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 settled last Friday in New York at 1,326 an ounce while currently trading at 1,322 down slightly for the trading week. I’ve been recommending a short position from the 1,333 level and then adding more contracts around 1,320 as I still remain bearish while placing my stop loss above the 10-day high which stands at 1,346 as the chart structure has improved tremendously this week. Gold prices have hit 1,306 on 3 different occasions, and if that is broken, I do believe the all-out bear market could get ugly to the downside as prices are still trading below their 20 and 100-day moving average telling you that the trend is lower. Gold prices reacted sharply higher off of the construed negative monthly unemployment report adding 150,000 jobs which were slightly below consensus estimates. However, the U.S dollar has reversed as gold prices were about $17 higher, but currently only up about $5 which happened last Friday as well. The chart structure in gold will not improve for another 5 days, so you’re going to have to accept the monetary risk at this point. My only 3 trade recommendations are still short the 10-year notes, gold and the NASDAQ 100 as I will stick to my trading system and not second-guess myself as that is very dangerous over the course time.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Silver Futures
Silver futures in the December contract settled last Friday in New York at 17.75 an ounce while currently trading at 19.22 up $.29 this Friday afternoon as a negative monthly unemployment number sent the U.S dollar lower while anticipating no rate change from the Federal Reserve. Silver prices are right near a 2 week high trading below its 20-day but still above its 100-day moving average telling you that the trend is mixed. I’m sitting on the sidelines in this market as my only recommendation in the precious metals is in the gold market to the downside as we have finally exited the dog days of August. I do see volatility and trends coming back in the month of September, however, move on and look at other markets that are beginning to trend. The chart structure in silver is starting to improve as we could be in a possible trade in the next couple of weeks and if you did take the gold trade continue to place your stop loss above the 10-day high which stands at 1,346. The chart structure is also improving on a daily basis in that market as we will have to see what the Federal Reserve actually does do in the next couple of months.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Crude Oil Futures
Crude oil futures in the October contract settled last Friday at 47.64 a barrel while currently trading at 43.81 down about $4 for the trading week. This market has terrible chart structure at present as prices went straight up and now straight down as I have not participated for quite some time, and it looks to me that I’ll be sitting on the sidelines, as I need the chart structure to improve therefore lowering monetary risk. Crude oil prices are trading below their 20 and 100-day moving average telling you that the short-term trend is lower as the same story plagues this market. Massive over supplies here in the United States continues to keep a lid on any price rally as I see choppiness ahead so avoid this market at present as I think it’s very difficult to trade successfully. Oil prices have basically been trading in a range over the last 6 months between 40/50 as we might retest the $40 level as that’s a possible bottom in my opinion as we are exiting the summer driving season which generally weakens demand for gasoline, therefore, pushing crude oil prices lower as well.
TREND: LOWER
CHART STRUCTURE: POOR
10-year Note Futures
The 10-year note in the December contract settled last Friday in Chicago at 130 – 13 while currently trading at 130 – 18. I’ve been recommending a short position from around this price level as I am placing my stop loss above the 10-day high which stands at 131.15 as the chart structure will not improve because prices are stuck in a very tight trading range recently. The 10-year note is trading below its 20 and 100-day moving average telling you that the short-term trend is lower as prices reacted positively originally to the negative monthly unemployment number sending prices as high as 131.12 before reversing sharply. We are right near session lows as we are now yielding 1.62% looking to breakout to the downside once again. The next major level of support is Monday’s low of 130.10 & if that is broken, I think we could head lower as this is a very difficult trade in my opinion. I’m going against the Federal Reserve which props up equity prices and wants to keep the bond market at historical lows. However, I am a technical trader, and the trend is lower while the risk/reward is in your favor coupled with outstanding chart structure so remain short while placing the proper stop loss risking 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
NASDAQ 100 Futures
The NASDAQ 100 in the September contract settled last Friday in Chicago at 4785 while currently trading at 4791 up slightly for the trading week currently trading up 15 points off of the negative monthly unemployment number, however, prices have come off session highs. At the current time I am recommending a short position from around the 4757 level and if you took that trade continue to place your stop loss above the 10-day high which stands at 4837 risking around $1,600 per mini contract plus slippage and commission. However, come Wednesday's trade that will be lowered to 4823, therefore, lowering monetary risk. This market is reacting positively because they don’t think interest rates are on the rise. However, I’m a technical trader, and the chart structure is excellent at present as well as the risk/reward so I will continue to stay short while placing the proper stop loss. The NASDAQ 100 is trading below its 20-day but slightly above its 100-day moving average as prices have been stuck in a very tight 4-week consolidation. I’m also looking at a possible short position in the S&P 500 which I have not acted upon at this time as that breakout is on a closing basis which will be 2157 which could happen possibly next week.
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.
S&P 500 Futures
The S&P 500 in the September contract continues to be stuck in a very tight channel. I’ve been writing about this market for weeks looking at entering a possible short position if prices break below the 4 week low which comes next week will be 2157 while placing your stop loss above the 10-day high which stands at 2192 risking 35 points or $1,800 per mini contract plus slippage and commission. At present, I’m sitting on the sidelines waiting for a breakout to occur as this market has very little volatility as we escaped the dog days of August as September historically speaking can become very volatile as I do think volatility will increase tremendously next month. The chart structure at present is outstanding as I cannot remember the last time the S&P 500 has going nowhere basically over the last 2 months as we still have not had a 1% trading session in over 35 straight days which is remarkable in my opinion as that will not continue for much longer. Volatility in many of the commodities is very low because August historically speaking is very quiet as I’m looking forward to the trends coming back in the month of September as I have only 3 trade recommendations at present.
TREND: SIDEWAYS
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures in the December contract which is considered the new crop and will start to be harvested over the next several weeks settled last Friday in Chicago at 3.25 a bushel while currently trading at 3.28 up about $.12 over the last 2 trading sessions and up slightly for the trading week. Corn prices hit a new contract low around 3.15 a bushel before this recent rally as the interest rate outlook does not look like rates are going higher pushing up many commodity prices this Friday afternoon as I’m sitting on the sidelines in this market as I think there is very little movement ahead price wise. Traders are awaiting the next USDA crop report which will be out in the next week or so looking at lower possible yields as a short-term bottom might be a place, but I still see weakness throughout 2016 as we just have oversupply issues as there are better markets to trade at present. One bright spot in the corn market in my opinion in 2017 will be the fact that I do believe lower acres will be planted. Therefore a record crop will not be produced as we also have not had a weather problem since 2012. I think a bullish scenario could play out next year, but for the remainder of 2016, I see sideways to lower prices ahead due to massive supplies coupled with a record crop starting to come onto the market.
TREND: LOWER
CHART STRUCTURE: SOLID
Cotton Futures
Cotton prices in the December contract settled last Friday in New York at 68.03 while currently trading at 67.80 down slightly for the trading week as prices are near a 7 week low. Prices declined throughout the month of August hitting a new low yesterday before rallying over 200 points on concerns about possible flooding in the southern part of the United States due to the recent hurricane that hit the state of Florida. However, in my opinion, I think that was mostly on short covering as prices have been in a sharp decline from the recent high around 78 which was hit early in the month of August. Prices are trading below their 20 but above their 100-day moving average as this trend is mixed. I’m currently sitting on the sidelines in this market, and I’m looking at a possible short position in next week’s trade. Next Monday markets will be closed due to the Labor Day holiday as we have a long weekend ahead of us as we certainly will see volatility in Tuesday's trade. I’m looking at a possible short position next week while placing my stop loss above the 10-day high which stands at 69.12 as the chart structure will improve next week so keep a close eye on this market to the downside as the risk/reward will be in your favor.
TREND: LOWER
CHART STRUCTURE: SOLID
Sugar Futures
Sugar futures in the October contract settled last Friday at 20.61 a pound while currently trading at 20.18 down about 43 points for the trading week despite today’s rally to the upside as I’m currently sitting on the sidelines waiting for a breakout to occur. Sugar futures are trading below their 20-day but still far above their 100-day moving average as it certainly looks to me that prices have topped out around the 21 level as we have been in a sideways trend over the last 2 months as a breakout is looming to the downside in my opinion. Crude oil prices have been falling rather dramatically over the last week, and I think that is starting to put pressure on sugar prices. Sugar is used as a biodiesel, and I do think a bearish trend is starting to develop as prices have had a very difficult time cracking the 21 level as another retest of the bottom end of the range is now occurring. The 10-day high currently stands at 20.94 risking around 130 points from the breakout or 4 week low or around $1,400 per contract plus slippage and commission so let’s see what happens in Tuesday's trade, but we could be entering a short position relatively soon as the chart structure will not improve for another 3 days.
TREND: LOWER
CHART STRUCTURE: POOR
Coffee Futures
Coffee futures in the December contract settled last Friday in New York at 144.85 a pound while currently trading at 151.60 trading higher for the 7th consecutive trading session breaking out to a 5 week high. I'm currently sitting on the sidelines in this market as the chart structure is weak therefore the monetary risk is too high. The main reason for the recent rally is based on the President of Brazil being removed from office, therefore, spurring demand. That coupled with the fact of lower world production numbers being rumored sent prices higher as the new bullish trend is higher. Coffee prices are trading above their 20 & 100-day moving averages telling you that the short-term trend is higher. The next major level of resistance is around the 158 level which was hit in July and if you have read any of my previous blogs you understand that I have had a bullish bias to the upside as I still think historically speaking coffee prices look cheap. If you already have a bullish futures position I would place your stop loss under the 10-day low which stands at 141 risking around $4,300 per contract as I will be waiting for some type of price pull back to enter as then the monetary risk will be lowered as this sleeping giant has awoken again.
TREND: HIGHER
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.
If you are looking for a futures broker feel free to contact Michael Seery at 312-224-8140 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: 312-224-8140
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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.
