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.

Gold Futures

Gold futures in the February contract settled last Friday around 1,190 while currently trading at 1,223 this afternoon near a 6 week high as I’ve been recommending to sit on the sidelines in this market as volatility is way too high and the risk is also way too high in my opinion, however it does look to me like a bottom has been placed here in the short term with gold spiking from the 1,140 level last week and then rebounding around 100 dollars in the last 7 trading days which is incredibly impressive as the stock market is sharply lower this afternoon sending money back into the gold and precious metal sector. Gold futures are trading above their 20 but still below their 100 day moving average telling you that the trend is lower as I will remain neutral as the chart structure is awful at this time, however if you do think gold has bottomed my recommendation would be to buy at today’s price level while placing your stop loss below 1,186 risking around $37 or $3,700 per contract plus slippage and commission but the risk is too high & does not meet my criteria so I will wait for better chart structure to develop but I have to admit its sure fun to watch.
TREND: HIGHER
CHART STRUCTURE: AWFUL

Crude Oil Futures

Crude oil futures in the January contract are trading lower for the 3rd consecutive day hitting a fresh 5 year low down another $1.30 trading at 58.67 a barrel as the trend continues to get stronger because of the fact that massive worldwide supplies and OPEC refusing to cut production sending prices sharply lower in recent weeks and if you are currently short this market I would continue to place your stop loss above the 10 day high which currently stands at 69.32 risking around $11 or $11,000 per contract plus slippage and commission as this has been the best trend in 2014. If you are currently not short this market I would definitely sit on the sidelines as the risk is too high and I definitely am not recommending buying crude oil as picking a bottom is almost impossible so if you are short continue to do the right thing and the right thing in my opinion is placing your stop above the 10 day high which will be lowered on a daily basis improving tremendously next week as who knows how far prices can actually drop. Crude oil demand was cut for the 4th time in recent weeks as demand and oversupply continue to pressure this market as the consumer is benefiting tremendously at the pump helping retail sales during the Christmas season. Crude oil futures are trading below their 20 day and $26 below their 100 day moving average showing how bearish this market has become.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Lean Hog Futures

Lean hog futures in the February contract settled last Friday around 85.62 currently trading at a 84.35 hitting a 15 week low as I’ve been recommending a short position when prices broke 86 earlier in the week and if you took that trade place your stop above the 10 day high which currently stands at 89.75 risking around 550 points or $2,200 per contract plus slippage and commission as the trend remains bearish in my opinion. Hog prices are trading below their 20 and 100 day moving average as prices look to retest the August spike bottom around 83.25 here in the short term as supplies are coming onto the market rather quickly and that’s what happens when you have record prices as producers are expanding and I do believe that prices are headed lower especially with a strong U.S dollar and a weak commodity market as a whole. Cattle prices recently hit a 6 week low for the 1st time in quite some time putting pressure on hog prices as the 10 day low will start to be lowered on a daily basis starting next week so continue to play this to the downside taking advantage of any rally as the chart structure will improve and that’s what I like to see when entering into a trade. Hog prices are generally very volatile throughout the year so make sure you place the proper amount of contracts minimizing risk as much as you can as there’s a possibility in my opinion that prices break 80 in the coming weeks.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Cocoa Futures

Cocoa futures in the March contract settled last Friday at 2890 while currently trading at 2870 as I’m recommending a bullish position as the risk/reward is in your favor in my opinion as I would buy a futures contract at today’s price of 2865 while placing your stop loss below the 10 day low which currently stands at 2835 risking $300 per contract plus slippage and commission. The longer-term downtrend line has been broken in the cocoa market as a short term bottom might be in place but the reason I’m taking this trade is because prices hit a 4 week high earlier in the week and the risk reward is in your favor with outstanding chart structure allowing you to place a tight stop loss which in my opinion is the key to successful trading. The Ebola scare has faded in recent weeks as that propped up prices thinking that harvesting the crop would be difficult, however record production in the Ivory Coast has pressured prices here recently but I think if you can risk $350 on a cocoa trade you take a shot in my opinion.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Cotton Futures

Cotton futures in the March contract are currently trading above their 20 but still below their 100 day moving average telling you that the trend is mixed after settling last Friday in New York at 59.64 currently trading at 60.65 hitting a 4 week high with outstanding chart structure as I am now recommending a bullish futures position at today’s price while placing your stop loss below the contract low which stands at 58.53 risking around 210 points or $1,050 plus slippage and commission. If you have been following any of my previous blogs you understand that I like trading markets with tight chart structure as this market has been grinding sideways for 4 weeks so play this to the upside as I do believe the risk/reward is on your side at the current time despite the fact that oil prices have fallen out of bed coupled with a strong U.S dollar as this trade is strictly technically based. The grain market has been rallying sharply in recent months and I think that will also be supportive for cotton prices as all the bearish fundamental news has already been baked into the cake so let’s see if a short-term bottom has been created. Volatility in cotton at the present time is relatively low as there is very little fundamental news to dictate short-term prices however this trade meets criteria to the upside so take advantage of any dips placing the proper stop loss risking 2% of your account balance on any given trade.
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

Coffee Futures

Coffee futures settled last Friday around 180.10 while currently trading at 175.10 down 500 points for the week as I’ve been recommending a short position when prices broke 185 & if you took that original recommendation the chart structure has improved dramatically in the last week as the stop has been lowered to 186.50 still risking about 1000 points from today’s price levels or $3,800 per contract plus commission and slippage, however if you are currently not short this market I would wait for some type of rally before entering. The 10 day high will be lowered on a daily basis next week as well as this trade continues to grind lower as excellent weather in Brazil is pressuring prices here in the short term as last year we had a tremendous drought that sent prices up about 100% percent in a matter of several months but this year is a different story so far but it’s a long growing season and weather can change very quickly but the trend is to the downside so continue to take advantage of any rallies while making sure that you risk 2% of your account balance on any given trade as coffee can be an extremely high risk trade due to extreme volatility at certain times of the year. Coffee prices are trading below their 20 and 100 day moving average telling you that the trend is to the downside with the next major level of support at the July low of around 167 as prices topped out in early October as the bearish trend continues in the short term.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Corn Futures

Corn futures in the March contract hit a 6 month high today closing sharply higher for the 2nd consecutive day as I was recommending a short position as I was wrong on this trade placing my stop on a closing basis at 4.03 getting stopped out right near session highs as this trade has my head shaking despite the fact that oil was down another $2 today. Corn prices continue to move higher all off of rumors of Monday’s acreage report with acres expected to be much less than expected and as a trader you must realize when you are wrong as I stuck my neck out on this one and got it chopped off so sit on the sidelines and wait for another trend to develop as the trend currently in corn is higher but I’m on the sidelines as I truly do believe that prices are limited to the upside as corn is still trading above its 20 and 100 day moving average as it’s been a very impressive rally since October 1st up over 22% despite the fact that we had back to back record crops. Wednesday’s USDA crop report showed that we have about a 2 billion bushel carryover which was expected but it will come down to what Monday’s acreage report states to see if this bull market continues as I’m just getting a little suspicious at the current time as it seems like China is booking as much soy and corn as possible going into the new year and I think that will slow down especially if we have another record crop down in South America
TREND: HIGHER
CHART STRUCTURE: SOLID

Sugar Futures

Sugar futures in the March contract settled last Friday at 15.14 while settling at 14.98 still trading below its 20 and 100 day moving average telling you that the trend continues to be bearish as I’ve been recommending a short position for quite some time and if you took the original trade make sure you place your stop loss at the 10 day high which currently stands at 15.68 as the chart structure has improved dramatically risking around 70 points or $800 per contract plus slippage and commission. The next level of support in sugar is at the contract low of around 14.98 as I think with plunging oil prices in recent weeks that will continue to pressure sugar, however it is been relatively stubborn in recent weeks as volatility is low at the current time but continue to play this to the downside as the stop loss has been tightened up considerably. Sugar has the same problem many of the other commodities have is the fact that we just have oversupply in recent years and now with oil breaking $60 a barrel I still believe that sugar could retest the 2010 summer lows of around 13.50 a pound in the near future
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Wheat Futures

Wheat futures in the March contract are up sharply this Friday afternoon in Chicago trading higher by another $.14 for the 2nd consecutive trading session hitting 6 month highs and if you took my original recommendation when prices broke 5.20 several months ago continue to place your stop loss below the 10 day low which happened in yesterday’s trade at 5.73 risking around $.40 or $2,000 per contract plus slippage and commission from today’s price levels. Wheat futures are trading far above their 20 and 100 day moving average telling you that the trend is to the upside as there are major concerns about Russia’s crop sending prices sharply higher. The grain market certainly has gone into a bullish trend as corn prices are also breaking out today hitting a 6 month high as I was recommending a short position in that trade which still baffles me as crude oil prices are down nearly $2 but as a trader you must move on as I was clearly wrong in the corn market however continue to stay long the wheat as 6.40 is the next major level of resistance. Remember when you trade wheat it’s a different commodity from corn or soybeans as the wheat market can have weather dictate short-term price during the winter time where corn and soybeans have already been harvested so continue to trade with the trend, however if you are not long this market at the current time volatility has increased so sit on the sidelines as the risk is too high at this point.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

U.S Dollar Futures

The U.S dollar in the March contract is down 35 points this Friday afternoon still trading barely above its 20 and 100 day moving average as I’ve been recommending a long position for quite some time as this trade has basically gone sideways and if you took the original trade place your stop at the 10 day low which stands at 88.02 risking around 50 points or $500 plus commission and slippage from today’s price levels per contract. The dollar index traded near the 90 level earlier in the week only to come back down retesting recent lows as this market has outstanding chart structure at the current time as prices have been just grinding slowly higher and if you have not entered this trade the risk reward is in your favor at the current time so continue to play this to the upside in my opinion. As I’ve talked about in many previous blogs I like trading markets with tight chart structure which allows you to place very tight stop losses and at the current time the U.S dollar meets that criteria as I do think the foreign currencies especially the Euro with all of the stimulus will continue to head lower as the U.S economy is clearly the best economy in the entire world.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

S&P 500 Futures

The S&P 500 futures in the December contract are down another 16 points this Friday afternoon in Chicago currently trading at 2015 as I was recommending a bullish position getting stopped out in Wednesday’s trade as prices hit a 2 week low and now prices have hit a 4 week low as I’m currently sitting on the sidelines licking my wounds. The S&P 500 is trading below its 20 day but still above its 100 day moving average so sit on the sidelines as I am very surprised about the weakness as December is generally a positive month for stocks, however with crude oil absolutely falling off a cliff here in recent trading sessions pushing the stock market lower as many energy companies are sharply lower this afternoon. The next level of major support is around 1960 as I’m still bullish the stock market as I think we will rally into the new year, however as a trader when prices hit the 10 day low and you have a long position it’s time to move on minimizing your risk as much as possible and move on to another trade because never getting out can be very dangerous in my opinion. When oil prices stabilize you would probably see some stabilization in the stock market as currently it’s still a positive year in 2014 and I still think the stock market has room to run as interest rates continue to go much lower as the 10 year yield is yielding 2.09% which is remarkable as deflation and worldwide recessions seem to be coming especially in Europe and Russia. In my opinion I think the decline in oil prices will be bullish in the long run and definitely benefits retail sales which were extremely strong, however it certainly looks like yearend profit taking is happening at the current time so sit on the sidelines and wait for better chart structure to develop which might take a couple of weeks especially with the holiday season upon us.
TREND: NEUTRAL
CHART STRUCTURE: POOR

Do You Over Trade Your Account?

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.