Cotton futures in the March contract settled last Friday in New York at 66.69 while currently trading at 64.00 down about 270 points for the week as prices have now hit a 5 week low.
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 at 67.13, however the chart structure will improve in next weeks trade therefor the monetary risk will be lowered.
Cotton prices are trading under their 20-day but still slightly above its 100 day moving average which also stands at major support around the 63.00 level as I think that area will be touched in next week’s trade.
One of the main problems for cotton is the fact that we can’t come up with a trade agreement with China as they are the number one importer of U.S cotton in the world and until that situation is cemented look for lower prices ahead. At the current time my only other soft commodity recommendation is a bullish sugar trade as I do think cotton prices have topped out in the short-term so continue to play this to the downside while placing the proper stop loss making sure that you risk only 2% of your account balance on any given trade.
Sugar futures in the March contract settled last Friday in New York at 12.73 a pound while currently trading at 12.74 basically unchanged for the trading week continuing it’s extremely low volatility.
I have been recommending 2 bullish positions with an average price of 12.67 and if you took that trade continue to place the stop loss under the 10-day low which now stands at 12.46 & in Monday’s trade that will be raised to 12.51 as the chart structure is outstanding at the current time due to the fact that prices have been stuck in the mud.
Sugar is still trading slightly above its 20 and 100 day moving average as the trend remains higher as we need some fresh news to dictate short-term price action as the Brazilian Real has hit a 4 year low against the U.S dollar as that has a negative influence on prices. The next major level of resistance stands at the 13.00 area as I will be looking at adding more contracts at that level due to the fact that the stop-loss is so tight therefor the risk/reward is in your favor so stay long.
Orange Juice Futures
Orange juice futures in the January contract settled last Friday at 100.50 while currently trading at 99.00 down about 150 points for the week as prices 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.
CHART STRUCTURE: EXCELLENT
Rice futures in the January contract settled last Friday in Chicago at 11.89 while currently trading at 12.23 up about $0.34 for the trading week as prices are right near a 5 week high. I had been recommending a bearish position from around the 11.82 level getting stopped out around 12.10 earlier in the week while at the present time I’m sitting on the sidelines waiting for another trend to develop.
Rice prices are now trading above their 20 and 100 day moving average as the trend has turned higher, however the chart structure is terrible therefor the risk/reward is not in your favor as prices rallied straight up over the last week. The volatility has finally come back to life in this historically volatile commodity as my only grain recommendation is a bearish soybean trade which continues to grind lower on a daily basis.
S&P 500 Futures
The S&P 500 in the December contract settled last Friday in Chicago at 3118 while currently trading at 3111 down about 7 points for the trading week breaking a 4 week winning streak.
I have been recommending a bullish position from around the 3006 level and if you took that trade the stop loss has now been raised to 3074 as the chart structure will also improve in next week’s trade therefor the monetary risk will be reduced.
For the bullish momentum to continue prices have to break the November 19th high of 3132 in my opinion as earnings season has been very solid coupled with the fact that we are entering the holiday markets which generally push prices higher.
Expectations for an outstanding Christmas season is predicted as the U.S economy is by far the strongest in the world with historically low unemployment and an excellent stock market helping fuel the economy so stay long as I still think the 3200 level is realistic come year end.
The S&P 500 is trading far above its 20 & 100 day moving average as this is the strongest trend to the upside out of all commodity sectors as we continually grind higher on a weekly basis despite this recent setback.
CHART STRUCTURE: IMPROVING
The Article was written by Michael Seery (CTA—COMMODITY TRADING ADVISOR)