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 March contract are trading higher for the 4th consecutive trading session up another $.50 at 33.72 a barrel after settling in New York last Friday at 32.19 hitting a 3 week high. I’ve been sitting on the sidelines in this market for quite some time as a short-term bottom around $28 looks to have occurred in my opinion with the next major level of resistance abound $38 as OPEC is hinting at a possible production cut sending prices up about $5 in the last two weeks. Crude oil prices are trading above their 20 day but still below their 100 day moving average telling you that the short-term trend is mixed so look at other markets that are beginning to trend with better potential at the present time. The U.S dollar continues to hover around 99 giving very little guidance in the short-term as this market is based on OPEC and overproduction at the current time as a relief rally is underway in my opinion. The problem with crude oil is not a lack of demand as the demand is still extremely high for oil and gas, but the problem is over supply with Iran coming onto the market and that is why prices have dropped precipitously over the last three months, but everything comes to an end so keep an eye on this market as we might be entering another position soon.
TREND: HIGHER
CHART STRUCTURE: POOR

U.S. Dollar Futures

The U.S dollar in the March contract is up 125 points on the last day of January 2016 in a volatile trading session currently at 99.71 as I’m presently sitting on the sidelines in this market as I offset my bullish position taking a small loss now waiting for another breakout to occur which could happen in the next week or two. The U.S dollar is trading above its 20 and 100 day moving average telling you that the short-term trend is to the upside and with the United States possibly raising interest rates several more times in 2016 coupled with the fact that Europe and Japan are most likely to keep interest rates as low as possible as I think the bullish momentum continues in the dollar. The chart structure will start to improve in the next week’s trade, but wait for the breakout to occur before entering as high volatility has entered the commodity markets today due to the fact that Japan has now entered the crazy aspect of negative interest rates sending shock waves throughout the currency sector.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Gold Futures

Gold futures in the April contract settled in New York last Friday at 1,096 an ounce while currently trading at 1,115 up about $20 for the trading week continuing its bullish momentum hitting a 3 month high. Gold prices are trading above their 20 and 100 day moving average telling you the short-term trend is to the upside which has not happened in quite some time as this market looks to have created a double bottom around the 1,050 level, however at the current time I’m sitting on the sidelines waiting for better chart structure to develop. The next major level of resistance is Wednesdays high around 1,130 as I’m still not bullish the precious metal sector as I still see no reason why to own gold, but I’m a trend follower and at the present time I’m certainly not recommending any type of short position as that would be countertrend which I think is a poor way to trade over the course of time. The U.S dollar is up 90 points this Friday afternoon putting pressure on some commodity sectors including gold as I see that trend continuing as Japan has now issued a negative interest rate sending the Yen sharply lower in today’s trade, but if you think that prices have bottomed wait for the risk/reward to improve before pulling the trigger on a bullish position.
TREND: HIGHER
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

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.

Lean Hog Futures

Lean hog futures in the June contract settled last Friday in Chicago at 78.95 while currently trading at 80.10 continuing its bullish momentum up over 100 points for the trading week as I was recommending a short position around the 76 level getting stopped out around the 79.50 level taking a loss on this trade as I was dead wrong as prices continue to defy gravity moving higher on a daily basis. One of the fundamental factors pushing hog prices up is the fact that McDonald's same-store sales were outstanding as they have continued their breakfast menu for 24 hours pushing up pork demand here in the short term so at the current time I’m sitting on the sidelines licking my wounds looking for another chance at entering into this market. Hog prices are trading above their 20 and 100 day moving average telling you the short-term trend is to the upside and when I originally recommended this trade it was a countertrend trade which I don't do very often and probably will do less in the future as trading with the trend in my opinion is the way to go over the course of time. The next major level of resistance as the October 13th contract high around 81.62 as I think that could be in the cards in the next couple of days, but keep a close eye this market as I still think I'll prices are extremely expensive compared to the rest of the commodity markets as I will be looking at entering another short position once the market meets my criteria.
TREND: HIGHER
CHART STRUCTURE: POOR

Cocoa Futures

Cocoa futures in the March contract settled last Friday in New York at 2872 while currently trading at 2756 trading down about 100 points for the trading week right near recent lows continuing its bearish trend in the short term as I've been recommending a short position from 3350 and if you took that trade the 10 day high has been lowered to 2905 as that will stay at that level for the next 6 days so you’re going to have to be patient with the risk tolerance at this point. Cocoa prices are trading far below their 20 and 400 points below their 100 day moving average telling you that the trend is getting stronger to the downside as I think prices will retest the contract low around 2550 in the coming days as I remain bearish. At the current time I'm recommending short positions in many of the soft commodities including orange juice, cotton, sugar, and cocoa prices as the trend is your friend in the commodity markets and clearly the trend in the soft commodities are to the downside. Growing conditions in the Ivory Coast have been ideal which is also putting pressure on prices so remain short, however if you have missed this trade look at other markets that are beginning to trend as I don't like to chase markets.
TREND: LOWER - MIXED
CHART STRUCTURE: IMPROVING

Cotton Futures

Cotton futures in the March contract settled last Friday in New York at 62.45 while currently trading at 61.08 down about 140 points for the trading week as I've been recommending a short position from 62.50 over the last several weeks as volatility in cotton is crawling at the present time. If you took the original trade place your stop loss above the 10 day high which stands at 62.75 as the chart structure will not improve for quite some time so you’re going to have to accept the monetary risk at this point. Prices are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside with the next major level of support at the contract low around 59.50 which I think could be tested in the next couple of days as traders are awaiting the next USDA crop report which is still 2 weeks away and should send volatility back into this market. At the current time I'm short many of the soft commodities including cotton, orange juice, sugar, and cocoa prices as the entire complex is bearish and remains bearish in my opinion so stay short while placing the proper stop loss risking 2% of your account balance on any given trade as who knows how low prices can actually go. The U.S dollar is up 125 points this afternoon having little impact today, however if the dollar continues its bullish momentum I think there is another leg down in the commodity sector as a whole.
TREND: LOWER
CHART STRUCTURE: SOLID

Coffee Futures

Corn futures in the March contract are up 5 cents this Friday afternoon in Chicago at 3.70 a bushel unchanged for the trading week stuck in a sideways pattern as traders are awaiting the next USDA crop report which comes out in 2 weeks as there is very little fresh fundamental news in the short-term. Corn futures are trading above their 20 but still below their 100 day moving average telling you that the trend is mixed with the next major level of resistance around 3.73 and if that is broken then look at the possibility of testing 3.80, however this market is very limited to the upside especially in the month of February as South America is also producing another record crop as I still remain bearish despite the fact that I’m not recommending any type of position to certain clients. At the current time I have very few short positions in corn as I think this rally over the last three weeks is overdone as the risk/reward is in your favor, however I'm still advising many clients to sit on the sidelines as the potential on this trade is very limited as prices in the grain market have been inept in recent weeks. Traders are expected a decline in 2016 acres to around 84 million which is less than what was produced in 2015 and should not produce another record crop as oversupply issues continue to hang onto this market therefore less acreage will help in the long run, but this market needs some type of drought to get any energy going to the upside in my opinion as that cannot happen until the summer months arrive.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

Soybean Futures

Soybean futures in the March contract settled last Friday in Chicago at 8.76 a bushel while currently trading at 8.73 down slightly for the trading week continuing its nonvolatile & choppy trend over the last 6 months. I have not talked about the soybean market for quite some time as there has been very little trend as I’m currently sitting on the sidelines waiting for a breakout to occur as there is little fresh fundamental news to dictate short-term price action at the present time. Soybean prices are trading right at their 20 but still below their 100 day moving average as the longer-term trend line is still intact to the downside as the chart structure is also solid at the current time as I do think we will be entering into a trade in the next week or two. Soybean prices hit major support around the 8.50 level which was hit on many different occasions only to rally as traders are keeping a close eye on South American weather which is outstanding at the present time and should produce another record crop, therefore pushing carryover levels near historic highs as well as there is very little bullish fundamental news to dictate prices to the upside. Traders are awaiting the next USDA crop report which comes out in 2 weeks as spring planting is right around the corner believe or not as we only have 1 more month of winter here in the Midwestern part of the United States as certainly volatility will start to increase come springtime so be patient and wait for a trend to develop.
TREND: MIXED
CHART STRUCTURE: SOLID

Sugar Futures

Sugar futures in the March contract continued their bearish momentum this week currently trading at 13.16 a pound as I’ve been recommending a short position from around 14.45 and if you took that trade continue to place your stop loss above the 10 day high which stands at 14.98 as the chart structure is very poor at the current time due to the fact that prices have fallen out of bed. Sugar prices are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as a rounding top has occurred in my opinion on the daily chart which was one of the reasons I was recommending a short position coupled with the fact that the risk/reward was in your favor at that time. Many of the soft commodities continue to move lower as I remain bearish many commodities as the U.S dollar is up 130 points putting pressure on several different sectors, but if you have missed this trade move on and look at other markets as the risk/reward is not in your favor at the current time as you have missed the boat. The chart structure in sugar will not improve for another week as your going have to accept the monetary risk at this time as the next major level of resistance is at 12.50 & if that is broken I think the gap on a daily chart will be filled just under 12 as there is more to go on the downside in my opinion so stay short while placing the proper stop loss.
TREND: LOWER
CHART STRUCTURE: POOR

Trading Theory

If you follow this rule you will have a chance of being successful over the course of time, if you don’t follow this rule you will be sure to lose your money quickly. This rule is simple Do Not OVERTRADE EVER for this is an easy way to lose all your capital quickly. My definition of over trading is risking too much money on any given trade, for example if you are trading a $100,000 dollar account and you place a gold trade today you should limit your loses to 2% of the account value which in this case is $2,000 which allows you to be wrong on many trades and still be around to play another day. In futures and option trading you will have losing trades that is for certain so make sure you manage those losses and move on to another trade.