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 are currently trading higher by $8 in New York this Friday afternoon trading at 1,216 an ounce after settling last Friday at 1,186 up around $30 this week hitting a 3 week high as terrorism in France has occurred with Al Qaeda now taking credit for killing 12 people and possibly more sending gold prices higher as a flight to quality.

Gold prices are trading above their 20 and right at their 100 day moving average looking to breakout however the true breakout does not occur until prices close above 1,240 on a closing basis which could possibly happen next week as gold prices have been grinding higher despite the fact that the U.S dollar hit a 9 year high which is generally very pessimistic precious metal prices but with worldwide tensions currently prices are holding their own. Gold prices have been in a steady long-term downtrend after hitting 1,900 back in 2011 as the stock market seems to be relentless to the upside, however profit taking is hitting the S&P 500 today sending money back into the precious metal but be patient on this trade and wait for the true breakout to occur which could take several weeks hoping that the chart structure will be tight allowing us to place a tight stop loss minimizing the risk to 2% of your account balance on any given trade so keep an eye on the gold market as it certainly looks like something is about to develop in my opinion.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

Silver Futures

Silver futures are currently trading at 16.44 an ounce in the March contract trading above their 20 day but still below their 100 day moving average telling you that the trend is mixed to slightly higher as major support has developed around 15.50 which was hit on multiple occasions & unable to break and now is trading at the upper end of the range hitting a 3 week high. The silver chart is starting to develop excellent chart structure and it seems to be that the longer-term bearish pattern has come to an end but the true breakout in this market does not occur until we break 17.36 as prices may have created a spike bottom after Thanksgiving around 14.15 an ounce as worldwide problems are now putting money back into the silver market as traders are thinking that prices may have been overdone to the downside.

Remember the fact that silver has demand especially from electronic components and that demand is not going away anytime soon especially if the price continues to go lower, however the U.S dollar is hit a 9 year high that in the long run bearish precious metal prices but as a technical trader when prices hit a 4 week high with excellent chart structure I try to take that trade so keep an eye on this market as I’m currently sitting on the sidelines, but something is going to happen in the next week or so and it looks to be to the upside in my opinion.
TREND: MIXED
CHART STRUCTURE: IMPROVING

Crude Oil Futures

Crude oil futures in the February contract are down $1.10 this Friday afternoon in New York currently trading at 47.80 a barrel after settling last Friday at 52.70 finishing down nearly $5 or 10% once again as this market continues its amazing bearish trend and if you’re still short this market I would place your stop above the 10 day high which now has been lowered to 55.74 and then coming on Monday’s trade that will be lowered once again down to $55.00 as the chart structure is starting to improve dramatically. The next level of support is 40/45 and remember the fact that we traded in the low 30s in late 2008 as the Saudis continue to state that they will not cut production trying to hurt some American companies especially the shale industry as prices are trading far below their 20 & 100 day moving average telling you that the trend is to the downside so continue to remain short, but if you have not participated in this market sit on the sidelines and move on as the risk is too high currently.

I am definitely not recommending anybody to buy into this market as nobody knows how low prices can go as you cannot turn off the spigot in just a matter of a couple of days as a glut of crude oil still remains on the market for at least 3 to 5 months in my opinion so stick with the trend and the trend clearly is to the downside regardless of any geopolitical event, as in the old days with Al Qaeda taking responsibility for killing multiple people in France that would have pushed crude oil up $5, however not anymore and that is a wonderful thing for the American consumer . Gas prices have been plummeting in recent weeks with around 20 states at the current time below $2.00 a gallon all due to the fact that the United States is an exporter of oil and has huge supplies at the current time.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Lean Hog Futures

Lean hog futures continued their bearish trend in Chicago this week settling last Friday at 81.30 in the February contract while currently trading at 78.00 down over 300 points hitting a 1 ½ year low as hog expansion is clearly taking place in my opinion as supply issues should not be a problem in 2015 as prices are trading far below their 20 & 100 day moving average as I have been recommending a short position in this market for several weeks and if you took that trade make sure you place your stop loss above the 10 day high which currently stands at 82.50 as the chart structure will not improve until later next week as major support now is around 70 – 77 and I do think prices are going lower.

I have been recommending a short in the February contract which we will have to rollover into the June contract relatively soon as the commodity markets in general still remain pessimistic as cattle & hog prices were stubbornly high for quite some time but now the U.S dollar hit a 9 year high this week which certainly is negative exports so stay short as the chart structure still remains relatively solid. The trend is your friend in the commodity markets and the meats can be extremely trendy so make sure that you place the proper stop loss risking 2% of your account balance on any given trade as the bottom has not been created in my opinion as the virus that affected hog prices in 2014 pushing prices to all-time highs around 135 is not in the cards this year.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Cocoa Futures

Cocoa futures in the March contract are down about 20 points this Friday afternoon currently trading at 2963 as I’ve been recommending a long position over the last several weeks and if you took that original trade make sure you place your stop loss below the 10 day low which currently stands at 2900 risking around 60 points or $600 per contract plus slippage and commission at today’s price level. Cocoa has been relatively nonvolatile in recent weeks before yesterday’s 75 point up move due to the fact of hot & dry weather in West Africa, however production is still relatively large as supply issues are not a problem at the current time.

Cocoa prices are trading above their 20 but still below their 100 day moving average telling you that the trend is mixed, however the chart structure is outstanding at the current time and I do believe that the risk/reward is in your favor and if you have not taken the original recommendation you still can at today’s price level as $600 risk meets criteria. Cocoa prices can become extremely volatile and I expect that to happen once again as low volatility will not be here for very long in my opinion as there are many times cocoa has 100 point days or even higher. Cocoa has to be planted within 20 miles of the equator & is only grown in incredibly unstable countries and that’s why prices remain high because if cocoa was grown in the state of Illinois prices would be at 500 versus nearly 3000.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Corn Futures

Corn futures in the March contract finished up $.06 closing right around $4 a bushel as traders are awaiting Mondays critical USDA crop report at 11 o’clock CT showing supply/demand tables as well as production numbers for the year 2014 as I have been recommending a short position in corn right around this price while placing your stop loss above 4.17 risking $850 per contract plus slippage and commission. Many of the commodity markets are heading lower due to the fact that the U.S dollar hit a 9 year high this week and crude oil prices continue to plunge and I have a hard time believing that corn has sustainability up at these levels as I’m sticking my neck out on this trade once again as I do believe the risk/reward is in your favor and I also do believe that South America will produce an excellent crop despite what recent weather reports are suggesting.

Corn prices have had a remarkable rally from the early October lows around 3.20 a bushel all way up almost to 4.20 a bushel up 30% and I believe prices have topped out as if you look at the relationship between ethanol prices and crude oil prices its way out of whack in my opinion as crude prices are sharply lower while corn prices are still relatively high in comparison so I remain bearish, however if we are stopped out at 4.17 on Mondays report its time to move on and look for a better market to trade as you always must have risk parameters at hand.
TREND: MIXED
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

Cotton Futures

Cotton futures in the March contract settled last Friday in New York around 59.58 while currently trading at 60.10 still in a bottoming pattern as I’ve been recommending a bullish position in cotton and if you took that trade prices really have gone nowhere in recent weeks continue so place your stop at 59.47 risking around 100 points or $500 per contract plus slippage and commission.

Cotton futures are trading right at their 20 day but still below their 100 day moving average as traders are awaiting Monday’s USDA crop report with possible less production occurring in 2015; however there’s weak demand as prices have been stuck in the mud. Worldwide supplies are still quite large as the U.S dollar hit a 9 year high this week which is also very pessimistic cotton prices as the chart structure is outstanding at the current time allowing you to place a very tight stop loss due to the fact of extremely low volatility which I don’t think will stay for very long as we start entering the spring months as cotton can be extremely volatile in the spring and summer just like the grain market due to weather problems. If you have not entered a bullish position I think the risk/reward is in your favor at today’s price level as the risk is only around $500 plus slippage and commission so if you think the bottom has taken place that would be my recommendation at the current time.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Sugar Futures

Sugar futures in the March contract settled last Friday at 14.17 while currently trading at 14.95 as I’ve been recommending a short position in sugar for several months and if prices do close above 14.90 its time to move on and get stopped out as prices are currently trading above their 20 but still below their 100 day moving average telling you that the trend is mixed. There is concern about sugar production as hot & dry weather has hit South America pushing prices up over 100 points for the trading week so we will have to sit on the sidelines and wait for a new trend to develop as volatility still remains relatively low. Sugar prices have been following crude oil prices which are hitting a new multiyear low once again today, however when weather problems happen that trumps everything else and causes price spikes higher so time will tell to see if any production cuts actually do occur.
TREND: MIXED
CHART STRUCTURE: SOLID

Wheat Futures

Wheat prices in the March contract finished lower for the 3rd straight trading session continuing its bearish trend hitting a 6 week low finishing down 3 cents at 5.64 a bushel in Chicago this afternoon as prices have topped out in my opinion, however the chart structure at the current time is poor as I’m bearish this market but I will sit on the sidelines and wait for a little better chart structure to develop which could happen in the next couple of days so keep a close eye on the downside in the wheat market as traders await Monday’s USDA crop report. Wheat prices have dropped about $1.00 from the peak as the Russian situation has calmed down quite a bit as there are still large supplies worldwide as growing conditions in the United States are not suffering any crop damage at the current time as I do think lower prices are ahead, however the 10 day high is at about 6.21 which is around $.53 or $2,700 risk per contract at these price levels as I would like to see that risk come down and that could happen in the next couple of days.

I have talked about in previous blogs I’m currently short corn, soybeans, as I do think the grain market will start to rollover due to the fact that the U.S dollar is hitting a 9 year high once again this week as the commodity markets still remain pessimistic in my opinion. Wheat prices are trading $.40 below their 20 day moving average but still above their 100 day moving average as prices rallied about $2 in 2 months and now have dropped about $1.00 so we’re trading about midrange but it looks to me that a possible retest of the $5 level is in the cards in my opinion so take advantage of any rally while maintaining the proper stop loss risking 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: POOR

Live Cattle Futures

Live cattle futures in the February contract finished limit down 300 points for the 2nd consecutive trading session as I wrote about in yesterday’s blog I’m still neutral in this market but I do believe lower prices are ahead and if you are a cattle producer I would certainly be hedging even at today’s price levels as the commodity markets in general still remain very pessimistic especially with the U.S dollar hitting a fresh 9 year high this week. Cattle futures are trading below their 20 and 100 day moving average for the 1st time in quite some time settling last Friday at 165.67 going out today around 160.60 down over 500 points for the trading week as a possible retest of last month’s low of 155 is in the cards.

Cattle prices have been the strongest bull market in recent memory but everything comes to an end and with crude oil prices plummeting & deflation worldwide occurring I have a hard time believing that cattle prices will stay this high however the chart structure is terrible at the current time and the risk parameters do not meet my criteria so I have to sit on the sidelines and wait for tight chart structure to develop allowing you to place a tight stop allowing risk of 2% of your account balance on any given trade, however as a cattle producer I would definitely start hedging you do not want to get greedy in my opinion as a producer you must seriously look at what is going on in the crude oil market as prices have dropped 50% in 3 months as nobody knows where markets can actually go and how quickly they can move as prices are still near all-time highs so definitely hedge as I cannot stress this more imperatively.
TREND: LOWER
CHART STRUCTURE: POOR

Orange Juice Futures

Orange juice futures in the March contract are trading below their 20 and 100 day moving averages as I’m keeping a close eye on this market looking for a possible break out to occur under 139 while settling last Friday in New York at 143.90 currently trading around 141 as traders are keeping an eye on production numbers as the chart structure is starting to improve. If prices do break 139 my recommendation would be to sell a futures contract while placing your stop at 147 risking 800 points or $1,200 risk per contract plus slippage and commission as the chart structure will start to improve but sit on the sidelines and be patient and wait for a true breakout to occur.

Much of the country is very cold temperature wise, however Florida is not in any danger of any type of frost looking at the 7 to 10 day forecast as Mondays report will be very interesting & should send some high volatility back into this market which has been relatively quiet in recent weeks.
TREND: MIXED
CHART STRUCTURE: SOLID

Coffee Futures

Coffee futures in the March contract are trading higher for the 5th consecutive trading session as I have been recommending a short position getting stopped out around the 177 level as hot & dry weather in Brazil is causing prices to rally over 2000 points in the last 5 days hitting a 3 week high. At the current time I’m sitting on the sidelines in this market as the trend is mixed as prices are trading above their 20 but still below their 100 day moving average so I’m waiting for better chart structure to develop as coffee prices had their best week since the month of October. Volatility in coffee will start to increase tremendously in the next couple of months as traders remember last year’s horrific drought that sent prices up sharply in the months of January and February, however droughts can quickly erase if abundant rain hits key coffee growing regions as volatility is too high and the trend is mixed so this does not meet my criteria so sit on the sidelines and let’s see what develops as this market will definitely become interesting here in the short term.

The problem with coffee is the fact that the coffee trees were stressed so dramatically in 2014 and sometimes it can have an effect on next year’s crop as coffee is grown on a tree unlike corn or soybeans which has a new crop every single year as you cannot grow a coffee tree in one year and if those trees are stressed they still might not produce a terrific crop and that’s the concern at this time.
TREND: MIXED
CHART STRUCTURE: POOR

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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