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 witnessed another extremely volatile trading session with another $20 trading range currently trading up $4 at 1,188 after trading as low as 1,167 earlier in the session as the U.S dollar hit another multiyear high pressuring many the commodity prices, however bottom feeders appeared thinking that gold was overdone to the downside. Gold futures are trading below their 20 and 100 day moving average as I am currently sitting on the sidelines in this market waiting for better chart structure to develop as the market is just too volatile in my opinion, however if you are bearish this market I would sell at today’s price while placing my stop above the 10 day high which currently stands at 1,210 risking around $23 or $2,300 per contract plus slippage and commission as the chart structure is relatively solid at the current time. Gold futures remain in a long-term downtrend as investors are still putting money into the S&P 500 and out of the precious metals especially with a strong U.S dollar which looks to head higher in my opinion and with worldwide problems cooling down especially with Russia there’s really no reason to own gold at the current time.

Gold futures traded over the last 2 months in a price range between $1,140-$1,240 and now around mid-range so I’m waiting for a trend to develop as traders are waiting next Friday’s monthly unemployment report which should send even more volatility into this market so make sure if you are in the futures market that you use the proper amount contracts risking 2% of your account balance on any given trade as this market is high risk.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Crude Oil Futures

Crude oil futures are lower this Friday afternoon currently trading in the February contract at 52.60 a barrel after hitting new lows earlier in the trading session trading as low as $52 a barrel and if you’re still short this market the chart structure is improving tremendously so continue to place your stop loss at the 10 day high which stands at 58.53 and that stop will be lowered next week as well as volatility certainly has slowed down in recent weeks due to the holidays. Crude oil futures are trading far below their 20 and 100 day moving average telling you that the trend is to the downside as I never try to catch a falling knife as this market continues to move lower and that is why I will continue to move my stop to the 10 day high allowing you to try to take advantage of much of the move as possible as nobody knows how low prices could go. The problem with oil is twofold as the 1st is that we have record supplies and the 2nd is the U.S dollar is hitting another all-time year high once again pushing most commodity prices lower but it’s really all about the oversupply issue as the United States is now an exporter with record domestic supplies at the current time, however if you are currently not short this market you have missed the boat and I would sit on the sidelines and look for another market at the current time.

Ever since Thanksgiving when the Saudis announced that they will not cut production prices have been in a freefall and that’s terrific for consumers as gasoline prices in many parts of the country are under $2 a gallon which is remarkable in my opinion happening in such a quick period of time, however prices have been lower in the past so do not try to buy this market in my opinion as I still remain bearish.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

Lean Hog Futures

Lean hog futures in the February contract are up 15 points this Friday afternoon in Chicago currently trading at 81.35 as I’ve been recommending a short position over the last month when prices broke 86.00 & if you took that recommendation make sure you place your stop at the 10 day high which currently stands at 82.50 risking around 110 points or $450 per contract plus commission and slippage as the chart structure is outstanding at the current time as prices have been trading sideways over the last 2 weeks. Live cattle prices have rallied sharply off recent lows and that is helping support hog prices at the current time and if you have not entered this trade I would still recommend selling it at today’s price while placing the stop risking $550 as the risk/reward is in your favor as the hog contract is large with volatile price swings. Last year we experienced a virus that sent hog prices to all-time highs but this year has been a different story as that has not come to fruition as expansion should increase tremendously in the next several months in my opinion, however if we are stopped out at the 10 day high move on and keep an eye on this market as the chart structure still remains excellent and another trend could develop very quickly.

Volatility in the hogs has been relatively low recently after falling about 1000 points earlier in the month as a consolidation is understandable but I do remain bearish as prices are still trading below their 20 and 100 day moving average telling you that the trend is to the downside.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Cocoa Futures

Cocoa futures in the March contract are trading higher by 20 points this Friday afternoon in New York as I've been recommending a long position over the last several weeks as the chart structure remains extremely tight and if you took the original recommendation place your stop loss below today's low on a closing basis at 2896 as prices are currently trading at 2925 as the risk is about $300 from today's price levels plus slippage and commission. Cocoa prices are trading below their 20 but above their 100 day moving average telling you that the trend is mixed, however the risk reward was in your favor on this trade as the original risk was only $300 so continue to play this to the upside despite the fact that the Ivory Coast is looking to have large production once again. As a commodity trader you must have certain criteria and my criteria is that the risk/reward must be in your favor and the chart structure must be tight allowing you to place tight stop losses and cocoa has met all criteria in my opinion.
TREND: HIGHER
CHART STRUCTURE: OUTSTANDING

Corn Futures

Cotton futures in the March contract are down for the 2nd consecutive trading session in New York this Friday afternoon as I’ve been recommending a bullish futures position when prices broke above 61.00 however this trade has stalled out and reversed and if you took the original recommendation make sure that you place your stop below 59.49 on a closing basis which could be executed in today’s trade and if it is executed sit on the sidelines and wait for another trend to develop.

The reason I recommended the trade to the long side was the fact that the chart structure was outstanding bottoming around 59 and if your risk tolerance is higher you can place the stop below the contract low of around 58.71 risking about $500 from today’s price levels plus slippage and commission as the commodities in general look very weak due to the fact that the U.S dollar is hitting multiyear highs once again today pressuring cotton prices. The grain market in recent weeks have been going up and I thought that can support cotton prices, however the grains have turned bearish once again trading sharply lower for the 2nd consecutive day as agricultural products still remain weak so continue to place the proper stop loss and look for another market that is currently trending .

The problem with cotton is the same problem with many of the agricultural markets as we have ample supplies worldwide and that’s keeping a lid on prices also due to the fact that demand is very low with China having massive reserves which is slowing down there demand as this trade became disappointing as I thought the risk reward was in your favor due to extremely tight chart structure.
TREND: MIXED
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

Cotton Futures

TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Sugar Futures

Sugar futures in the March contract are down 35 points hitting a new 5 year low currently trading at 14.17 a pound as I’ve been recommending a short position in sugar for several months and if you took that trade continue to place your stop loss above the 10 day high which currently stands at 15.20 as the chart structure will start to improve tremendously starting next week as the trend is getting stronger to the downside on a weekly basis in my opinion. Sugar futures are trading far below their 20 and 100 day moving average telling you that the trend is to the downside as I think a possible retest of the summer 2010 lows around 13.50 is in the cards as oversupply is keeping a lid on prices at the current time also due to the fact that crude oil prices continue to move lower which is putting pressure on sugar prices as sugar is used as a bio diesel and I still believe prices can head lower even from today’s depressed levels.

The breakout in sugar occurred around 15.65 as volatility has been relatively low in recent weeks and I do believe you continue to play this to the downside taking advantage of any rallies as the chart structure is going to tighten up starting in Tuesday’s trade as the trend in the commodity markets is to the downside due to the fact that the U.S dollar is sharply higher once again today hitting a multiyear high and as a commodity trader you must follow the trend in my opinion as the path of least resistance is the way you want to position yourself.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Wheat Futures

Wheat futures in the March contract settled lower for the 3rd consecutive trading session finishing down $.08 closing around 5.81 a bushel as I was recommending a bullish position in wheat for quite some time getting stopped out earlier in the trading week around the $6 level as now I’m currently sitting on the sidelines waiting for a better chart structure and trend to develop. Wheat prices rallied from 4.80 all the way to around 6.80 on the Russia situation with the Ruble collapsing however geopolitical events always settle down and that’s exactly what happened as I was also recommending that you take off some contracts if you had multiple contracts on around the $6.30 level as the world still awash with wheat supplies at the current time.

I have to say it was a very impressive rally that I did not expect as prices climbed near the $7 level, however major support right is at this level and it wouldn’t surprise me if we start to head lower in the beginning of 2015 as the crop is in good condition at the current time but the chart structure is terrible and the risk is too high so sit on the sidelines and keep an eye on this market at the current time. Wheat futures are trading below their 20 but still above their 100 day moving average telling you that the trend is mixed so find another trend that is developing at the current time.
TREND: MIXED
CHART STRUCTURE: POOR

Soybean Futures

Soybean futures in the March contract settled 16 cents lower at 10.07 a bushel trading below their 20 and 100 day moving average telling you the trend is bearish as I’ve been recommending a short position placing your stop above the 10 day high which was at 10.66 and earlier this Monday prices traded as high as 10.68 but did not close at that level as the stops are always based on a close only basis as prices have now sold off for the 4th consecutive day dropping around $.60 from Monday’s high. The next major level of support is at 9.91 which was hit on December 3rd if that level is broken you have to think that a possible retest of the contract low could be at hand as the chart structure will not improve for quite some time as the stop will remain at 10.66.

The U.S dollar hit another multiyear high today causing many commodities to head lower as soybeans have been very stubborn over the last 6 weeks as Monday prices traded briefly at a 7 week high, however with excellent South American weather which should produce another record crop & a strong U.S dollar I still believe that soybean prices are headed lower. If you did not take the original recommendation the chart structure is awful at the current time so wait for some type of price kickback before entering as the 10 day high will not be lowered for quite some time as carryover levels are still extremely high historically speaking and I do think some of the demand will start to shift to South American soybeans in the coming months so continue to remain short.
TREND: LOWER
CHART STRUCTURE: POOR

Coffee Futures

Coffee futures in the March contract in the first trading day of the new year is down 550 points currently trading at 161.05 hitting a new contract low and if you took the original recommendation when prices broke 185 make sure that you place your stop loss above the 10 day high which currently stands at 177.65 as the chart structure will start to improve next week. Coffee futures are trading far below their 20 and 100 day moving average telling you that the trend is to the downside as the currency in Brazil known as the REAL is hitting a new low against the U.S dollar which is also putting pressure on prices as well as outstanding weather in Brazil as there is very little bullish fundamental news to support prices at this time.

Coffee prices broke the July low of around 167 with the next major support around 155 and I do think that commodity deflation is here to stay in the short term so continue to play this to the downside, however if you have missed this trade sit on the sidelines as you have missed the boat as the risk is too high at current levels or wait for some type of price kickback lowering your risk as the 10 day stop will come down dramatically in the next couple of days. Coffee futures were up about 50% in 2014 because of a massive drought in key coffee growing regions; however it’s very difficult historically speaking to have back to back droughts and so far the weather has been accommodating as the trend clearly is to the downside in my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING

What do I mean when I talk about chart structure and why do I think it is so important when deciding to enter or exit a trade?

I define chart structure as a slow and grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market and allowing you to place a stop loss with will be relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure but markets that continue to trend like the current soybean complex allowing for you to place close stops as it continues to fall dramatically. I always like to place my stops at 10 day highs or 10 day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loses.

Do You Add To Losing Trades?

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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