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.

Crude Oil Futures

Crude oil futures in the January contract finished lower for the 6th consecutive trading session settling in New York last Friday at 39.97 while currently trading at 35.69 a barrel down over $4 dollars for the trading week hitting a 7 year low as I had a short position in heating oil and not in crude oil which was disappointing because crude oil continues to move lower as well. Heating oil has been the leader in this complex due to extreme warm weather in the northeastern part of the United States as that product was down another 700 points once again as there is very little demand causing crude oil prices to continue to move lower as I'm certainly not recommending any type of bullish position. Crude oil prices are trading far below their 20 and 100 day moving average telling you that the short-term trend is to the downside as I think prices could trade as low as $30 in the coming weeks, but the easy money has already been made to the downside as gasoline prices were higher once again as spreading between heating oil and gasoline continues almost on a daily basis. The reason for the rise in gasoline prices is the fact of strong demand because people are driving and taking advantage of the warm weather, but eventually the cold weather is coming and then I think that gas prices will react negatively and catch up to the rest of the complex. The fact that OPEC did not cut production and actually increased output has really put the squeeze on prices here in the short term so look for further weakness as supplies are at an all time high.
TREND: LOWER
CHART STRUCTURE: POOR

Copper Futures

Copper futures in the March contract settled last Friday in New York at 2.08 while currently trading 2.1140 as I've been recommending a short position over the last several months originally in the December contract while now in the March contract getting stopped out around 2.13 as prices hit a three week high as I'm very frustrated as I would've thought prices would have continued to head lower especially with the carnage that is occurring in the S&P 500 today. Prices are now trading above their 20 day but still below their 100 day moving average telling you that the short-term trend is mixed as now I’m sitting on the sidelines in this market waiting for better chart structure to develop as prices bottomed out right around the 2.00 level so look at other markets that are beginning to trend as I am frustrated in today's trading action. The precious metals in general continue to move lower especially silver prices, but everything comes to an end as the funds were buyers today coupled with the fact that the commercials have huge long positions pushing prices sharply higher in today's trade. I am certainly not bullish copper prices but as a trader you must have an exit strategy as mine is getting out at the 10 day high if I’m short.
TREND: MIXED
CHART STRUCTURE: SOLID

Silver Futures

Silver futures in the March contract settled last Friday in New York at 14.52 an ounce while currently trading at 13.92 down about 60 cents for the trading week right at a five-year low as prices are now trading below its 20 and 100 day moving average telling you that the short-term trend is to the downside. I'm looking at a possible short position in Monday's trade as the 10 day high is around $.60 away or $600 per mini contract or $3,000 per large contract plus slippage and commission so if prices rally on Monday therefore lowering monetary risk I will be recommending a short position in this market as who knows how low silver could actually go. Silver in my opinion is extremely weak despite the fact that the U.S dollar sold off around 300 points in the last week, but silver was unable to rebound and that just tells you that there is very little demand for this precious metal, but trading is all about risk as monetary risk could be lowered come Monday so keep an eye on this market as a possible short position is looming in my opinion. The S&P 500 was sharply lower causing gold prices to rally about $17 off of their lows as that is all based on a flight to quality, but silver does not have the same bias as this is an industrial metal.
TREND: LOWER
CHART STRUCTURE: SOLID

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

What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow 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 allowing you to place a stop loss 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 as I 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 loss.

Cattle Futures

Cattle futures in the February contract settled last Friday in Chicago at 129.22 while currently trading at 126.90 continuing its bearish momentum as I've been recommending a short position from around 133.20 and if you took the original trade continue to place your stop loss above the 10 day high which stands at 135, however the chart structure will start to improve later next week therefore lowering monetary risk. There is a possibility in my opinion that a short-term bottom was created in yesterday's trade as a major reversal possibly happened, however I still remain bearish due to the fact that prices are historically high especially compared to the rest of the commodity markets which are much lower than cattle at the current time so remain short in my opinion. Prices are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as lean hog prices have rallied substantially over the last four days as I think that is also supporting cattle prices but I think hog prices are way overdone to the upside as I'm starting to look at shorting this market as well. The U.S dollar is down about 300 points in the last week which has supported some of the commodity markets, however crude oil prices hit a 7 year low and that is definitely putting pressure on the entire sector as a whole as volatility in cattle is extremely high so make sure you risk 2% of your account balance on any given trade as a risk management strategy.
TREND: LOWER
CHART STRUCTURE: POOR

Cotton Futures

Cotton futures in the March contract settled last Friday at 64.71 while currently trading at 63.70 down about 100 points for the trading week but still trading above its 20 and 100 day moving average telling you that the short term trend is higher hitting a 3 1/2 month high in Wednesday’s trade as I'm currently sitting on the sidelines in this market. The USDA released its crop report earlier in the week cutting U.S and world production especially in the country of Pakistan as that’s pushed up prices in recent weeks with the next resistance at 65 coupled with the fact that the U.S dollar has sold off around 300 points over the last week which surprises me as I have been bullish the dollar as traders are focused on Wednesdays Federal Reserve announcement on interest rates. The chart structure presently is solid but I'm not convinced of higher prices at the current time so I want to look at other markets that are beginning to trend as I think cotton will remain in a trading range until spring planting with limited upside and limited downside potential.
TREND: HIGHER
CHART STRUCTURE: SOLID

Cocoa Futures

Cocoa futures in the March contract settled last Friday in New York at 3390 while currently trading at 3354 down slightly for the trading week as I’m recommending a short position from around 3350 while placing your stop loss above the 10 day high which stands at 3430 risking 80 points or $800 per contract plus slippage and commission. Cocoa is a unique commodity as it’s only grown within 20 miles of the equator and generally in very unstable countries which can be very difficult to harvest on occasion, however the risk/reward is your favor at the current time so take a shot to the downside as I think a possible double top has been created. Many of the soft commodities are mixed today, however they have remained choppy in recent weeks as cocoa hit new contract highs several days ago before hitting a four week low in Monday's trade, but trading is all about risk in my opinion as I think there's a probability a top has been created. The U.S dollar has been incredibly choppy over the last week or so as traders are awaiting the Federal Reserve’s decision on whether to raise interest rates next Wednesday which will certainly send short-term price action back into this market with the next major level of support around 3300 and if that is broken I think the bear market could be underway.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Rough Rice Futures

Rough rice futures in the January contract settled last Friday in Chicago at 11.18 while currently trading at 11.05 down slightly for the trading week continuing its bearish momentum as I've been recommending a short position from 12.40 and if you took that trade continue to place your stop loss above the 10 day high which currently stands at 11.95 as the chart structure will start to improve on a daily basis starting next week therefore lowering monetary risk. Rice prices are trading far below their 20 and 100 day moving average telling you that the short-term trend is to the downside as prices are hitting a 5 month low and traded as low as 10.76 in Tuesdays trade before rallying due to profit-taking. The grain market has been relatively choppy over the last month or so except for rice prices which are still overpriced in my opinion with the next major level of support around 10.75 that if that is broken I think we could possibly break $10 a bushel to the downside, however if you have missed this trade move on and look at other markets that are beginning to trend as you have missed the boat as the risk/reward is not in your favor at the current time.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Wheat Futures

Wheat futures in the March contract are trading above their 20 day but still below their 100 day moving average telling you that the trend in the short term is mixed as I was recommending a short position from around the 4.84 level getting stopped out in yesterday's trade around 4.98 taking a loss as I have had no luck trading wheat in 2015. Wheat prices in Chicago settled last Friday at 4.84 while currently trading at 4.92 up slightly on the week after double bottoming at the contract low around 4.65 as prices have rallied on concerns of exceptionally warm weather throughout the Great Plains and Midwestern part of the United States causing concerns about crop quality. The grain market has been extremely choppy over recent months as the only recommendation I still have is shorting the rice so I'll sit on the sidelines in this market and wait for another trend to develop as prices remain extremely choppy. Hard red winter wheat has broken out of a four week consolidation as that has also pushed up the Chicago wheat at the current time as I'm licking my wounds and trying to find another market that's beginning to trend but it certainly looks to me that wheat prices have bottomed out in the short-term.
TREND: MIXED
CHART STRUCTURE: IMPROVING

Orange Juice Futures

Orange juice futures rallied significantly this week after settling last Friday in New York at 140 while currently trading at 150 up around 1000 points all on a significant drop in orange juice production in the state of Florida as the USDA reported earlier in the week due to greening disease which is the real problem keeping prices relatively high especially compared to the rest of the commodity markets. If you have read any of my previous blogs I was looking at a possible short position earlier in the week around the 140 level, however that level was not breeched so I'm also sitting on the sidelines with overhead resistance around the 160 level as I can't remember the state of Florida producing such a poor crop, but I am avoiding this market at the current time as I just don't know where prices are going. The chart structure in orange juice is poor at the current time as I will still be recommending a short position if prices do break 140, however that seems unlikely as the only recommendation I have in the soft commodities is shorting the cocoa market.
TREND: HIGHER
CHART STRUCTURE: SOLID

Trading Theory

When Do You Add To Your Winning Trade? This has always been a very interesting question because it can create a situation of going from rags to riches or from riches to rags in a very short amount of time. Many times I see traders abuse pyramiding or adding to positions with utter lack of any type of money management system in place and letting it ride which usually ends up in a complete wipeout of capital and sometimes even worse. Commodity prices can move very quickly with large gains or loses like we experienced in the 2008 crash of stock and commodity prices, so you always have to use stops and not fall in love or marry a position. In my opinion the answer to this question is add only once to the trade if that position has made you at least 2%-3% of your account balance while still having stop losses on all positions that equal 2% loss at a maximum risk. Remember your stop loses will be different on both positions because of the fact that you entered those trades at a different date and price.