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 1,317 while currently trading at 1,256 down about $60 for the trading week hitting a 4 month low all due to the fact that the U.S dollar is hitting a 31 year low against the British Pound pushing prices lower. Gold is trading below its 20 and 100-day moving average telling you that the short-term trend clearly is to the downside as prices are retesting the Brexit low which happened in late June with the next major level of resistance is between 1,200/1,220 in my opinion. At the current time, I’m not involved in gold or silver, but I’m not recommending any type of bullish scenario as I do think lower prices are ahead as I do not like to counter trend trade as over the course time that is very dangerous. The U.S dollar continues its bullish momentum which I think will move higher in the short-term as I see no reason to own gold at present despite the fact of negative interest rates around the world.
TREND: LOWER
CHART STRUCTURE: POOR
Copper Futures
Copper futures in the December contract are currently trading at 2.1600 a pound after settling last Friday in New York at 2.21 down about 500 points for the trading week hitting a 2 week low. I’m currently sitting on the sidelines waiting for a true trend to develop which has not occurred in quite some time. Copper prices are trading below their 20-day but right at their 100-day moving average as this commodity has been extremely choppy over the last 6 months as a possible bottoming pattern has developed in my opinion, but move on and avoid this market at present. The precious metals, in general, are very weak as gold and silver hitting multi-month lows this week all due to the fact of a very strong U.S dollar also pushing copper prices lower. However, copper is more influenced by the housing market and interest rates as we keep flip-flopping about whether to raise rates and that is why copper keeps flip-flopping and going nowhere, but copper is a very trendy market, and when it finally does breakout we want to be involved, however, it might take some time.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Rough Rice Futures
Rough rice futures in the November contract hit a 6 week high in today’s trade after settling last Friday at 9.88 while currently trading at 10.15. I have been recommending a bullish position from around the 10.00 level and if you took that trade continue to place your stop loss under the 10-day low which stands at 9.62 as the original trade was risking about $800 per contract plus slippage and commission. Rice prices are also trading above their 20-day, but below their 100-day moving average telling you that the short-term trend is mixed, but it’s really telling you how far prices have sold off in recent months as I do think a bottom formation has occurred in this market. The volatility in rice can explode at certain times with huge price swings up and down with large monetary risk, and I do think volatility will start to increase exponentially here in the coming weeks as the next major level of resistance is up at 10.40 which is still quite a distance away. The only sector in the grain market that I am sitting on the sidelines at present is in the soybean sector as that market remains extremely choppy, but I do think come November the lows probably will be established.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Oat Futures
Oat futures in the December contract settled last Friday in Chicago at 1.78 a bushel while currently trading at 1.91 up about $.13 for the trading week trading higher for the 3rd consecutive trading session. I have been recommending a long position from around the 1.82 level and if you took that trade continue to place your stop loss under the 10-day low which stands at 1.72 as the original risk was about $500 per contract plus slippage and commission as the chart structure was outstanding at the time of the breakout. Prices have now hit an 8 week high, and I still think there is more room to run to the upside, but if you have missed this trade wait for some type of pullback before entering, therefore, lowering monetary risk. I do think sectors of the grain market are in a bottoming pattern as I’m also recommending bullish trades in corn and in the rice market. Oat prices are trading above their 20-day but slightly below their 100-day moving average which stands at 1.95 which is the next major level of resistance as well & if that is broken I think oats will be trading in the low $2 area relatively quickly in my opinion.
TREND: HIGHER
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.
Corn Futures
Corn futures in the December contract settled last Friday in Chicago at 3.36 a bushel while currently trading at 3.40 up slightly for the trading week. I’m now recommending a bullish position from around the 3.40 level while placing your stop loss under the 10-day low which stands at 3.25 risking about $750 per contract plus slippage and commission. Corn prices are right near a 10 week high as harvest is in full swing in the Midwestern part of the United States as we should produce an amazing crop around 15.1 billion bushels. All of the bad news, in my opinion, has already been reflected into the price as we now look forward to next year’s crop. Corn prices are trading above their 20-day but far below their 100-day moving average which tells you how far prices have come from this summer. Generally speaking the lows in the grain market are hit around the November month, but take a shot at this to the upside as the risk/reward is in your favor in my opinion. However, the chart structure will not improve for another 6 days, so you’re going to have to accept the monetary risk at this time.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Cotton Futures
Cotton futures in the December contract settled last Friday in New York at 68.08 while currently trading at 67.75 basically unchanged for the trading week. I’m currently sitting on the sidelines in this market as there is no trend so look at other markets that are beginning to trend and avoid the cotton market at present. Prices are trading below their 20 and 100-day moving average telling you that the short-term trend is mixed as traders await next week’s USDA crop report which will certainly send high volatility back into this market as we are projected to have an excellent crop which is currently being harvested in the southern part of the United States which should keep a lid on prices for the next month or two. The U.S dollar continues its bullish momentum to the upside hitting a 2 month high this week as that is hurting certain commodity sectors including the cotton market, but wait for better chart structure to develop as I think this market will remain choppy for quite some time.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Wheat Futures
Wheat futures in the December contract settled last Friday in Chicago at 4.02 while currently trading at 3.99 a bushel down slightly for the trading week still stuck in a very tight 5 week channel as I’m looking at a possible bullish scenario if prices break 4.12 while placing your stop loss under the 10 day low at 3.90 risking around $.22 or $1,100 per contract plus slippage and commission. At present, I’m currently recommending corn, oats, and rice to the upside as I do think there’s a strong possibility that wheat prices are bottoming out. Volatility in this market will certainly expand as we head into the volatile autumn and winter seasons for wheat prices, however, wait for the breakout to occur as trading in a consolidation is very difficult to trade successfully in my opinion over the course of time. Wheat prices are trading right at their 20-day but still far below their 100-day moving average as this been one of the most bearish commodities in 2016 but everything comes to an end so keep a close eye on this market for a possible position come next week.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the March contract settled last Friday in New York at 23.00 a pound while currently trading at 23.64 up about 64 points for the trading week continuing its bullish trend as this market has been incredibly resilient to the downside. Prices are hitting a fresh 4 year high this week as I’ve been sitting on the sidelines in this market as when the original broke out to the risk/reward was not in your favor. However, as I have stated many times, I’m certainly not recommending any type of short position as I do think sugar prices are going higher. Sugar is trading far above it's 20 and 100-day moving average as this trend is getting stronger on a weekly basis and if you are long a futures contract, I would place my stop under the 10-day low around 22.55 which is about a $1,200 risk per contract plus slippage and commission at today’s price levels. The main reason for higher prices is investors are looking at the possibility of a smaller crop in the country of Brazil coupled with the fact of strong worldwide demand, therefore, lowering supplies.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Trading Theory
There are many different theories about how long does a meaningful consolidation has to last before you enter a trade? In my opinion, I always want to see a consolidation that lasts at least 8 or more weeks before I would consider entering. The reason that I want a longer consolidation is to try and avoid a bunch of false breakouts such as a 10 or 15-day consolidations which happen all the time, so I am trying to put the odds in my favor by trading the breakout of at least 8 weeks or more and the longer such as a 10 or 13-week consolidation, the better.
Trade with the short term trend
As the saying goes in futures trading the trend is your friend but sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity, and you say to yourself that was a bad trade and should I do something different on my next trade. If it was up to me, I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side. I define a trend as a commodity hitting a 20 day high or low as a trendy market if the market is in a consolidation stay away from it and find something that is trending up or down and goes in that direction remembering the money management rules of 2% maximum loss if you are wrong.
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
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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.
