Weekly Futures Recap With Mike Seery

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.

Silver Futures

Silver futures in the September contract finished the week down about $.30 to close this Friday at 20.60 ending on a positive note up about $.18 closing right near session highs as the trend is now lower hitting a 4 week low so I’m neutral this market sitting on the sidelines waiting for another trend to develop, however if you are bearish I would sell at today’s price of 20.60 while placing my stop loss above the 10 day high which was on Monday’s trade at 21.32 risking around $.70 for $3,500 per contract as the chart structure currently is very solid. I’ve was recommending a long silver futures position when prices broke above 20.02 in late June while getting stopped out last week at the 10 day low as prices have broken down as the Malaysian airliner crisis has settled down as deflation currently is in the air not inflation as the U.S dollar continues to rally against the Euro currency as many of the commodity markets have been heading lower. Silver futures are trading below their 20 but still above their 100 day moving average telling you that trend currently is mixed and if you’re not looking to sell at today’s price level I would sit on the sidelines and trade another market that has a stronger trend.
TREND: MIXED
CHART STRUCTURE: SOLID

Gold Futures

Gold futures in the August contract finished up $12 this Friday afternoon in New York closing around 1,303 an ounce finishing down about $7 for the trading week as prices hit a 4 week low in yesterday’s trade as the trend has turned to the downside as money is starting to flow into the S&P 500 once again hitting all-time highs this week. Gold futures are trading below their 20 day and right at their 100 day moving average with the next major support at 1,290 and then all the way down possibly to 1,260, however I do think prices are limited to the downside as there is just too much turmoil currently going on in the world as it seems to be getting worse not better as I think gold is still consolidating as I’m sitting on the sidelines in this market looking for a better trend. The one scary situation in my opinion is the fact that the United States has done nothing to stop Iran’s nuclear bomb program and that is very concerning because in a couple of years we could be facing the fact of a nuclear Iran and that situation certainly is bullish gold if you are a longer term investor.
TREND: MIXED
CHART STRUCTURE: SOLID

Soybean Futures

Soybean futures in the November contract experienced a wild trading and volatile week with prices trading as high as 11.07 in yesterday’s trade up about $.33 settling up only $.09 in one of the most volatile trading sessions I’ve seen in a while as this Friday afternoon prices settled down 1 cent at 10.83 finishing basically unchanged. Traders are getting concerned about a lack of rain in certain parts of the Midwest as prices have stabilized in recent days after falling out of bed due to a possible record crop in 2014. If soybeans receive adequate rain in the Midwest that would be bearish soybeans going into harvest, however if dry temperatures come into play with no rain you could see the weather scare that we’ve not had as prices hit new lows in Wednesday’s trade at 10.55 and rallied over $.50 at one point settling right in the middle of the trading range for the week. Prices are still trading below their 20 and 100 day moving average and I’ve been recommending a short position in soybeans for quite some time and if you took that recommendation place your stop at the 10 day high which currently stands at 11.20 and that stop will come down in the next couple of days risking around $.40 or $2,000 per contract as the trend still remains bearish in my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Cotton Futures

Cotton futures in the December contract are trading lower for the 2nd consecutive trading session currently at 65.50 down about 50 points this Friday afternoon in New York after settling last Friday at 67.75 finishing down about 225 points hitting a new 5 year low with low demand from China and large supplies coming onto the market pressuring prices here in the short term. If you have been following any of my previous blogs I was recommending a short position when prices broke down below 76.00 and if you took that recommendation I would place my stop loss above the 10 day high which currently stands at 69.15 around 270 points away or $1,350 risk per contract. The trend is your friend in the commodity markets and all of the agricultural markets have fallen out of bed as over planting is pressuring corn, soybeans, wheat, and cotton prices and should continue to put a lid on prices throughout 2014 in my opinion so continue to place your stop at the 2 week high as your exit strategy. Prices have dropped about 2000 points since early May and almost has the identical chart as corn as the bear market started in late May pushing prices down to today’s depressed levels and I still think prices could head even lower possibly retesting the 60 level.
TREND: LOWER
CHART STRUCTURE: SOLID

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

Cocoa Futures

Cocoa futures in the September contract rallied over 110 points this week closing around 3193 hitting a 3 year high as this remains one of the few commodities in an uptrend and if you are currently long this market when prices broke out above 3150 then place your stop loss below the 10 day low which currently stands at 3050 risking around $1400 from today’s price levels as the trend looks to go higher in my opinion. Cocoa futures broke out of an 8 week consolidation between 3050 – 3150 breaking above that level in Wednesdays trade so continue to play this to the upside while maintaining a proper stop loss and risk management risking 2% of your account balance on any given trade. Cocoa futures are trading above their 20 and 100 day moving average telling you that the trend is higher as we start to enter the demand season of Autumn and Christmas time so let’s see if this breakout is for real.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Coffee Futures

Coffee futures in the September contract finished higher for the 3rd consecutive trading session in New York currently at 179.50 closing up more than 700 points for the trading week after bottoming out at the 160 level as I’m still recommending to sit on the sidelines in this market as the trend has been very choppy over the last 3 months and wait for a better chart pattern to develop. Coffee futures hit a 4 1/2 month low last week before rebounding with a possible breakout situation happening above 185 a pound as I was hoping prices could dip as low as 145 – 155 but I don’t think that’s going to be a reality but a true breakout has not occurred so remain neutral this market. Coffee futures are trading well above their 20 day moving average but still below their 100 day moving average which stands at 186 and that’s right when the breakout would occur on the upside so keep a close eye on this market as prices may have bottomed. Reports are coming in that the quality of the coffee is very low with light weights so continue to monitor this situation and look for a breakout above 185 with improved chart structure
TREND: MIXED
CHART STRUCTURE: SOLID

U.S. Bond Futures

The 5-year notes rallied 2 ticks today in Chicago to finish at 119-04 in the September contract currently yielding 1.69% as the market has rallied in the short term due to problems with Russia blowing up planes and Israel in a war with Hamas but all of this will pass soon as this already has been priced into the market with a possible top being created at 120 which has been hit on about 5 different times in the last 5 months & has failed to move higher and if you been reading any of my previous blogs I am a long-term bear on the bond market I think if you are an investor you should be short the 5-year and 10 year notes as the Federal Reserve will continue its tapering program.

There are several reasons to be bearish the bonds & one of my main reasons is I think inflation could start to creep its ugly head back into the United States as money printing eventually ends up creating inflation in my opinion, and the commodity markets have certainly reacted strongly in 2014 and that will push interest rates up as well as you cannot keep the easy monetary policy if prices continue to move up the way they are. All the government reports basically state that there’s no inflation but go to the grocery store and now you go to the gas station where prices are relatively high while insurance costs are going through the roof as well so inflation is already here, but I believe it’s going to get worse so continue to sell the futures market in the bonds and if you need help to structure some type of short bond portfolio feel free to give me a call & I will be more than happy to help you as I think this is an excellent opportunity in the long run. That advantage of this special opportunity because interest rates cannot stay this long forever, it just might take time so you have to have patience and not consider this as a trade but as an investment.
TREND: MIXED
CHART STRUCTURE: SOLID

Lean Hog Futures

Lean hog futures in the August contract rallied this Friday afternoon in Chicago closing up 50 points at 123.70 after hitting a 10 week low in yesterday’s trade as I’m recommending selling hogs when prices broke 126 a pound while placing your stop above the 10 day high which currently stands at 131.20 risking around 700 points or $2,800 from today’s price levels as the hog contract is very large with high risk and high volatility. Hog prices are trading below their 20 and 100 day moving average telling you that the trend is lower as I am a trend follower so continue to play this to the downside as the chart structure will improve in the next couple of days and that stop will lowered. I think the possibility of the spike low created around 112 will be retested in the coming weeks as many of the commodity markets have turned bearish as the U.S dollar is strengthening against the Euro currency.
TREND: LOWER
CHART STRUCTURE: OK

Corn Futures

Corn futures in the December contract finished down $.06 for the trading week in Chicago currently hitting a new contract low at 3.64 in Thursday trade also hitting a fresh 4 year low as excellent growing conditions in the Midwest continue to pressure prices and if you took my recommendation back in early May at 4.87 I would continue to place my stop above the 10 day high which currently stands at 3.95 which is around $.23 or $1,200 risk from today’s price levels as the trend is extremely strong to the downside. As I’ve talked about in many previous blogs I think prices are going to break 3.50 the next couple of weeks and there is a chance come harvest time that prices will trade under $3 a bushel due to the fact that we just have to big of a crop coming in October as carryover levels are expanding rapidly as I believe prices are still headed lower, however if you have not been short this market I would sit on the sidelines and wait for a better chart pattern to develop because you have missed the boat.

The crop here in Illinois is the greatest crop I’ve ever seen in my entire life as the 7 to 10 day forecast has mild temperatures with adequate rain as this has been one of the greatest growing seasons I can remember without any weather scare up to this point. Corn futures are trading far below their 20 and 100 day moving average as prices have completely collapsed from early May as I talk to many farmers throughout the country and many of them still have not sold or hedged any of their crop which tells me that prices could still drop dramatically even from today’s depressed price levels. Corn futures have dropped around $.75 in the last 3 weeks after the USDA crop report showed bearish crop production and carry over levels so continue to play this to the downside my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Sugar Futures

Sugar futures in the October contract traded up 20 points for the week in New York to settle around 17.17 a pound and I’ve been recommending a short position in sugar for quite some time and if you took that recommendation I would place my stop above the 2 week high which currently stands at 17.45 risking around 30 points or $330 per contract as the chart structure has tightened up considerably due to the fact that prices have gone sideways for the last 2 weeks. I was recommending a short position when prices broke out of a 4 month consolidation at 17.45 as this trade has basically stalled out but I’m not giving up on this trade as I still believe that 16.80 is in jeopardy to the downside and a possible retest of the contract low at 15.80 is coming in my opinion as corn prices continue to hit new lows and I think that will start to pressure sugar prices as they are both used as bio diesels as deflation is in the year not inflation currently.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

2 Great Trading Theories

1. I will start with the number 1 answer first because 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. 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.