We've asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.
Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.
Gold Futures
Gold futures in the June contract are trading right at their 20 and 100 day moving average which doesn’t happen very often telling you that this market has basically been going sideways over the last 2 months with very little volatility is as prices seem to be bottoming out around the 1,270 – 1,280 at the current time I’m sitting on the sidelines in this market as there is no current trend but a breakout seems to becoming in my opinion as I do think with low interest rates remaining for quite some time that gold prices are currently bottoming out.
If you’re looking at buying this market at today’s price of 1,294 I would place your stop loss below the 4 week low 1,275 an ounce risking around $20 per contract or $2,000 if you’re looking at a bearish position I would sell at today’s price while placing my stop above the 10 day high which stands at 1,310 risking around $1,700 per contract as the gold chart has excellent chart structure allowing you to place tight stops. The story this week was a lot of money going into the U.S treasuries as investors think the U.S could be slipping into a recession and if that is true you would have to assume that gold prices will benefit from bad economic news so keep a close eye on this market.
TREND: SIDEWAYS
CHART STRUCTURE: OUTSTANDING
Silver Futures
Silver futures in the July contract finished lower for the 2nd consecutive trading session going out this Friday afternoon in New York at 19.25 finishing higher for the week by about $.35 as prices have a difficult time penetrating the $19 dollar level. I’m recommending a long position in this market while placing my stop below the spike bottom which happened 3 weeks ago at 18.65 risking around $.70 or $3,500 from today’s price level.
The chart structure in silver is outstanding at the current time as I think eventually investors will realize that this market is too cheap as prices were trading at $35 in 2013 while many of the other commodities are all sharply higher in 2014 silver prices remain flat. Silver is trading below its 20 and 100 day moving average telling you this market still remains bearish so if you’re looking at taking a bearish position then sell at today’s price of 19.35 while placing your stop loss at 4 week high which happened in Wednesday’s trade right at 20.00 risking $.65 or $3,300 per contract.
TREND: MIXED
CHART STRUCTURE: OUTSTANDING
Unleaded Gasoline Futures
Unleaded gasoline futures for the June contract are trading above their 20 and 100 day moving average telling you that the trend is currently higher as prices have been very choppy in recent months with big spike ups & big spike downs so currently I’m recommending a neutral position in this market as the chart structure remains very poor. Unleaded gasoline demand season starts after Memorial Day weekend which could push prices back up to recent highs of 3.06 as we are trading at 2.98 a gallon & as a trader I have to look for the strongest trends and this is one of the weakest trends in the oil sector so stay away and focus on something else in the meantime.
TREND: HIGHER
CHART STRUCTURE: POOR
Crude Oil Futures
Crude oil futures in the June contract finished up $2 this week continuing its grinding trend higher as I am currently sitting on the sidelines due to the fact that this market has been choppy in recent months but the chart structure has improved dramatically allowing you to place tight stops regardless of your opinion. I will look at this market from 2 different directions if you’re bearish I would sell at today’s price of 102 while placing your stop above the contract high at 104 risking $2,000 per contract or if you are bullish this market I would buy at today’s price while placing my stop below $99 risking $3,000 per contract as the fundamentals are bearish.
With near record high supplies here in the United States as inventories are not at issue at this point but then we are entering demand season which starts after Memorial Day weekend but I do think prices are limited to the downside and to the upside as the volatility in crude oil is relatively low at the current time and that is why I’m suggesting those 2 trades because of the limited risk in such a volatile market generally and I do think you will start to see higher volatility in the coming weeks and months.
TREND: MIXED
CHART STRUCTURE: POOR
Orange Juice Futures
Orange juice futures are trading below their 20 day but above their 100 day moving average like many of the other soft commodities also in a mixed trend hitting a 4 week low today trading lower by 800 points in the last 2 trading days as I have sitting on the sidelines currently as the chart structure is very poor. I have been bullish orange juice prices for quite some time and I’m surprised about the recent weakness, however many of the commodities have been selling off due to the fact that interest rates continue to go lower and that is concerning because that says the economy is slowing down which means demand for commodities will also slowdown pushing prices lower as the bond market continues to defy logic. In my opinion I would look for severe weakness in orange juice as a buying opportunity but at the current time there is no trend so I have to wait for something to develop before entering but prices are limited to the downside in my opinion.
TREND: LOWER
CHART STRUCTURE: POOR
Wheat Futures
Wheat futures in the December contract finished lower for the 6th consecutive trading session dropping about $.60 currently trading at 6.99 and I was recommending a long position when prices broke out above 7.40 however we were stopped out right around the 10 day low which was at 7.20 level but prices continue to head lower and currently I’m recommending investors to sit on the sidelines and wait for a trend to develop. Rains entered the southern Great Plains pushing prices lower as temperatures also have dropped significantly but this market at the current time has no trend as the chart structure is very poor as volatility is relatively high and will remain high throughout the summer months so look for another commodity with the strongest trend and just keep an eye on this market.
TREND: MIXED
CHART STRUCTURE: POOR
Coffee Futures
Coffee futures are trading below their 20 but above their 100 day moving average as I remain neutral this market as choppiness has come about while closing last Friday at 184 going out today in New York around 185 finishing lower by 1175 points this Friday afternoon so my recommendation at this point is to wait for better chart structure to develop before entering. Estimates on the Brazilian coffee crop will start coming out in the next several weeks with the whisper number around 43 million bags and that is simply going to put high volatility back into this market also dictating where short-term prices are headed and I still have many contacts out of Brazil and they told me that they think the estimates are too high and prices will rally once again but on a technical basis this market remains choppy so avoid and find another trending commodity. If you’re looking to get into a bullish position in the coffee market I would look to be buying around the 170 level as that’s where major support stands currently because I don’t think prices are headed back down to 130 due to the fact that the central Brazilian drought was too harsh.
TREND: MIXED
CHART STRUCTURE: POOR
Sugar Futures
Sugar futures in the July contract are trading above their 20 and 100 day moving average hitting a 4 week high this week but selling off this Friday afternoon by 29 points to trade at 17.91 a pound and I was recommending buying sugar when it closed above 18.03 and if you took that recommendation you should place your stop loss at 17.07 risking around $1,100 per contract as sugar currently is the strongest trend to the upside of any of the soft commodities. Sugar has been trading in a 4 week channel between 17 – 18 before finally breaking out rallying about 100 points in 2 days as major resistance currently stands at 18.40 – 18.60 which also was the most recent high.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean oil futures for the December contract finished down for the 2nd consecutive trading session closing at 40.53 down 30 points for the trading session right near a 6 week low as I’m recommending a short position in soybean oil if prices trade below 40.30 while placing my stop loss at 41.40 risking around $660 or 110 points per contract as the chart structure is outstanding at the current time. If you been following my previous blogs I have been currently recommending a short position in soybeans as I do think prices are headed lower and I think in a couple of days prices will break that critical 40.30 level so play this to the downside as the next major support is at 39.50 and then around the contract low 38.00 as I do believe soybean oil prices are turning bearish. Prices are trading below their 20 day but above their 100 day moving average telling you at the current time prices is mixed but I’m looking to sell on weakness so keep an eye on this market Friday afternoon as volatility should be high going into the weekend.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Cotton Futures
Cotton futures are trading below their 20 but above their 100 day moving average which currently stands at 89.00 and if this market closes under 89.70 I would be recommending to sell a futures contract while placing your stop above the 2 week high which is at 95.00 risking around 530 points around $2,700 per contract. Cotton prices have been down 6 consecutive trading days as many of the commodity markets seemed to have peaked recently and as a technical trader when markets break down I like to be a seller and when markets start to rally I like to be a buyer but at this point the critical level is 89.70 which is a 6 week low as volatility in cotton is very low at the present time and I have a hard time believing going into the summer months that prices can remain in such a tight trading range so look at some options because the premiums are historically cheap for this time of year.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Corn Futures
Corn futures have broken down significantly this week in the December contract which is considered the new crop which will be harvested this fall currently trading at 4.80 down about $.35 in the last week when prices traded as high as 5.15 reversing to the downside despite the fact that the Midwest is extremely cold and wet but traders believe that a record crop could be at hand. It’s an extremely long growing season and I’m surprised that this market has been hit so hard, however when you have back-to-back 14 billion crops it’s going to be very difficult to rally as supplies will increase dramatically the only question is will Mother Nature be kind or unkind this summer. I’ve been trading the grain market for a long time and I’m not a meteorologist but in my opinion it has been an extremely cold winter and spring with plenty of moisture and I don’t believe we will have a drought this year as the odds favor record crops across the board and if you’re a farmer look to hedge and sell on any rally.
TREND: LOWER
CHART STRUCTURE: POOR
Cocoa Futures
Cocoa futures are trading below their 20 and right at their 100 day moving average trading higher by about 50 points for the trading week and I have been recommending a short position in cocoa at 2894 currently as we are trading at 2915 while placing my stop at 30.50 risking around $1,600 per contract, however if you want to play my 10 day rule that stop will be at 2967 which is only 50 points away currently or risking $500 per contract as the chart structure is getting tighter and tighter on a daily basis. The reason I was recommending a short position in cocoa was due to the fact that it’s broken out of a 13 week consolidation as a trader I look for special opportunities and I believe that a breakout of such a long channel is a special opportunity so I’m jumping on that bandwagon but prices have stalled here in recent days
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean futures in the November contract are trading below their 20 but above their 100 day moving average trading in a very tight trading range over the last 2 weeks and I have been recommending short position when prices broke 12.10 placing your stop above 12.50 risking $.40 or $2,000 per contract as prices currently are trading at 12.22 a bushel. If $2,000 is too much risk for you to risk move your stop to the 10 day high which is 12.30 risking around $.8 or $400 per contract and if you’re looking to get in the market today on the short side sell at today’s price of 12.22 while risking only $.08 or $400 as I think Is an excellent opportunity because the risk/reward situation is highly in your favor as the chart structure on the daily chart is outstanding. If you have the opposite view would and think prices are headed higher I would buy at today’s price while placing my stop below the 4 week low which was 12.06 risking around $.16 or $800 per contract as the volatility in the soybeans will start to heighten especially after the Memorial Day weekend.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING
Livestock Futures
Livestock futures had a small rally again with live cattle in the June contract trading up for the 2nd consecutive trading session higher by 20 points in a relatively quiet trade at 138.05 a pound trading above its 20 & 100 day moving average after bottoming out in recent weeks and has rebounded on the fact that corn prices are close to entering a bear market which makes it more profitable for farmers to feed the animals and keep them at pastor therefore limiting supply. Feeder cattle prices in the August contract are up 85 points at 193.30 a pound which are all time high prices and have rallied 1200 points in 3 weeks trading above its 20 & 100 day moving average hitting all-time highs once again continuing its torrid pace to the upside all due to extremely tight supplies.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Bond Futures
The 5 year note had a huge rally this week in Chicago finishing at recent highs at 120-06 in the June contract with a yield of 1.50% as investors are fearing that the U.S is heading into a recession as I have been recommending a short position in the 5 year note for a long time and this so far has been a losing trade but I still think that stocks are headed higher and bond yields are headed higher longer term. If you are new to the market I would take advantage of this rally and sell at current levels you just need patience as this will take time to develop.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING
Oat Futures
Oat futures in the July contract finished down about $.10 for the trading week closing around 3.37 bushel breaking out to a new 3 month low and now I’m recommending a short position in the oat market while placing your stop loss above the 10 day high which is 3.60 risking $.20 or $1,000 per contract as the chart structure is outstanding. The oat market surged all-time highs earlier in February as shipping problems in the Great Lakes due to extreme cold sent prices sharply higher, however since that spike top prices have been steadily declining and breaking out to the downside today so continue to play this to the short side making sure that you keep your stop at 3.60 minimizing your risk in case the trend does change.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING
TRADING RULES
1 — If you follow this rule you will have a chance of being successful over the course of 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 dollar 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 option trading you will have losing trades that is for certain so make sure you manage those losses and move on to another trade.
2 — Trade with the short term trend, as the saying goes in futures trading the trend is your friend. Sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade. If it was up to me I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side. I define a trend as a commodity hitting a 20 day high or low as a trendy market, if the market is in a consolidation stay away from it and find something that is trending up or down and go in that direction remembering the money management rules of 2% maximum loss if you are wrong.
3 — This rule is extremely important and I witness it being abused constantly creating tremendous loses that are sometimes difficult to come back from. Never add to a losing position because if the position continues to go against you and now you have added even more contracts which are all losing money your account will suffer loses much more than 2% and in some case adding positions and never getting out of a losing trade has wiped peoples trading accounts down to zero because of 1 or 2 bad trades. Remember always play for another day you will have losing trades and the good traders manage losses and move on to the next possible trade.
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
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.
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: (800) 615-7649
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COT Report:
https://dl.dropboxusercontent.com/u/29771494/COTReport/COTReport.html