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Mike Seery’s Daily Commodity Comments For 11-25-19

S&P 500 Futures—The S&P 500 in the December contract is trading higher by 12 points at 3124 continuing its bullish momentum as this is a shortened holiday trading week due to the Thanksgiving holiday which generally averages a 0.6% gain to the upside as I think that situation is going to occur once again.

I have been recommending a bullish position from around the 3006 level over the last several months and if you took that trade the stop loss now stands at 3075, however in Wednesday’s trade that will be raised to 3081 as the chart structure is outstanding at the current time due the fact of low volatility.

For the bullish momentum to continue we have to break the November 19th high of 3132 as I think that will happen in this week’s trade as I see absolutely no reason to be short as this is the strongest trend to the upside out of all sectors.

As I have talked about in many previous blogs I think prices will hit the 3200 level come Christmastime which is about 4 weeks away as the holiday season is expected to be outstanding as the U.S economy is firing on all cylinders so continue to place the proper stop loss as who knows how high prices can go.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

Soybean Futures—Soybean futures in the January contract is trading slightly lower for the 4th consecutive session down 1 penny at 8.96 as prices are right near a 10 week low continuing its bearish momentum to the downside.

I have been recommending a bearish position from around the 9.23 level and if you took that trade continue to place the stop loss above the 10 day high which also stands at 9.23 as the chart structure will not improve for another 4 trading sessions so you will have to accept the monetary risk at this time.

If prices break the September 20th low of 8.94 as then I think prices will retest the contract low which was hit on September 9th at 8.65 as no trade agreement with China looks to come about anytime soon as that is a bearish fundamental factor towards soybean prices.

Harvest should be completed next week as we will now focus on how many acres we will plant in 2020 as Brazil is off to an ideal growing  season is it looks that Argentina and Brazil both could produce record crops once again as the fundamental and technical picture for this commodity remains negative so stay short as I see no reason to be a buyer.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

 

Cotton Futures—Cotton futures in the March contract is trading higher for the 2nd consecutive session up 40 points at 65.25 as I have been recommending a bearish position from around the 65.00 level and if you took that trade continue to place the stop loss above the  most recent high which was hit on October 30th at 67.13 as an exit strategy.

I will lower the stop loss in next weeks trade if we are still involved as I want to give this trade some room as the large money managed funds are still short this commodity as they still believe lower prices are ahead, however for the bearish momentum to continue prices have to break the November 21st low of  63.70 in my opinion.

This week is a shortened trading week due to the Thanksgiving holiday as this market will be closed on Thursday as the volatility should remain relatively low.

Cotton prices are still trading below their 20-day but above their 100 day moving average as the trend is lower to mixed, but I do believe that the risk/reward is in your favor so stay short as no trade agreement with China is in the cards as that is a negative fundamental factor for prices.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

Sugar Futures—Sugar futures in the March contract is currently trading lower by 2 points at 12.81 a pound in a very quiet Monday afternoon in New York as this is a shortened trading week due to the fact that we have Thanksgiving on Thursday as markets will be closed.

I have been recommending 2 bullish positions with an average price of 12.67 over the last month and if you took those trades continue to place the stop loss under the 10-day low standing at 12.51, however in tomorrow’s trade that will be raised to 12.57 as the chart structure is outstanding at the present time.

The risk/reward is highly in your favor due to the fact of the incredibly low volatility as I will be looking at adding more contracts if prices break the critical 12.93 which was hit on October 2nd as prices are still trading above their 20 and 100 day moving average telling you that the trend is higher as we just need some fresh news to put some volatility back into this market.

At the current time my only other soft commodity recommendation is a bearish cotton trade which is higher today on rumors of a U.S trade agreement with China as I have heard that story multiple times over the last several months so we will have to see if that comes to fruition, but sugar prices are based on weather conditions especially in the country of Brazil as I still remain bullish.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

 

Mexican Peso —The Mexican Peso in the December contract is trading lower for the 2nd consecutive session down another 23 points or 0.45% in a relatively quiet trade continuing its bearish momentum to the downside. I have been recommending a bearish position from around the 5145 level and if you took that trade continue to place the stop loss above the November 15th high of 51.90 as an exit strategy as the chart structure is outstanding at the current time therefor the risk/reward is in your favor.

If you take a look at the daily chart the downtrend line remains intact as I will be looking at adding more contracts if we close below the critical double bottom around the 5095 level as the U.S dollar is higher today on optimism about an agreement with China on trade, however that is strictly speculation at this time.

If prices break that critical 5095 area as I think we could retest the contract low which was hit on August 29th at 4925 as I think the U.S dollar will remain strong especially compared to the country of Mexico which is in a mess due to the fact that the cocaine cartels basically are running the country.

TREND: LOWER 

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

 

What Does Risk Management Mean To You? I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from.

For example if a customer has $100,000 account in my opinion on any given trade he or she should risk 2% – 3% of the account value meaning if you are wrong the worst-case scenario is still a $97,000 remaining balance, however what I always see is traders risking ridiculous amounts of money and instead of the 3% stop loss will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar account could dwindle down to nothing very quickly and I’ve seen it many times throughout my career.

What many traders forget to realize is they might have 4 or 5 commodity positions on and if you have too many contracts on all at the same time and all of those trades go against you which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from as your still in the game.

 

 

 

Orange Juice Futures—Orange juice futures in the January contract is currently trading at 99.45 up 130 points this Monday afternoon as are still stuck in a tight 4 week consolidation.

I will be recommending a bullish position if prices break the 101.65 level while then placing the stop loss under the contract low which was hit on October 30th at 96.10 as the risk would be around $850 per contract plus slippage and commission.

We are starting to enter the very volatile winter season for orange juice prices as a possible frost could hit the State of Florida sending prices sharply higher as that situation has occurred in the past as I do think we are in a bottoming-out pattern as the downside is limited.

Volatility at the current time remains low as I don’t think that situation is going to last much longer as the weather conditions at the current time remain ideal, but it is a long growing season so look to play this to the upside.

TREND: MIXED

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

Gold Futures—Gold futures in the December contract is trading lower for the 3rd consecutive session down another $7 at 1,456 an ounce as the U.S equity market continues to hit all-time highs as the holiday season is upon us and that spells bad news for the precious metals in my opinion.

At the current time I’m not involved in gold as I think prices will  continue to head lower while breaking the November 12th low of 1,446 possibly in tomorrow’s trade as I see no reason to own gold and if you are short continue to place the stop loss at 1,479 as an exit strategy.

Gold prices are trading under their 20 and 100 moving average as the trend remains to the downside as I still believe prices will hit the 1,400 level come Christmas time as all the negative influences throughout the world including impeachment and Brexit are waning at the current week as I still think there is significant room to run to the downside in the next several weeks.

Gold prices are trading far below their 20 and 100 moving average as this trend remains negative and as a commodity trader you must trade with the path of least resistance and not try to pick tops or bottoms as that is very dangerous over the course of time

TREND: LOWER

CHART STRUCTURE: IMPROVING

VOLATILITY: AVERAGE

 

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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