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 December contract settled last Friday at 1,086 while currently trading at 1,194 experiencing a wild trading session this Friday afternoon with the U.S dollar trading sharply lower as I’ve been recommending a short position in the August contract as we rolled over into the December contract today so continue to place your stop loss above the 10 day high which stands at 1,110 an ounce. Gold futures have traded sideways for the last two weeks and looks to be forming some type of short-term bottom, but I will stick to my trading rules and keep the proper stop loss as I still see no reason to own gold but if we are stopped out move on and look at other markets that are beginning to trend as we have been short from around the 1,170 level as prices have stalled out in recent weeks. The problem with the precious metals and gold in particular is the fact that all of the interest lies in the S&P 500 which is still hovering around all-time highs as money flows continue to come out of the precious metals and into the equity markets as I think that trend is to continue throughout 2015 and at this point I would rather own stocks than own gold so continue to play this to the downside in my opinion while risking 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

Silver Futures

Silver futures in the September contract settled last Friday at 14.49 an ounce while currently trading at 14.80 up about $.30 for the trading week still trading below their 20 & 100 day moving average as I’ve been short from 15.80 and if you took that trade place your stop loss at 14.99 which is the 10 day high as the chart structure is outstanding at the current time. Silver prices continue to bounce off of 14.50 as it looks to be forming a bottoming pattern but I will stick to my rules as we are just an eyelash away from getting stopped out as silver had a 40 cent trading range this Friday afternoon as the U.S dollar is down 100 points, however the trend is still lower and if we are stopped out move on and let’s find another market that’s beginning to trend as volatility is relatively low at the current time. The Federal Reserve continues to want the inflation rate to hit 2% so they can start to raise interest rates but at this point there is very little worldwide demand for any commodity especially due to the fact that China looks to be falling off a cliff as they are the largest importer of commodities in the world and if you have not sold silver at this time the risk/reward is highly in your favor risking $.20 or $200 per mini contract plus slippage and commission as we will see what Monday’s trade brings.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

Crude Oil Futures

Crude oil futures in the September contract settled last Friday in New York at 48.14 a barrel while currently trading at 47.90 down slightly for the trading week still trading below its 20 and 100 day moving average as I’ve been recommending a short position over the last several months and if you took that trade place your stop above the 10 day high which now stands at 51.41 as that will improve on a daily basis starting next week. Crude oil futures are trading below their 20 and 100 day moving average telling you that the trend is to the downside as there is very little bullish fundamental news to push prices higher in the short term and I think that will continue for quite some time as the U.S dollar still remains relatively strong despite today’s steep decline. Many of the commodity markets continue to go lower as deflation is a worldwide problem and has been over the last several years especially when the United States stopped there quantitative easing program which propped up all asset prices including most commodities. With the possibility of China slowing down the perception is that demand will also slow down so continue to place the proper stop loss which is just a little over $3 away as this trade as fallen out of bed over the last two months, but if you have missed this recommendation sit on the sidelines and look for another market that’s beginning to trend as you have missed the boat.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Live Cattle Futures

Live cattle futures in the December contract are trading below its 20 and 100 day moving average telling you that the short-term trend is to the downside as I have been recommending a short position when prices broke 153 and if you took that trade continue to place your stop loss above the 10 day high which in Monday’s trade will be 151.15 as the chart structure will improve on a daily basis. Cattle prices settled last Friday in Chicago at 147.05 while currently trading at 148.40 up slightly for the week hitting a five month low in Monday’s trade before trading limit up in Tuesday’s trade as the volatility is relatively high at the current time. Corn prices are right near contract lows once again as excellent growing conditions in the Midwestern part of the United States is producing what looks to be a very good crop once again as that has supported feeder cattle prices which is also supporting live cattle here in the last several days but remain short while placing the proper stop loss as I still think lower prices are ahead. Many of the commodity markets rebounded slightly today due to the fact that the U.S dollar is down over 100 points but I think this is just a one day situation and if you have not taken this trade the chart structure and the risk are in your favor at the current time as I would still take a shot at the downside as cattle prices historically speaking are extremely high especially compared to the rest of the commodity markets.
TREND: LOWER
CHART STRUCTURE:IMPROVING

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

Sugar Futures

Sugar futures in the October contract settled last Friday in New York at 11.24 a pound while currently trading at 11.16 basically unchanged for the trading week as I’ve been recommending a short position from around 11.50 and if you took that recommendation the chart structure is outstanding at the current time so place your stop above the 10 day high at 11.72 risking around 50 points or $550 per contract plus slippage and commission. Sugar futures are trading far below their 20 and over 150 points below their 100 day moving average telling you that the trend is getting stronger to the downside as oversupply and over production should continue to put pressure on prices despite the fact that the U.S dollar is down over 100 points but that’s still not supporting sugar prices at this time. The reason I decided to take this trade was the fact of extremely tight chart structure which lowers monetary risk as that met my criteria to enter into a trade as I still think that there’s a possibility that prices could break 10.00 a pound in the next several weeks so continue to play this to the downside as the risk/reward is highly in your favor in my opinion.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Cocoa Futures

Cocoa futures in the September contract are trading below their 20 but still above their 100 day moving average as I’m recommending a short position from around 3215 while placing your stop loss above the 10 day high which currently stands at 3367 risking around $1,600 per contract plus slippage and commission. The chart structure will improve in next Wednesday’s trade as the monetary risk will be lowered so continue to play this to the downside as cocoa have prices rallied about 500 points over the last four months and I think they have topped out as the risk/reward is in your favor as cocoa is very large contract with large price swings. The interesting thing about cocoa is that its grown in the Ivory Coast which is in West Africa which is very unstable and sometimes difficult to harvest and that’s why prices are historically high, however the rest of the commodity markets coupled with a strong U.S dollar continue to sell off many markets so take a position to the downside while placing the proper stop loss as I think the spread between cocoa and many of the other commodities is too wide at the current time. The next major level of support is around 3100/3150 and if that level is broken I think the official bear market could be underway so take advantage of any price rally in the next week to get short.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Lean Hog Futures

Lean hog futures in the December contract settled last Friday in Chicago at 61.52 while currently trading at 60.52 down slightly for the trading week as I’ve been recommending a short position from 69.00 while placing your stop above the 10 day high at 62.75; as prices traded above that level twice this week but never settled above that level so I remain short while keeping the proper stop loss. Hog futures have been very stubborn in recent days as we were just an eyelash away from being stopped out but remember when you place the 10 day stop it must be on a closing basis as we were hanging in there by the skin of our teeth at the current time as I still think lower prices are ahead as the risk/reward is your favor. Hog futures are trading below their 20 & 100 100 day moving average but if you are stopped out move on and look at other markets like cattle which I’m also recommending a short position as I still think the commodity markets in general are headed lower. The U.S dollar is down 80 points today but did not lend any support to cattle or hog prices as I think prices will retest the 57.00 level possibly in next week’s trade as I still see no reason why to own any commodity at the current time as worldwide economies are still in a slump with deflation in the air.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

Coffee Futures

Coffee futures settled higher for the 3rd consecutive trading session settling last Friday at 122.25 a pound while currently trading at 125.30 still trading below its 20 and 100 day moving average as I’ve been recommending a short position from the 128 level and if you took that trade place your stop loss above the 10 day high which currently stands at 128.20 as the chart structure is outstanding at the current time. The next major level of support is the contract low around 120 but I still think we can retest the January 2014 lows of 105 and if you did not take the original trade I would still sell at today’s price as the risk is around 300 points or 1,200 risk per contract plus slippage and commission. I am currently recommending short positions in cocoa, sugar, coffee as volatility is relatively low but as a trend follower I will stick to my guns on this and continue to place the proper stop loss while maintaining the proper risk management strategy of 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

Cotton Futures

Cotton futures in the December contract are trading below its 20 and 100 day moving average hitting a 4 week low in today’s trade, however the chart structure is still poor at this time and if you been reading any of my previous blogs I have not traded cotton in 2015 as prices have gone nowhere so I’m still avoiding this market at the current time. Cotton prices are at major support and there could be a possible recommendation coming up in the next couple of days especially if the chart structure or monetary risk is reduced as concerns about China slowing down is putting pressure on cotton prices currently. The problem with China is that they are the largest importer of cotton in the world and hold around 50% of the world reserves so the reality is they won’t be importing much cotton therefore reducing demand as it looks to be another outstanding crop in the southern part of the United States as harvest will begin in about two months increasing worldwide supplies so keep an eye on this market as we could be in a short position later next week. Traders are awaiting the August USDA crop report which should send volatility back into this market as there’s very little volatility at the current time.
TREND: LOWER
CHART STRUCTURE: POOR

Soybean Futures

Soybean futures in the November contract settled last Friday in Chicago at 9.65 a bushel while currently trading at 9.40 hitting a 4 week low as outstanding weather in the Midwestern part of the United States is pushing prices lower & as I write this article in the state of Illinois the crops look absolutely outstanding as lower prices are ahead. I have been recommending a short position from around the $10 level if you took that trade continue to place your stop loss above the 10 day high which now stands at 10.09 as the chart structure will start to improve on a daily basis as I think that prices will retest the contract low around $9.00 is in the cards in the next couple weeks. Soybean futures are trading below their 20 and 100 day moving average telling you that the trend is to the downside as the month of July was one of the greatest growing condition months I can ever remember which was the complete opposite from the month of June which was extremely cold and wet but the soybean crops have certainly come alive as an excellent crop will come to fruition this October. Traders are awaiting the August USDA crop report which will finally show how many acres were actually planted coupled with an estimate of the final production number which is between 3.55 – 3.85 billion bushels and in my opinion I think you’ll be towards the higher end of the range as we head into the critical next three weeks to soybean production so continue to take advantage of any price rally while maintaining the proper stop loss as the commodity markets especially the grain markets still look very weak.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Trading Theory

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.