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.

Crude Oil Futures

Crude oil futures in the September contract finished basically unchanged for the trading week to close around 97.60 and I have been recommending a short position when prices broke 98.70 last week while placing your stop loss now above the 10 day high which is 102.10 risking around $4.00 or $2,000 per contract as the chart structure will improve dramatically in the next 2 days so if you’re lucky enough to get a rally in tomorrow’s trade take advantage will placing the proper stop loss minimizing your risk to 2% of your account balance. Many of the commodity markets were lower again today due to the fact that the U.S dollar hit a new 6 month high and I still do believe that the federal government wants lower oil prices because Russia’s economy is based on high oil prices and there’s no better way to hurt the Russians than push crude oil back down to $80 a barrel so continue to sell this market as I remain bearish. Crude oil futures are trading below their 20 and 100 day moving average with the next major support around 96.50 if that level is broken I think you will retest the March lows of around 94.25 so continue to play this to the downside.
TREND: LOWER
CHART STRUCTURE: Improving

Silver Futures

Silver futures in the September contract traded lower by 40 cents this week in New York despite problems in Russia continuing to spread however I am still recommending a short position at today’s prices placing a stop above the 10 day high of 21.15 risking around $1.10 or $5,500 as the chart structure will improve on a daily basis as I think today was just a kick back due to geopolitical events. In my heart I still believe that the U.S dollar will head higher as Eastern Europe looks to be headed into a recession as Italy today had back-to-back negative GDP officially putting it into recession possibly spreading out into the rest of Europe while Russia banned imports of chicken and pistachio nuts as the trade war is starting to expand as I have been talking about in recent blogs I think Russia is going to put a damper on global demand as the game has changed as a superpower now is playing with sanctions and looking to offset them while stopping imports hurting other countries as well and I think this is going to become a bigger problem down the road.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Cocoa Futures

Cocoa futures in the September contract are currently trading above their 20 and 100 day moving average and it’s the only soft commodity actually in a bullish trend as the breakout occurred around 3150 which was the contract high and if you are currently long this market I would place my stop below the 10 day low which is currently at 3154 as prices have been going in a sideways grinding higher pattern over the last couple of weeks. Cocoa futures are one of the only bullish trends around as many of the commodity markets and especially the soft commodities continue to move lower but the risk /reward is in your favor so continue to play this to the upside as the demand season of autumn and Christmas time is ahead as cocoa is only grown in West Africa and has be grown within 20 miles of the equator making it a very rare commodity and those countries are extremely unstable so if something happens cocoa prices can become very volatile and move sharply higher to the upside so continue to remain bullish this market making sure that you have the proper stop loss and mine is at the 10 day low of 3154 minimizing your risk in case you are wrong and the trend changes.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING

Dollar Index Futures

The Dollar Index in the September contract is trading above their 20 and 100 day moving average and as I’ve talked about in many previous blogs I am extremely bearish the commodity markets but I am bullish the U.S dollar which is at a 6 month high and make sure if you are long this market place your stop at the 2 week low which currently stands at 81.08 risking around $400 dollars as prices are off this Friday afternoon in New York trading at 81.49 basically unchanged for the trading week. The Euro currency looks to retest the November 2013 low around 133 while prices are currently around 1.34 level as investors are fleeing out of Europe and the Ukraine as there is a real possibility of Eastern Europe going into a recession putting money back into the U.S dollar and if you agree with that trade continue to buy the U.S dollar in my opinion as the trend is your friend in the commodity markets and the trend in the U.S dollar for the 1st time in 5 years looks to go higher in my opinion as nobody wants anything to do with the Euro or Russia.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING

Cotton Futures

Cotton futures in the December contract are still trading below their 20 and 100 day moving averages as traders await the August 12th USDA crop report which should send some high volatility back into this market as prices have basically been going sideways with low volatility over the last week while settling last Friday at 63.27 settling this Friday around 64.25. I’ve been recommending a short position in cotton for quite some time and if you took that recommendation make sure you place your stop above the 10 day high which currently stands at 66.10 risking around 200 points or $1,000 from today’s price levels as the chart structure is terrific at the current time allowing you to place tight stops. The problem with cotton is carryover levels are expected to hit a record unless Tuesdays crop report states otherwise and that’s why prices have dropped over 2000 points in the last several months while this year’s crop is expected to be very good but not a record as many of the commodity markets especially the soft commodities continue to go lower.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

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

Lean Hog Futures

Lean hog futures in the August contract finished lower once again by 110 points to close around 114.10 a pound as I’ve been recommending a short position for quite some time when prices broke 126 a 2 weeks back and in my opinion prices are way overpriced as the hog virus is now a thing of the past and with Russia now playing the sanctions game against American chicken. What happens if the next announcement will be that they will be banning cattle or beef as I continue to remain short, however we do have to rollover from the August contract to the October contract which I will probably do on Monday as this trade has been terrific to the downside and I still continue to believe that the August contract will break through 112 which was the April spike low so continue to play this to the downside as the commodity markets in general have turned extremely weak due to the fact that the U.S dollar has hit a 6 month high against the Euro currency as the trend is your friend in the commodity markets. Live cattle and feeder cattle both finished limit down today and that’s also going to put even more pressure on Mondays trade continuing the bearish trend, however now that the entire sector as turned bearish so continue to sell rallies in my opinion while placing your stop loss above the all-time high at 161 in the October contract limiting your risk in case the trend does change, however I think a special situation has developed to the downside as deflation is a problem not inflation.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Corn Futures

Corn futures in the December contract finished down around $.05 for the trading week as volatility has slowed down dramatically as traders await Tuesday’s report from the USDA stating carryover levels and production levels which should be around 14 billion bushels as prices have basically traded sideways in the last 3 weeks as I’m still recommending a short position placing your stop above the 10 day high which is at 3.78 risking around $.15 or $750 per contract as the trend continues to be bearish in my opinion.I constantly talk about Russia which now has thrown a wrench into this closet as I think commodities generally go lower for the rest of 2014. Corn futures are trading below their 20 and 100 day moving average telling you that the trend is strong to the downside continuing almost on a weekly basis as the United States crop is terrific especially here in state of Illinois as Tuesday’s crop report will have a huge impact on short-term price direction and volatility and I still believe prices will break $3 a bushel come harvest time this October.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Sugar Futures

Sugar futures had a slow trading session this Friday afternoon still trading below their 20 and 100 day moving average hitting a 6 month low going out last Friday at 16.35 while settling around 16.17 finishing down only 18 points this week in a very volatile trading week as we had 2 sharply higher night sessions but both of them finished lower for the trading day and if you have been following any of my previous blogs I highly recommend that you do not use stops on night sessions because of the low trading volume. I’m still recommending a short position in the sugar market and if you took the original recommendation when prices broke 17.45 place your stop above the 2 week high which currently stands at 17.26 which was Mondays high when prices traded up 90 points higher before selling off to finish down 2 points off of a warehouse fire creating panic on the night session. The chart structure in sugar will remain the same for at least another week so you have to be patient with this trade as I do think there’s a high possibility that prices break 15.80 and then head back down to contract lows around 15 a pound.
TREND: LOWER
CHART STRUCTURE: POOR

Orange Juice Futures

Orange juice futures in the November contract are trading below their 20 and 100 day moving average looking to retest recent lows settling last Friday at 144 going out today around 142.50 as I remain neutral this market as prices have dropped in recent weeks as the soft commodities still remain bearish in my opinion. The problem with orange juice currently is that it’s considered a luxury item and many of the commodity markets are losing demand due to the problems in Eastern Europe so I think orange juice is in jeopardy of going lower but as I talked about before I’m sitting on the sidelines and looking at other markets currently.
TREND: LOWER
CHART STRUCTURE: SOLID

Coffee Futures

Coffee futures are down 300 points this Friday afternoon in New York trading at 181.50 a pound after settling last Friday at 192 trading down almost 1100 points for the trading week as this market remains extremely volatile and extremely choppy and I’m still recommending to sit on the sidelines and wait for a better trending market. Coffee futures are trading above their 20 but right at their 100 day moving average telling you that the trend is mixed as coffee prices spiked last Friday hitting 207 and then actually finished lower that afternoon telling you that that may have been an exhaustion bar to the upside, however I don’t like choppy markets as they are very difficult to make money so avoid this market and wait for better chart structure to develop.
TREND: LOWER
CHART STRUCTURE: TERRIBLE

Cattle Futures

Cattle futures in the October contract finished limit down 300 points as I was recommending in yesterday’s trade to sell as I think the all-time highs are in place as deflation is in the year with Russia banning imports of chicken from America creating a possible trade war which is spooking investors selling off pushing prices to limit down and I continue to recommend a short position making sure you place your stop loss above the all-time high at 161 risking around $3,300 per contract from today’s price levels as I do believe lower prices are ahead. Cattle futures are trading below their 20 but still above their 100 day moving average and that tells you how far prices have sold off however prices continue to move lower while grain prices continue to move lower as well and eventually that will start to pressure cattle prices as feeder cattle in the August contract finished limit down for the 2nd consecutive day and I assume you will see lower prices in Monday’s open so continue to play this to the downside as prices are way overblown in my opinion to the upside for this type of economy. The chart structure currently is poor due to the fact that volatility has come back into this market so this trade should only be done by large accounts but I do think there’s a special situation to the downside as I can’t remember the last time I saw back-to-back limit downs in feeder cattle which tells you how bullish this market has been over the course of last several years but everything comes to an end.
TREND: LOWER
CHART STRUCTURE: POOR

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 and your still in the game.