200. However, that stop could be raised next week to the 2294 area as the chart structure will start to improve tremendously, therefore, lowering the monetary risk.
Cocoa prices are trading above their 20-day but still below their 100-day moving average as this is my only soft commodity recommendation. However, I do believe that the commodity markets are starting to see some signs of life because many states are beginning to open up their economies, which is positive towards demand. Volatility remains average. However, historically speaking, this commodity can experience tremendous price swings, and I think that situation is going to start to develop once again to the upside, so stay long.
TREND: HIGHER – MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING
Soybean Futures
Soybean futures in the July contract, which is considered the old crop settled last Friday in Chicago at 8.39 a bushel while currently trading at 8.49 down about 10 cents for the trading week on optimism about purchases from China.
If you have been following my previous blogs, you understand that I am bearish the grain market, and I still think soybeans could head substantially lower. If you are short a futures contract, I would continue to place the stop loss above the 10-day high standing at 8.57, which is just an eyelash away as an exit strategy as the downtrend line on the daily chart still remains intact.
For the bullish momentum to continue, prices have to break the April 21st low of 8.18. Excellent growing conditions in the Midwest continue, and planting will be in full swing. Couple that with the fact of weakening demand due to the Coronavirus situation that doesn’t seem to be ending anytime soon. Soybean meal continues to melt away weekly because livestock herds are decreasing. After all, processing plants continue to close, so stay short as I still think there is significant room to run to the downside.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Trading Theory
If you follow this rule you will have a chance of being successful over time, if you don’t follow this rule, you will be sure to lose your money quickly.
This rule is simple Do Not OVERTRADE EVER for this is an easy way to lose all your capital quickly.
My definition of over trading is risking too much money on any given trade, for example, if you are trading a $100,000 account and you place a gold trade today you should limit your loses to 2% of the account value which in this case is $2,000 which allows you to be wrong on many trades and still be around to play another day.
In futures and options trading, you will have losing trades that is for certain, so make sure you manage those losses and move on to another trade.
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Michael Seery, President
Seery Futures
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Twitter–@seeryfutures
Phone #: 630-408-3325
mseery@seeryfutures.com
There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.
