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 April contract settled last Friday at 31.91 a barrel while currently trading at 32.00 basically unchanged for the trading week with a possible double bottom being created around $29 the level occurring. Crude oil prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as the long-term trend is also to the downside despite the fact that several countries decided to freeze production this week, but that still leaves production at record levels as investors found that as another negative situation. The volatility in crude oil is extremely high at the current time as I’m looking to possibly enter into a short position on any type of rally as the chart structure has improved tremendously, therefore, lowering monetary risk, but at this point I’m sitting on the sidelines waiting for an opportunity which could develop any day. The commodity markets in general still look weak as I still have many short positions in several different commodity sectors including natural gas which is hitting another contract low today as supplies are just too high across the board despite the fact that the U.S dollar may have topped out.
TREND: LOWER
CHART STRUCTURE: POOR

Natural Gas Futures

Natural gas prices in the April contract settled last Friday in New York at 2.03 while currently trading at 1.89 trading lower 7 out of the last 8 trading sessions as the original recommendation was a short position in the March contract as we rolled over and if you took that trade continue to place your stop loss above the 10 day high which stands at 2.23 as the chart structure is very poor at the present time. Natural gas prices continue to move lower on a weekly basis as this trade has gone straight down from the original recommendation so continue to place the proper stop loss as the chart structure will start to improve on a daily basis, as I still see lower prices ahead possibly retesting 1.75 and if that is broken I think we can test 1.50 as extremely warm weather in the Midwestern part of the United States continues to plague this commodity. The fundamentals in natural gas are extremely bearish with all time high inventories as we were producing too many products especially in the energy sector including natural gas so continue to play this to the downside as I'm looking at adding more contracts once some type of price kickback develops, as I still see no reason to own natural gas especially as we enter the month of March, as springtime is upon us.
TREND: LOWER
CHART STRUCTURE: POOR

U.S. Dollar Futures

The U.S dollar in the March contract settled last Friday at 95.98 while currently trading at 96.92 up around 100 points for the trading week as I’m currently recommending a short position from around the 96.90 level while placing my stop loss above the 10 day high at 97.50 risking around 60 points or $600 per contract plus slippage and commission. The dollar is trading below its 20 and 100 day moving average telling you that the short-term trend is to the downside as prices are near a 4 month low due to the fact that the interest rates in the United States have been dropping dramatically, as lower rates mean a lower U.S dollar generally. Volatility in the dollar certainly has increased because of the stock market which is on a roller coaster ride daily sending shockwaves into currency markets. The next major level of support is around the 95.00 level and if that is broken I think we can retest the 93 level in the coming weeks as it certainly looks to me that interest rates are even going lower as worldwide rates have turned negative in certain countries which is an amazing situation in my opinion as the risk/reward is in your favor at the present time as I am still recommending this trade even if you did not take the original advice.
TREND: LOWER
CHART STRUCTURE: POOR

Gold Futures

Gold futures in the April contract settled last Friday in New York at 1,239 an ounce while currently trading at 1,231 down about $8 for the trading week trading in a highly volatile manner. Gold prices are trading above their 20 and 100 day moving average telling you that the short-term trend is to the upside as prices have skyrocketed from the contract low around 1,050 and now have rallied over $200 in a matter of weeks as panic around the world is sending gold prices sharply higher. At the current time, I am sitting on the sidelines as the risk is too much for me to tolerate as the only recommendation in the precious metals currently is the silver market as the gold chart structure is terrible. The S&P 500 has been extremely volatile in the year 2016 and that has supported gold prices however the S&P has rallied significantly over the last week, but it has not been a negative influence on gold as there is demand for gold at the current time and I’m certainly not recommending any type of bearish position as that would be countertrend and poor trading in my opinion so avoid this market at the present time. Trading is all about risk as I see other opportunities in the commodity markets where the risk/reward is in your favor coupled with outstanding chart structure as gold does not meet any of my criteria to enter into a trade as sometimes you miss trades and that’s exactly what has occurred in this situation.
TREND: HIGHER
CHART STRUCTURE: POOR

Silver Futures

Silver futures in the March contract settled last Friday in New York at 15.79 an ounce while currently trading at 15.47 down about $.30 in a highly volatile trading week with large swings on a daily basis as I have been recommending a bullish position from around 14.80 and if you took that trade continue to place your stop loss below the 10 day low which now stands at 14.90 a chart structure has improved tremendously over the last several days. The next major level of resistance in silver is around the $16 level as we will have to roll out of the March contract into the May contract early next week due to expiration as I will give the new stop loss in that blog as well. Silver prices are trading above their 20 and 100 day moving average telling you that the short-term trend is to the upside as money flows continue to go back into the precious metals for the first time in several years as the precious metals have fallen tremendously from their highs just hit in the year 2011. In my opinion, the U.S dollar has topped out which is bullish the precious metals so stay long this market while placing the proper stop loss as volatility has certainly come back into this market which is generally a bullish indicator.
TREND: HIGHER
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

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.

Live Cattle Futures

Live cattle futures in the April contract continue to experience high volatility settling last Friday in Chicago at 129.12 while currently trading at 134.45 up around 500 points for the trading week still remaining in the choppy trend as I’m currently sitting on the sidelines waiting for the volatility to settle down. Cattle prices are trading above their 20 and 100 day moving average telling you that the short-term trend is to the upside; however the long-term downtrend line is still intact as we are right up near major resistance, but I will be patient and wait for better chart structure to develop before entering into a short trade. If you take a look at the daily chart a gap was filled around the 134 level a couple of days back which is very interesting as my theory states that gaps are filled as this one only took 3-4 days for that to occur so keep a close eye on cattle as I’m still looking to enter into a short position. Hog prices continue to grind higher and I think that is supporting cattle prices here in the short-term as demand still remains fairly strong even at these expensive prices especially compared to the rest of the commodity markets, but as a trader you need the risk/reward in your favor and that’s not the case at the present time.
TREND: MIXED
CHART STRUCTURE: IMPROVING

Cocoa Futures

Cocoa futures in the May contract settled last Friday at 2874 while currently trading at 2880 as I was recommending a short position in cocoa over the last 3 months getting stopped out right around the 2890 level this week as I’m now sitting on the sidelines waiting for another trend to develop. Cocoa prices are now trading above their 20 but still below their 100 day moving average consolidating the dramatic move down in prices that we experienced over the last several months bottoming out around the 2750 level right near a 3 week high. As a trader you must have an exit strategy and mine is if I’m short a futures contract I then place the stop at the 10 day high and that’s exactly what happened this week when prices hit 2890 as it was time to move on and look at other markets that are beginning to trend, as we might not be involved in cocoa for some time. Many of the commodity markets remain weak in my opinion as I am currently still short several soft commodities including sugar and cotton as I’m not convinced that cocoa prices are going higher, but the risk/reward is no longer in your favor as the trend is mixed.
TREND: LOWER - MIXED
CHART STRUCTURE: SOLID

Cotton Futures

Cotton futures in the May contract are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as I’ve been recommending a short position if you took that trade continue to place your stop loss which in Monday’s trade will be 60.75 as prices are currently trading at 59.75 risking another 100 points or $500 per contract plus slippage and commission. Prices settled last Friday at 58.64 up about 100 points for the trading week with major support at the recent contract low around the $58 level as I think there’s a possibility prices will retest and break that level in next week’s trade. Traders are keeping an eye on the next USDA crop report which is still 3 weeks away as early trade numbers suggest that the United States will plant around 9% more acres this year than in 2015 continuing to put ample supply onto the market, therefore, keeping a lid on prices here at least for several more months unless some type of weather condition pushes prices higher. The chart structure in cotton for a long period of time was poor, but now it has improved tremendously so place the proper stop loss as I remain bearish.
TREND: LOWER
CHART STRUCTURE: POOR

Sugar Futures

Sugar futures in the May contract settled last Friday in New York at 13.12 while currently trading at 12.64 a pound hitting a fresh 5 month low as I’ve been recommending a short position originally in the March contract as we rolled over into the May contract and if you took that trade place your stop loss above the 10 day high which stands at 13.50 as the chart structure is poor. Sugar prices are trading lower for the 3rd consecutive day as I still think there’s a probability that prices will fill the gap at 11.80 which is still another 85 points away as prices are still 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 so stay short in my opinion while placing the proper stop loss. Sugar prices experienced a rounding top which I’ve talked about in many previous blogs over the last several weeks peeking out around 15.50 as being nimble is a major key to success in my opinion as waiting for the trade to develop is definitely beneficial in the long run so stay short as I’m looking to add more contracts once the chart structure and the risk/reward meet my criteria as lower prices are ahead in my opinion.
TREND: LOWER
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 is one of the most important aspects of trading in my opinion.