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 are sharply higher this Friday in New York trading up $20 at 1,137 an ounce after settling last Friday at 1,103 reacting to the Federal Reserve yesterday not raising interest rates sending gold sharply higher with high volatility. Gold is trading above its 20 day but still below its 100 day moving average telling you that the trend is mixed as I’ve been sitting on the sidelines for quite some time as this trend is extremely choppy as I’m advising investors to avoid this market at the current time and wait for better chart structure before entering. I was recommending a silver trade getting stopped out a couple of days back as the precious metals as a whole have rallied as it looks like the Federal Reserve is very hesitant to raise interest rates which is bullish commodity markets at least here in the short-term, but the true breakout in gold is above 1,170 but look at other markets that are beginning to trend with less risk. The U.S dollar has been down 150 points in the last three days which has been very supportive to the precious metals as money is coming out of the S&P 500 and into gold but time will tell us if this trend is for real.
TREND: MIXED
CHART STRUCTURE: POOR
Crude Oil Futures
Crude oil futures in the October contract settled last Friday in New York at 44.63 a barrel while currently trading at 46.40 up nearly $2 for the trading week as the short-term trend seems to be gaining traction to the upside. I’m currently sitting on the sidelines in this market as prices are trading above their 20 but below their 100 day moving average telling you that the trend is mixed as a bullish API report on Wednesday sent prices up sharply as it looks to me that prices want to go higher but the risk is too high at the current time to enter into a position. The U.S dollar was sharply lower this week as that supported the precious metals and the energy sector as prices are still consolidating last month’s rally from $38/$49 as volatility is relatively high at the current time. The Federal Reserve announced yesterday that they will not raise interest rates helping push-up many commodities here in the short term, but the problem with oil at the current time is the fact that we have massive worldwide supplies which have sent prices sharply lower in 2015 but that’s already reflected into the price, but wait for better chart structure to develop as it might take a couple more weeks so keep a close eye on this market.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Silver Futures
Silver futures in the December contract settled last Friday in New York at 14.50 an ounce while currently trading at 15.25 up $.75 this week reacting to the Federal Reserve not raising interest rates sending silver prices sharply higher. I was recommending a short position in silver from around 14.70 getting stopped out in Wednesdays trade around 14.95 as prices are now trading above their 20 day but still below their 100 day moving average telling you that the trend is mixed so sit on the sidelines and look at other markets that are beginning to trend. The chart structure in silver at the time of the recommendation was outstanding, however currently the chart structure is poor with high risk as the true breakout does not occur until prices break 15.77 as silver may have bottomed in the short-term. Many of the commodity markets have been choppy in recent weeks as I was stopped out of many of my trade recommendations as my only two positions at current time are short coffee and cattle as I will wait and be patient as sometimes not trading is the best thing to do.
TREND: MIXED
CHART STRUCTURE: POOR
Live Cattle Futures
Live cattle futures in the December contract are trading far below their 20 and 100 day moving average telling you that the trend is getting stronger to the downside on a weekly basis as I have been recommending a short position from 146 and if you took that trade continue to place your stop loss above the 10 day high which currently stands at 146.75 as the chart structure is poor at the current time. Cattle prices settled last Friday in Chicago at 142.37 while currently trading at 139.50 down about 300 points for the trading week, however you’re going to have to be patient with this trade as the chart structure will not improve until later next week as the risk remains high, but if you have not taken this trade you must look at other markets as you have missed the boat in my opinion. Cattle prices hit a fresh one year low as I think prices could retest the May 2014 lows of around 135 despite the fact that hog prices hit a 4 month high in yesterday’s trade. As I’ve talked about in many previous blogs I still believe that prices are way too high compared to the rest of the commodity markets as I have been stating this for several months as prices are still very expensive in my opinion and could go sharply lower in the next several months so take advantage of any price rally while maintaining the proper risk management strategy of 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: POOR
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
Dollar Index Futures
The dollar index futures in the December contract are trading below their 20 & 100 day average telling you that the trend is to the downside reacting negatively to the Federal Reserve’s decision not to raise interest rates sending the dollar down over 100 points for the trading week. I’m currently sitting on the sidelines waiting for a breakout above 96.63 to occur before entering a bullish position but it looks to me that prices look to retest last month’s low of around 93 but the chart structure is poor at the current time so avoid this market as the risk is too high in my opinion. I have not traded the currencies in quite some time but when I do see excellent chart structure coupled with a solid risk/reward situation I will trade the currency market but at this point the chart structure does not meet my criteria so find another market that is trending.
TREND: LOWER
CHART STRUCTURE: POOR
Cocoa Futures
Cocoa futures in the December contract settled in New York last Friday at 3254 while currently trading at 3317 up around 60 points for the trading week continuing its bullish momentum as it looks to retest the contract high which was hit in July around 3375 as I’m currently sitting on the sidelines as I have missed this trade. Cocoa futures broke out around 3165 but I was like a deer in headlights as I’m kicking myself for not taking a bullish position; however I am certainly not recommending any type of short position as that will be counter trend as I’m a trend follower as prices look to move higher in my opinion. Cocoa futures are trading above their 20 and 100 day moving average as concerns about El Niño hurting production in the Ivory Coast and Ghana which has seen dryness are pushing up prices here in the short-term trend as the trend is your friend and this trend is getting stronger on a weekly basis as I’m waiting for some type of setback in price to be able enter therefore lowering monetary risk. If you are currently long this market place your stop loss below the 10 day low which currently stands at 3200 as the chart structure will improve in next week’s trade.
TREND: HIGHER
CHART STRUCTURE: SOLID
Coffee Futures
Coffee futures in the December contract are trading below their 20 and 100 day moving average telling you that the trend is bearish in the short term after settling in New York last Friday at 116.55 while currently trading at 118.25 in a very nonvolatile trading week. I am currently recommending a short position and if you took that recommendation continue to place your stop loss above the 10 day high which currently stands at 122.50 as the chart structure is outstanding at the current time while the risk/reward is in your favor in my opinion. Coffee prices continue their bearish trend as traders are concerned that Brazil will continue to sell reserves due to the fact that of the Brazilian Real weakness versus the U.S dollar, but only time will tell to see if this comes to fruition. I’m a trend follower and the trend is to the downside as I think volatility will start to increase as coffee historically speaking is one of most volatile commodities in the world but at this point remains very dormant. As I talked about in yesterday’s blog anytime you can risk three or four points in coffee you must take that trade as I think that’s a special situation that does not happen very often over the course of the year due to the fact that volatility is usually much higher than it is presently.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING
Corn Futures
Corn futures in the December contract settled last Friday in Chicago at 3.87 a bushel while currently trading at 3.79 down 8 cents for the trading week as I was recommending a short position getting stopped out off of the USDA crop report around 3.85 as I’m now sitting on the sidelines waiting for another trend to develop. Corn prices are trading above their 20 but still below their 100 day moving average just like many of the commodity markets at the current time as this remains choppy so sit on the sidelines and wait for better chart structure to develop as prices seem to have bottomed out around the 3.60 level in my opinion. At the current time I have no recommendations in the grain market as they all remain choppy as we await next month’s USDA crop report with estimates reducing production by another 100 million bushels as the East Coast of the United States especially Ohio is turning up very poor yields due to an excessively wet spring. At the current time harvest is around 7%/10% complete as we will start to see some production numbers in next week’s trade but I don’t like choppy markets as I think corn will trade in a consolidation over the next several months just like it did last year as there’s very little fundamental news to push prices sharply higher or sharply lower.
TREND: MIXED
CHART STRUCTURE: POOR
Trading Theory
Where Should You Place Your Stops?
Identifying where stops exist in the market is an important lesson to learn because placing a correct stop loss that will improve your trading tremendously over the course of time. Nobody knows for sure where stops are located, however I have learned a couple of things over my 20 year career and I have a general idea where stops are placed and why. Buy stops are generally placed above the 10 day high as well as above contract highs as the bulls generally are buying more and the short selling are getting stopped out. Sell stops are usually placed at the 10 day low as well as below contract lows which means the shorts are adding to their position and the longs are getting stopped out as they figure they are wrong. The other common places to have stops are at certain moving averages such as the 20 or 100 day moving average where traders think either the trend is turning bullish or the market is starting to break down. Placing stops to close or not at important price levels can get very frustrating because the market can stop you out and then go the direction that you thought leaving you behind and out of the market. Placing stops is one of the most important aspects of trading in my opinion.
Sugar Futures
Sugar futures in the March contract are trading right at their 20 day but still below their 100 day moving average telling you that the trend is mixed as prices were lower by around 45 points for the trading week as I’m currently sitting on the sidelines in this market, but the chart structure is starting to improve on a daily basis as a possible trade could be in the cards next week. Sugar prices are near major resistance at 12.50 and if that is broken as I would be recommending a bullish position while placing your stop loss below the 10 day low which would be 12.00 risking about 50 points or $550 per contract plus slippage and commission. I had been recommending a short position last month as prices bottomed out around 11.50 a pound as many of the commodity markets have rallied off of recent lows due to the fact that the Federal Reserve refuses to raise interest rates which is a bullish short-term factor for many commodities, but worldwide supplies are still very ample so wait for a trend to truly develop before entering. Sugar prices bottomed at the same time that crude oil prices did as they are both used as biodiesels but trading is all about risk as the risk/reward could be in your favor if prices breakout to the upside.
TREND: MIXED - MIXED
CHART STRUCTURE: IMPROVING
Natural Gas Futures
Natural gas futures in the October contract are trading below their 20 and 100 telling you that the trend is to the downside as I’m now recommending a short position at 2.63 while placing your stop loss above the 10 day high which currently stands at 2.80 risking $1,700 per contract plus slippage and commission. The chart structure will not improve for another 6 days so you’re going to have to accept the risk as prices are down about 6 points for the trading week as the energy sector is lower this Friday afternoon. Natural gas prices bottomed out around the 263 level on over a dozen occasions only to rally every single time but this time we broke major support and that’s why I am taking a short position as I think the risk/reward is in your favor but I would like to see a little better chart structure as we had a false rally earlier in the week to the upside and that’s why the stop loss is relatively high. If the risk is too high for your trading account take advantage of any price rally therefore lowering monetary risk as who knows how low prices go as huge supplies continue to put pressure on this market coupled with mild weather conditions therefore decreasing demand here in the United States so stay short in my opinion as this is a major breakdown in price technically speaking.
TREND: LOWER
CHART STRUCTURE: SOLID
Cotton Futures
Cotton futures in the December contract settled in New York last Friday at 63.13 while currently trading at 61.40 going out on a sour note down over 100 points retesting last month’s low before the USDA report sent prices sharply higher as I’m recommending a short position from 62 while placing your stop loss above the 10 day high which stands at 64.20 as the chart structure is outstanding at the current time. Cotton futures are trading below their 20 and 100 day moving average as the Federal Reserve stated in yesterday’s minutes a global slowdown seems to be occurring therefore pushing commodity prices even lower this Friday afternoon as I do think prices could test 55 where prices traded in 2008 when we had another global economic slowdown so play this to the downside, but if the risk is too high wait for some type of rally therefore lowering monetary risk. Harvest is underway here in the United States as we will not produce a record crop but will still be very solid as worldwide supplies of cotton are large coupled with the fact that China holds 50% of the world reserves and in my opinion will sell on any type price rally coupled with the fact that they will not import any cotton therefore keeping demand weak so continue to play this to the downside as we will try this once again.
TREND: LOWER
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
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
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Twitter–@seeryfutures
Phone #: (800) 615-7649
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Jack--
Mr. Seery has defined chart structure at least twice during the last 10 months you have been reading him.
Also, he has made many good calls and is humble enough to admit mistakes.
He is after the big moves and does not bother with the stochastics.
Hewison and Seery are pros and thus do not deserve disrespectful remarks on this website.
Bruce:
Thank you for posting a comment. I do not recall the two instances of Mr. Seery articulating what he means by 'good chart structure'. Most of the time, his comments about chart structure are vague: "good", excellent", "terrible". When i first discovered MarketClub's World Cup Portfolio last fall, that is when i began reading Seery's Weekly Recap. I used to look forward to reading it every Saturday morning. I no longer it every Saturday morning, nor do I bother reading every week, and when i do, it's mostly for comedic ends. His missing the grain play at the beginning of July this year-- and his commentary explaining why he was missing the super-profitable grain play. . . both on the way up, and then on the way back down. . . was the proverbial final nail in the coffin for my enthusiasm and interest in anything he had to say about Wheat. I get that he is playing a bigger picture and that reacting to the shorter term cycles like the slow stochastic for 30 minute, or 3 hour, or 8 hour charts can be demanding. . . but i have never read him once comment on a chart that was about to hit one of the Bollinger Bands and it possibly changing directions-- when other Technical Indicators are also indicating the same highly probably forthcoming change in direction. I find Seery's Stop-Loss locations to be sloppy and prone to giving back too much Profit, too often. You wanna be an "investor"? That's fine. I have investments, too. But in the context of buying and selling futures, i am a "trader" and want to read and respect Trader-Grade commentary.
Have a Profitable Day
". . . wait for better chart structure. . . "
In the 8 - 10 months that i have been reading your Weekly before-the-week-is-actually-over Recaps, and i do not remember you ever once stating or articulating what exactly it is you mean by good chart structure; only "chart structure is terrible", or "chart structure is excellent". You will refer to some of the MAs, but those are indicators, not chart-structure characteristics. And yet, when other technical indicators are behaving classically and Textbook Perfectly - being a perfect time to sell or buy - you usually miss the move / easy money and don't even mention the indicator in your 'recap'; indicators such as the Slow Stochastic, the MACD, ADX, or my favorite never-mentioned indicator: Bollinger Bands. So, great seer, what is the criteria for good chart structure?
Increasingly amused,
Jack
opecific where you articulate what eso, what exactly is