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 have been very volatile in the last couple of weeks as prices are up $.30 this Friday afternoon in New York currently trading at 93.15 a barrel in the October contract as I am now recommending a short position when prices closed below 92.50 earlier in the week while placing your stop loss above the 10 day high which currently stands at 96.00 a barrel risking around $3,500 per contract as the chart structure is awful at the current time but I still do believe that the trend is lower despite the fact that prices traded as low as 90.43 before rallying severely in the last couple of days. Crude oil prices are trading below their 20 & 100 day moving average as the U.S dollar continues to make new highs against the Euro currency and I think that will be the main factor of lower prices, however problems with Iraq in Syria are propping up prices once again but continue to play this to the downside and sell any rally making sure you use the proper stop loss as the 10 day high will start to come down dramatically on a daily basis starting next week so the risk reward situation will be better than it is at the current time. The 10 year note is hitting a 5 week high yielding 2.56% and that is also a negative influence on commodity prices as well as oil as the United States is becoming an exporter as we are not so reliant on Middle East oil and that’s why prices have not been skyrocketing due to the all ISIS nonsense which is now controlling 2 countries.
TREND: LOWER
CHART STRUCTURE: POOR

Natural Gas Futures

Natural gas futures settled last Friday at 3.79 in New York as I have been recommending a long position while placing your stop below 3.78 on a closing basis and even going as low as the contract low of 3.74 which would probably be a smart move as prices rallied sharply earlier in the week only to come back to settle around 3.85 so if you’re still in this trade I would place my stop at 3.74 risking around $1,000 per contract. Many of the commodity markets continue to head lower and I have been recommending a long position when prices broke out to a 4 week high of 4.04 as the risk reward was in your favor but I think the fact of deflation and massive supplies of gas is putting a lid on this product at the current time and if you are stopped out sit on the sidelines and look for a better trend to develop as this trade seems to have stalled rather quickly.
TREND: MIXED
CHART STRUCTURE: SOLID

10 Year Note Futures

The 10 year notes in the December contract are trading below its 20 and just below its 100 day moving average as I am recommending a short position as prices have hit a 4 week low currently trading at 124 – 01 and if you go short this market I would recommend placing your stop above the 10 day high which currently stands at 125 – 25 risking around $1,800 per contract as the 10 year note currently is yielding 2.56%. The chart structure will improve dramatically next week as an improving economy is starting to put upward pressure on yields as I think there’s a possibility that you could trade as high as 3.0% come year end as the stock market remains extremely strong and I do believe money will continue to flow into that sector and out of the bond market due to the fact that you are wasting your money for 10 years if you’re buying the bond as over 180 companies in the S&P 500 pay higher than the 10 year note.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Silver Futures

Silver futures traded lower this week settling last Friday at 18.97 while currently at 18.66 down around $.30 for the trading week as the U.S dollar continues to pressure prices as money is flowing out of Eastern Europe into the United States as a safe haven pushing prices to a 1 year low. If you took the original recommendation back at 20.44 continue to place your stop above the 2 week high which currently stands at 19.67 as the chart structure is poor due to the fact that prices continue to move lower almost on a daily basis. The problem with the precious metals and many of the commodity markets is the fact that several European countries are going into recession while deflation is a problem throughout the world and with China’s economic news coming out yesterday showing a slowdown which is putting pressure as lower demand might be here to stay for the rest of 2014. Silver futures are trading far below their 20 and 100 day moving average telling you that the trend is lower but if you have not been short this market you might want to sit on the sidelines and wait for some type of rally making sure you place the proper stop loss.
TREND: LOWER
CHART STRUCTURE: POOR

Gold Futures

Gold futures had a disappointing week if you are bullish as prices are trading below their 20 and 100 day moving average and if you took the original recommendation when prices broke out at 1,278 make sure you place your stop loss above the 2 week high which currently stands at 1,293 which is quite a distance away. The chart structure is very poor at the current time due to the fact that prices dropped almost $30 this week all due to a strong U.S dollar as prices hit 9 month lows and it looks to me that prices will retest the December 31st, 2013 low of 1,185 as there’s just no interest in the precious metals and many of the commodity markets to the upside currently. China is also slowing down which also is a negative influence on gold prices as once again the stock market remains right near all-time highs and that’s where the money is going into and out of gold and out of bonds recently so continue to play this to the downside and sell any rallies while placing the proper stop loss risking 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: POOR

Coffee Futures

Coffee futures in the December contract traded sharply lower this week in New York currently trading below their 20 and 100 day moving average continuing a choppy trend over recent months hitting a 5 week low settling last Friday at 198 going out around 182 finishing lower by 1600 points creating a possible double top last week around 210. I've been sitting on the sidelines in the coffee market for several months as its very difficult to be successful trading choppy markets so continue to avoid this market and wait for better chart structure to develop as volatility is too high and that does not allow you to place tight stop losses as I look for markets with excellent chart structure allowing you to risk 2% of your account balance on any given trade so just keep an eye on coffee at the current time as the next level of support is at 170 as the soft commodities have generally turned bearish. Many of the commodity markets continue to go lower due to the fact that deflation around the world is occurring as coffee prices are still relatively high as the 2015 Brazilian crop will be watched very closely as it's very difficult to have back to back droughts and that’s the reason why prices are so high currently.
TREND: LOWER
CHART STRUCTURE: AWFUL

Cotton Futures

Cotton futures are trading above their 20 but still below their 100 day moving average hitting a 7 week high as yesterday’s crop report was expecting 17.3 million bales but the actual production number came out 900 million lower around 16.54 sending prices to recent highs as prices may have bottomed out in the short term. If you are looking at getting into a bullish position I would buy a futures contract at today’s price of around 68.00 while placing your stop loss at 64.00 risking 400 points or $2,000 per contract as prices rallied over 350 points for the week and does have outstanding support and chart structure at the current time. Cotton prices have plummeted in 2014 but have been going sideways to slightly higher in the last 2 months as that production number was quite surprising and could send prices higher here in the short term so continue to play this to the upside as you want to be a trend follower when you trade the commodity markets and the short term trend in cotton is to the upside.
TREND: HIGHER
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

Wheat Futures

Wheat prices settled last Friday at 5.35 a bushel currently trading at 5.01 down another $.09 this Friday afternoon in Chicago and if you took my original recommendation when prices broke below the contract low 5.46 continue to place your stop above the 10 day high of 5.66 as the trend is getting stronger to the downside in my opinion. Yesterday’s WASDE crop report stated that the ending stocks were 698 million bushels which was higher than estimated while also hiking production in the Ukraine as there is very little bullish fundamental news at this point as wheat crops around the world look excellent and prices are trading far below their 20 & 100 day moving average as $4.50 is my next target as that’s where prices were trading in 2010 before the Russian freeze skyrocketed prices up to $8 as the U.S dollar continues to hit new highs which is very pessimistic grain prices. Wheat futures have dropped about $2.60 this summer as carryover levels are coming historically high as the trend is your friend in the commodity markets and if you look at many of the trends in 2014 they have been terrific and as a commodity trader your job is to find a strong trend and stay away from markets that have not hit a 4 week high or low as that is my entry point on trying to find the beginning of a trend.
TREND: LOWER
CHART STRUCTURE: POOR

Corn Futures

Corn futures in the December contract are trading at 3.39 a bushel settling last Friday in Chicago at 3.56 selling off around $.17 hitting a new 5 year low as the WASDE crop report stated that production at 14.395 billion bushels which is all-time record and a carryover of just over 2 billion which is historically very high as harvest is right around the bend so continue to place your stop above the 10 day high which is at 3.69 as I still do believe there is a high probability that prices can test $3.00 dollars a bushel come harvest time. Rumors of a frost happening this weekend sent corn prices up sharply last Friday, however it doesn’t look like temperatures are going to be damaging to the crop which is behind schedule at 15% mature as the chart structure remains positive to the downside as prices are trading far below their 20 & 100 day moving average as the U.S dollar continues to move higher against the Euro currency which is another bearish influence on corn and grain prices. This year’s weather in the Midwest part of the United States is one for the record books as the entire summer saw mild temperatures with heavy amounts of rain creating massive crops and with the possibility of another 90 million acres being planted next year which could send prices even lower.
TREND: LOWER
CHART STRUCTURE: POOR

Sugar Futures

Sugar futures continue to plunge trading far below their 20 & 100 day moving average settling last Friday at 15.00 down about 100 points this week currently trading at 14.02 and traded as low as 13.95 hitting a 4 ½ year low all due to ample supplies with the next major retest at the May 2010 low of 13.66 which looks like that could happen next week as prices traded down for the 7th consecutive trading session. I’ve been recommending a short position in sugar for several months as this trade has really fallen out of bed so continue to place your stop above the 10 day high which is quite a distance away at 15.87 but will come down dramatically in the next several days as the chart structure is awful at the current time.
TREND: LOWER
CHART STRUCTURE: AWFUL

When Do You Enter A Trade? What are your rules to initiate a trade on the long or short side of the commodity market?

I have been asked this question many times throughout my career and my opinion is simply to buy on a 20-25 day high breakout in price on a closing basis only or sell on a 20-25 day low breakout to the downside also on a closing basis. Many times the price will break the 25 day high and sell off later in the day only to have your trade be negative very quickly. I would rather buy the commodity at a higher price on the close because that gives me more confidence that the market has truly broken out. However there are more ways to skin a cat and this is not the only answer because some other trading systems might rely on different breakout rules that have also been reliable. Remember always keeping a 1%-2% risk loss on any given trade therefore minimizing risks because the entry system I use always goes with the trend because I have learned over the course of time the trend is truly your friend in the long run. I also look for tight chart structure meaning a tight trading range over a period of time with relatively low volatility. I try to stay away from a crazy market that hit a 25 day high in 2 trading sessions versus the 25 high that actually took 25 days to create.

WHEN DO YOU EXIT A TRADE?

The biggest question that I have been asked is when do I exit a winning trade and when do I exit a losing trade? In my opinion the rule of thumb that I use is placing my stop loss at the 10 day high if I’m short or a 10 day low if I’m long. The other rule of thumb is to place your stop loss at the 2% maximum loss allowed in your account for any given trade.