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 settled last Friday in New York at 33.62 a barrel while currently trading at 31.62 down about $2 for the trading week stuck in a sideways trend at the present time. Crude oil prices are trading above their 20 day but still far below their 100 day moving average telling you that the trend is mixed as prices in my opinion are bottoming out, but at this point the market trend is sideways as a true breakout to the upside is above 34.82 as the chart structure is starting to improve so keep a close eye on this market, but avoid and look at other sectors that are beginning to trend. The U.S dollar has entered a bearish trend in my opinion and that has been supportive crude oil in recent days while also pushing up the precious metals which hit a 3 month high which is always a good sign as the commodity markets move hand-in-hand over the course of time which could be supportive crude oil here in the short time. As a trader I try to wait for special situations as the risk/reward must be in your favor with as low of monetary risk as possible but at the current time this market does not meet the criteria so you’re going to have to be patient as there will be an opportunity one day I just don’t know when.
TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING

U.S. Dollar Futures

The U.S dollar settled last Friday at 99.65 while currently trading at 97.14 down around 250 points for the trading week hitting a 3 month low. The U.S dollar is now trading below its 20 and 100 day moving average telling you that the short-term trend is to the downside as I’m now bearish this market which I have been bullish for months and months and months, however at this point the chart structure is terrible with high monetary risk to enter into a short position, so keep a close eye as a new short position could be entered on any given day. The problem with the U.S dollar is that the interest rates in the United States are going lower as the 10 year note is hitting another contract high now yielding 1.85% as once Japan went negative interest rates that changed the game as traders are no longer afraid of the Federal Reserve raising interest rates which certainly doesn’t look to be in cards in the March meeting. At the current time I am sitting on the sidelines waiting to enter into a short position, but the 10 day high is 275 points away or $2,750 as per contract plus slippage and commission which does not meet my criteria, but that can change on any given day.
TREND: LOWER
CHART STRUCTURE: POOR

Gold Futures

Gold futures in the April contract settled last Friday in New York at 1,116 an ounce while currently trading at 1,152 up around $45 for the trading week hitting a 3 month high continuing its bullish momentum. At the current time I’m not involved in the gold market as I’m recommending a bullish position in silver as the chart structure in gold is poor at the present time as the 10 day low is too far away to meet my risk management criteria, however I am certainly not recommending any type of bearish position in the gold market at this time as that’s countertrend trading. Gold prices continue to move higher rallying around $100 from their contract low which was hit recently due to the fact of a very weak stock market and U.S dollar which is right near an 8 week low as it certainly looks to me that the trend in the dollar is headed even lower which is supportive to precious metal prices. The next major level of resistance is around 1,180/1,190 as we are in overbought conditions, but if you are looking to enter into this market wait for some type of price retracement therefore lowering monetary risk, but money flows continue to come out of certain sectors and back into the precious metals which I have not been able to say for several years.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Silver Futures

Silver futures in the March contract settled last Friday in New York at 14.24 an ounce while currently trading at 14.74 up about $.50 for the trading week hitting a 3 month high. Silver prices broke out above 14.50 which was an 8 week consolidation over the last week as I’m now recommending a bullish position buying a mini futures contract at today’s price level while placing your stop loss below the 10 day low which stands at 14.07 risking $700 per mini contract plus slippage and commission. The chart structure will start to improve in next week’s trade therefore lowering monetary risk as silver prices are now trading above their 20 and 100 day moving average with a possible rounding bottom occurring on the daily chart. If you have been following my previous blogs you understand I was selling sugar due to the fact that it had a rounding top and now prices are falling out of bed while the opposite has now happened in the silver market as a rounding bottom has taken place as it certainly looks to me that higher prices are ahead. The U.S dollar is near an eight week low despite the fact that it’s up about 50 points this Friday afternoon, but the trend is lower in the dollar as interest rates around the world seem to be headed even lower so take a shot at the upside as I’m looking to add more contracts if prices break $15 and meets my risk management criteria.
TREND: LOWER
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

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 80.65 while currently trading at 80.30 down slightly for the trading week as I’ve been sitting on the sidelines licking my wounds getting stopped out several weeks back around the 79 level as this market continues to move northward defying gravity in my opinion. Hog prices are trading above their 20 and 100 day moving average telling you that the short-term trend is to the upside looking to possibly retest the October 13th contract high around 81.65 and if that level is broken who knows how high prices could go, but I’m still a skeptic in this market as there is a lot of supply coming onto market here real soon. At the current time there is no recommendation to the downside so avoid this market while looking at other markets that are beginning to trend, but please keep a close eye on the situation as these prices are extremely expensive compared to the rest of the commodity markets as it’s just a matter of time in my opinion, but we need the chart structure to improve which will take another 5/7 trading days to occur.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

Live Cattle Futures

Live cattle futures in the April contract finished on a sour note this Friday afternoon in Chicago currently trading at 134.30 down 135 points unchanged for the week as high volatility continues to be the name of the game in the cattle market in recent months. At the current time I am sitting on the sidelines waiting for better chart structure to develop therefore lowering monetary risk in my opinion as this market has been very wild and probably will not settle down for some time to come, but it certainly looks to me that 138.50 is major resistance and very difficult to penetrate. If you are producer I would definitely start hedging 10%/15% of risk just in case prices go back down as we can test the 124/126 level which is a possibility in my opinion. Cattle prices are trading above their 20 and 100 day moving average which tells you that the short-term trend is to the upside, but the long-term down trend line is still intact as the risk/reward is starting to be in your favor as the chart structure is improving on a daily basis, but you’re going to have to be patient on the speculative side as there is no trend prevalent so avoid this market and look at other markets that are beginning to trend.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

Cotton Futures

Cotton futures in the March contract are trading lower for the 3rd consecutive trading session settling last Friday in New York at 61.25 while currently trading at 60.15 down over 100 points for the trading week hitting a fresh 4 month low. I’ve been recommending a short position in cotton for over a month from around the 62.50 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 62.75 as the chart structure will not improve for another 8 days so you have to be patient with the monetary risk at this point. Cotton prices are trading far below their 20 and 100 day moving average breaking major support at the 60.50 level with the next major level of support around 69.50 and if that is broken I think we can test last January’s low around 57.00 as the bear market is just beginning in my opinion. Cotton prices remain weak despite the fact that the U.S dollar hit an 8 week low which is generally supportive commodity prices, but there is very little fresh fundamental news to dictate short-term prices higher in this market so remain short while placing the proper stop loss as who knows how low prices can actually go as in 2008 prices traded below 40 when the commodity market was extremely bearish just like the present situation.
TREND: LOWER
CHART STRUCTURE: POOR

Coffee Futures

Coffee futures in the March contract settled last Friday at 116.35 a pound while currently trading at 121.10 up nearly 500 points for the trading week hitting a 4 week high as the chart structure is starting to improve on a daily basis. If you have read any of my previous blogs you understand that I’m sitting on the sidelines in this market, but I do think prices are bottoming out as the next major level of resistance is around 126-128 and once that is broken I will be looking at taking a bullish stance. Coffee futures are now trading above their 20 but just barely below their 100 day moving average telling you that the short-term trend is mixed, however volatility in this market is very low at the present time as I don’t think that will continue for much longer as coffee prices have been stuck between 110/125 for quite some time as a breakout is looming in my opinion so be patient. At the current time I’m short several soft commodities including cotton, sugar, and cocoa, but coffee is in a different situation and is a huge contract with price swings that can be extremely large up and down as your controlling 37,500 pounds of coffee on 1 contract as a special situation could be developing for larger trading accounts.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

Sugar Futures

Sugar futures in the March contract settled last Friday in New York at 13.14 a pound while currently trading at 13.15 basically unchanged for the trading week as I’ve been recommending a short position from around 14.45 and if you took that trade continue to place your stop loss at the 10 day high which stands at 14.38 and will be lowered tremendously later next week down to 13.58 therefore lowering monetary risk. As I’ve talked about in previous blogs I believe that a rounded top was formed on a daily chart just like I have spoken about in the silver market today as there is a possibility of a rounding bottom occurring as these are very important chart structures to recognize as I still think sugar prices are headed lower. Sugar is trading below its 20 and 100 day moving average telling you that the short-term trend is to the downside as the next major level of resistance is around 12.50 and if that is broken I think prices can test the contract low around 11.50 as I see no reason to own sugar at the present time. Sugar prices remain weak despite the fact that the U.S dollar has entered into a bearish trend hitting an 8 week low, but has not been supportive sugar prices as oversupply problems are starting to come back onto the market so remain short as I look to be adding more contracts possibly next week to the downside.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Rounding Top & Bottom Formations

Rounding bottom chart patterns in the commodity markets are considered as a bullish signal which indicates a possible reversal of the current downtrend to a new uptrend and generally takes at least 1 month or longer to form so patient is a virtue when you are looking for rounding bottoms, however these indicators can be profitable because in my opinion they are 1 of the best trading indicators out there. These rounding bottom chart patterns in the commodity markets are a long-term reversal patterns that signals a shift from a downtrend to an uptrend. This pattern can also be used as a rounding top signaling that prices have peaked and look vulnerable to the downside. They are elongated and U-shaped, and are sometimes referred to as rounding turns, bowls or saucers. The pattern is confirmed when the price breaks out above its moving average which also is considered a bullish trading indicator especially if the chart pattern breaks the 20 & 100 moving averages.