The Weekly Call provides perspective on high-quality setups and trading strategies focused in the Commodity world.. My current performance shows a 411% return since October 2016. My goal for this year by October is to have a 450% return for three years of running this blog, I am well on my way. The purpose of this blog is to demonstrate how to swing trade futures using our methodology to select high-quality setups and manage the trade with our risk management approach.
Last week the trade war which is now also a currency war hit it’s stride as we are now seeing a possible global recession play out. Higher gold, lower oil, higher bonds, lower equities will likely continue until there is some resolution to the trade war. The trade agreement with Japan may help the Ag markets to some degree, but we are still in a head line minefield environment which is likely to continue. I am still long Corn and expecting to see some upside movement this week. Of interest this week are Crude if we see lower into 50, Coffee, Sugar and Live Cattle.
More information on my entries can be found below and on our Private Twitter Feed. My track record is posted below under Completed Trades. See some of my completed trade videos below.
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5-26 – A nice setup on Sugar. On the daily chart, COT Commercials are positioned well as is retail. The 4 hr chart shows positive D and a higher low. Now the bulls just need to show up and prove it to me. As mentioned in the Commodity Advisory Newsletter with a special focus on Sugar there is also a fundamental reason for the long. Nice to have a tail wind, looking for an entry this week.
6-2 – The rally is confirmed, I am expecting $13 by mid July. The rising support trend line is the area to legg into the trade. Positive D has room to run on RSI.
6-9 – Nice rally last week and retracement expected this week back to the mid-line of the channel. Once seen, look for the next rally higher into $13.00
6-16 – No pull back last week and still expecting continuation higher. Support at 12.25 and looking for a retest this week and higher into 13.25 by mid-July. The market dynamics of Sugar are changing this year as we have a few countries that will miss their production targets.
6-23 – The pull back nearing completion now and against the support trend line. Should see continuation higher this week and a test of 12.65. Break and convert and we are on to the upside into 13.20. Fail at the support trend line and watch the 50% back area for the next buy area. The longer term lean is long sugar.
6-30 – We have reversed in Sugar and we have a nice setup here for a long against the monthly pivot. Looking for my next high window in Mid July and a target of $13.20. We should see a supply deficit this year in Sugar as mentioned in my previous Commodity Advisory Newsletter.
7-7 – Entered Sugar long last week as I was expecting a turn higher and gap support. I have been stopped out at 12.30 for a small loss. Sugar has the strength of the Real behind it and also the supply deficit that I am expecting this year. I am waiting for the next setup as I still like Sugar long into the $13.60 area into the end of July.
7-14 – Sugar currently in a compression pattern here that appears to be a triangle. Waiting on a clear resolution. There is risk to $12.00 and a possibility we could see a fall to this level. If seen, this is a strong buy. I am expecting Sugar to go higher directly into $13s as the compression should resolve higher directly. As mentioned in the Commodity Advisory Newsletter with a special focus on Sugar there is also a fundamental reason for the long. Looking for a possible entry this week.
7-21 – Sugar has resolved the compression pattern lower and likely will see $11.28 before the reversal higher. This is a last legg and likely we will see a reversal pattern later this week. CIT data shows a large number of fund shorts here which is fuel for a short covering rally when the reversal occurs. I am waiting on a setup lower to enter.
7-28 – When COT data shows an extreme reading often you will see a pop like we did last week and now a retest of the low. The pop is not an automatic reversal sign, it shows the fuel I mentioned last week with the funds being fuel for a short squeeze. A retest of the low is the next step in the reversal and needs to be proven for a reversal to be in place. Once a 50% back area is seen in the 11.70 area with support then we should see the rally continue higher into the $13 area. Watching for support this week and looking for an entry.
8-4 – Retest of the low is now taking place. We are three back and this a decent entry against 11.75. Looking for a long into $13 by the end of the month.
8-11 – Looks like the low is in as per my post last week. Expecting 50% back support and a short trip to $13. Buy the next pullback with a stop below the low.
8-18 – This is the pullback mentioned last week and a triangle is forming. Decision coming Monday/Tuesday, break up from this triangle and we see $13.00 next. Stop below the low here.
8-25 – Looks like the break up has begun and we are now back testing the broken trend line resistance. Nice setup with a stop below the low. Bulls now need to step in and break the next trend line to open $13 as next target.
6-2 – With the collapse of the Brazilian Real, we have seen a rally in Coffee. We have already hit target at 105 and I am expected a pullback into the monthly pivot area around 100 and will be looking for an entry. I am waiting on subscribers to finish their enrollment with Striker.com and will be starting new positions later this week.
6-9 – Made the retest to 100 per comments last week and now coffee is in the next impulse higher. Looking for 110 next for a 5th wave and the end of the first legg up. I will then expect a larger retrace back again to 100 before the next big step up.
6-16 – Last week the retest to 100 was broken and now we are in a larger three down. Most of the movement is currency related and I am looking for support at 97 then higher prices. No reversal pattern yet, but should see one this week. Higher high expected into the end of this month.
6-23 – Support found as discussed and a larger reversal pattern now formed. Looking for support at weekly pivot at 100 and higher into my cycle high date of 7-2. Brazil’s production is declining this year and we may have a global deficit in Coffee of 1-3 million bags. The Brazilian Real is up which is helping the rally. The outside day on June 19th was a solid clue. Should see the rally develop this week. From the 7/2 high, a pull back and higher to test the longer term declining resistance trend line is coming.
6-30 – As discussed last week in the Commodity Advisory Newsletter, Coffee may have a 1-3M bag deficit for the first time in many years. This combined with the strength in the Real and we have a formula for higher prices. At this point we are topping out and I am looking for a minor new high and negative D on RSI and then lower prices into my next cycle low window. Likely we find 104-105 as support and another opportunity to buy.
7-7- Cold weather and fear of frost has pressed Coffee higher. The weather has not caused any crop damage yet, but if it does we can expect traders to bid this higher. Currently expecting a retest into the 107-108 area and we have 105 below that as support. Watch for the gap to hold price up, looking for an entry when seen and higher prices into the 120s. We will break the weekly declining resistance trend line which will be the end of the longer term down trend in coffee.
7-14 – Coffee has been holding in what appears to be a wave 4 and a lower low is a clear buy. I like the next legg higher into the early August time frame and would like to see it retest the high. Weather and crop yield continue to be concerns in Brazil. The lower low completes the structure so watch for support on the 104 area.
7-21 – Coffee is still in the retracement pattern and I am still looking lower into 104 at a minimum for a setup long. I will wait on a lower low first. Volatility seen in recent weeks is weather related and there has been little damage due to frost. Demand is still solid so the supply side is in questions which should drive prices higher into 120s.
7-28 – Coffee made target and then some. No reversal pattern yet and once seen I like the long here. Against the lower trend line and also a gap just below in the $98s, we have reached a critical support area on Coffee. Looking for a reversal pattern this week and a break of the upper trend line.
8-4 Coffee now setting up for a long. The trend line is broken and the retest of the low in progress now. A break and conversion of $100 and we wil head higher into the next cycle high window 8-21. Consider a ratio call spread here 105/115.
8-11 – Looking for a retest here to complete the setup – 96 support and long against the low. The pullback should be seen sometime Monday. Next high window and 110 area the area to take profits.
8-18 No support at 96 and a lower low here creates a stronger setup. Increasing pos D in RSI and chances are we turn this week and break the declining resistance trend line. $110 the target for the rally.
8-25 The wedge has broken up and now a retest into the broken trend line, a similar setup to Sugar. This has good upside potential here with a stop below the low. The Brazilian Real needs to cooperate to move this market into the 104 area next.
6-2 – With the front month toting a hefty premium we have seen it collapse last week and I have been stopped out at the previous low. I leave the trade with a small profit and will look for an entry into the August contract in the next 5-7 trading days.
6-9 – Looking like a nice setup here for higher prices. Little risk with a stop below the low. Leaning long here for an entry next week and a move into 110s next.
6-16 – Live Cattle has a nice setup long, expecting a conversion of monthly pivot as a confirmation of the long. Next legg is higher into 112. If seen we should see continuation higher into the end of July. Weights now are as low as they have been in three years.
6-23 – Live Cattle did not convert monthly pivot and has made a bull flag in a three down. The low may hold and if it does the weekly pivot will convert which is the signal to buy. Weekly pivot is 103.75. Looking for a bullish stampede in the coming weeks.
6-30 – And the bullish stampede has occurred! A bullish engulfing candle printed last week on the daily chart and we likely have a reversal here. Follow though required and looking into August for at least a 112 print. Nice setup here against the weekly pivot.
7-7 – I entered Live Cattle last week in the front month, long 104.85. I am out one legg at 106.00 and expecting the last legg to finish somewhere in the 108.50-109 area. We are finishing a 5 up structure and likely will retest back into the monthly pivot area. I plan to add size on the pullback and may exit the first legg entirely if I see a good press higher into 109. For now, my stop is at even and we are in a risk free position.
7-14 – Live Cattle completed a 5 up last week and I took profit off my last legg at 108. Our Trading Boot Camp class got a better entry and made over a 100% profit on margin on this trade. First legg to the upside complete, looking for a modest retrace and the next leg higher. At this point we have negative D on RSI, no reason to buy yet. Cattle weights have been coming in low, we have a good reason to be long. We are overbought for the time being, so planning another entry lower in the 106.70-107.20 area.
7-21 – Last week I placed an order long in February for Live Cattle at 115.50 with a stop at 114.00 I like the X wave just one legg lower. I will modify this order if needed on Monday but I’d like to see it execute there.Target is $120. I see a meat theme here over the next few months with Lean Hogs and Cattle.
7-28 – Waiting on the retest and will be evaluating if my order is now out of play this week. Looking for an RSI of around 40 and the small retracement structure may find support at the trend line. If seen, then I will need to re-evaluate my entry price. For now, giving this a few more days to see what price decides. I expect Cattle to continue higher into our cycle date.
8-4 – I have initiated a Live Cattle position in Feb 2020 at 115.50. Support at 115.20 and I expect it to hold. Stop at 114. Looking for the next legg higher into the 8-19 cycle window. The front month looks for support at 106.725.
8-11 – On Monday, I was stopped out of Live Cattle with the Yuan devaluation and concerns that there may be an impact on demand. In addition, this weekend a processing plant caught fire and there should be a negative impact on the tape tomorrow. Lower prices are a buying opportunity as I see fall prices for Cattle being much higher that they are now.
8-18 – Mentioned to subscribers that we would see potential limit down days as a result of the plant fire. We did limit down on Monday and have since then found our footing. A small wave 4 and 5 have printed and the decline here is over done. Looking for support at the fib marked on the chart and a break back into the gap is expected. I like higher prices into the fall and likely we see a reversal this week in Cattle.
8-25 – The retest of the low is in progress and likely a result of the 10% tariffs added by China which is not a major import market. Looking for the reversal here and the low to hold. Another decent setup and the bulls need to perform this week. Next stop is 110 by mid September.
6-30 – I have initiated a position in December Corn last week and am looking at a longer term swing trade. I started with a DEC risk reversal Long 500 calls and Short the 430 puts. As long as the December future prints above 430 the position is not at risk. As mentioned last Friday, the Crop Report was a shock with the USDA Corn acreage unplanted at 1.1M acres. In the coming weeks this will be clarified and expect high volatility until then. At this point I want long exposure and will hedge on a move below 430 to minimize risk. Likely we see a marginal lower low for a wave 5 of a flat and a reversal and higher prices into 480. I think most traders are in the boat that the USDA numbers are low and the damage due to rain and late crop plantings will play out into the end of this crop year. More to come as this story unfolds.
7-7 – We have reversed in corn and last week I added a hedge in the front month by buying the 410 puts. This provides event risk coverage in case of a sudden move lower and higher gamma so a downside move below that strike will quickly bring the position back onside. I have already discussed the Corn situation…. the USDA numbers are likely wrong, we won’t know the real numbers until August. Emerging numbers are low and yields should come in between 155 and 163 bushels per acre. This means that this crop year is likely going to be at least tightest since 2013. If we hit the mean for the yield around 159 bushels per acre then we may see the second tightest market in history. I am a hold on the position and I want long exposure into the August 24th high window.
7-14 – For the reasons I mentioned last week, Corn has rallied as expected. This does not mean we go straight up, there will volatility here especially with the weather in the coming week or two. We are topping out for now and overbought at this moment, so expecting a retrace this week and continuation higher in the coming months. The trade believes the USDA numbers are wrong so their August report will likely have better planted acreage numbers. Until then it is anyone’s guess where the numbers will come in. My estimation is that this will be in one of the top 5 tightest years on record and I want the long exposure in this swing. No modifications planned, just a hold into at least August and looking for a $5.00/bushel print. I may hold this into November. This trade will be volatile so watch for the crop conditions report to continue to come in poor and if we have a hot dry weather window the next 10 days, the planted crop will become stressed so expect more weather premium to get built in.
7-21 – Reversal as expected last week and we are close to the low window on 7-23. Likely we see another legg lower and Corn continues to be volatile due to all the data point at different plated acres which should resolve on August 12th with the next USDA report. I am expecting price to climb into that report ad the 410 area to hold as support. My hedge expires on Friday which I put on due to event risk and the volatility. I am planning to carry a hedge after Friday with futures. I will wait on the low and may take profit on the hedge if it occurs and place a futures order when needed.
7-28 – In the low window and we could still make the target of 410 in the next few days. A reversal is expected and the August 12th USDA report should contain adjusted acreage to reflect somewhere between 5-8M unplanted acres. This along with the poor conditions should see a significant bounce in Corn. I am still expecting a bid into the report and then upside into 4.75-5.00 a bushel. Last week my hedge expired and I added another hedge in the new front month in case of event risk. When the retrace is complete I plan to remove part of all of the hedge after the turn is confirmed.
8-4 Trump’s tariff increase hit the commodity sectors hard last week. Oil, Corn, Wheat, Soy, Natural Gas all lower based on demand concerns. Likely we see a recovery from these lows this week and specifically Corn I am expecting the August 12th report from the USDA to show a 5-8M acre shortage in planting. More importantly the silking of the current crop is late which leaves the back end of the season at risk due to possible frost damage. The USDA’s best guess is 8 days away and I am expecting some buying before the event. I an hedged and holding into the announcement.
8-11 – The USDA crop report is tomorrow and I am expecting volatility. I will be covering the 450 short calls and taking a small profit leaving the upside open for greater profit. If the numbers come in with a 5M acreage shortfall from last year, we see a rally. Anything less is cause for concern. China is now threatening to not purchase grain from the US, this would be difficult as the Army Worms are now invading their smaller corn farmers and there should be a shortage in their production this year. Overall I am expecting this year to be one of the tightest in the last seven. If the survey is wrong again, they can be a long liquidation tomorrow. I am staying hedged into the announcement.
8-18 – Last week a busy week for Corn. The USDA report last Monday drove a long liquidation based on the new yield numbers that were published. With the weather issues and reduced planted acreage, the yield may be too high as it is early and any estimates may be inaccurate. As the crop develops we will see more updates in the Crop Progress reports. We went into the report completely hedged with a small negative delta. We exited the whole position last week near the low and took a small loss. We minimized risk with the hedge and made a small amount on the bearish drop. After closing the position we are now re-positioned long with a simple low risk call spread in December 380/430. We are likely to see a retest of the low early this week. The position has no downside risk.
8-25 – Corn is probing the low and with the new trade deal with Japan, we have a possible rally brewing this week. We need to see 380 break and then 370 back test and hold as support. This seen we should see upside action into mid-September. As the crop matures I think we will see more information about yields and they should be revised lower.
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Track Record of Completed Trades
The purpose of this blog is to demonstrate how to swing trade futures using our methodology to select high-quality setups and manage the trade with our risk management approach. This track record is based on entries and exits as posted in this blog using a $50,000 account limited to a three contract position size until account size warrants an increase in position size. See the videos below for more information.
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Completed trade in Cattle as of November 28th
We expect subscribers to have captured 60% of the swing in live cattle which is over $14,500 in profit using a margin of only $5,115. A great example of using leverage in futures.
Completed Trade in Coffee as of December 12th
The total swing was $37.00 and we expect subscribers to have captured 60% of a wing or $22 in coffee for a profit of over $25,500 using a margin of $8,850. A great example of using leverage in futures. See the video below for the review of the trade.