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.

Gold Futures

Gold futures in the June contract settled last Friday at 1,251 an ounce while currently trading at 1,247 in a very nonvolatile trading week right near major resistance as prices are still trading above their 20 and 100-day moving average telling you the short-term trend is higher. At present, I am not, involved in the precious metals as the U.S dollar continues to flip-flop which had made the commodity markets basically go sideways over the last several months. For the gold rally to continue in my opinion prices, have to break major resistance around 1,268 which is still about $20 away as the U.S stock market continues to hover near all-time highs which generally is a negative towards gold prices. Gold prices bottomed out last month around the 1,200 level as that's when the Federal Reserve stated that they might slow down on raising interest rates sending prices back up towards the upper end of the trading range, however prices still remain choppy over the last several months so wait for a true trend to develop as there are very few markets that have strong trends at the current time.
TREND: MIXED - HIGHER
CHART STRUCTURE: IMPROVING

Cocoa Futures

Cocoa futures in the May contract are currently trading at 2092 after settling last Friday in New York at 2131 down about 40 points for the trading week as prices have gone sideways in the last 2 weeks after hitting a 7 week high. At present, I am not involved in cocoa. However, if you are long a futures contract, I would place my stop loss under the 10-day low which stands at 2013 and in Monday's trade will be raised to 2055 as there is very little fresh fundamental news to dictate short-term price action in my opinion. Prices need to break major resistance which stands at 2200 to continue its bullish momentum as my only recommendation in the soft commodities is short cotton, and I am bearish sugar as the agricultural markets to look weak in my opinion. Cocoa prices are trading above their 20-day moving average, but still below their 100-day which stands at 2200 which is a critical level in my opinion as the quality of the cocoa beans in West Africa have not been excellent as that is the main reason why prices have rebounded off of multi-year lows.
TREND: MIXED
CHART STRUCTURE: EXCELLENT

Coffee Futures

Coffee futures in the May contract settled last Friday in New York at 137.60 a pound while currently trading at 138.50 in a very nonvolatile trading week as I am not involved in coffee at present as I'm waiting for a breakout to occur as the chart structure has improved tremendously due to the fact that prices continue to go nowhere. Coffee prices continue to trade under their 20-day moving average as the 100-day stands at 147 as I'm very surprised at how low the volatility is as historically speaking coffee is one of the most explosive commodities in the world with huge price swings and huge risk as I don't see this continuing for much longer. Ideal weather conditions in the country of Brazil continue to keep a lid on prices as Brazil is the largest producer in the world and also the largest producer of many commodities in the world as we are starting to enter the frost season which is about 5 weeks away & certainly will send volatility back into this market, but at the present time look at other markets. In my opinion, I do believe prices are limited to the downside as eventually I do think higher prices are ahead, but there is very little fundamental news to push prices in either direction.
TREND: MIXED - LOWER
CHART STRUCTURE: IMPROVING

Sugar Futures

Sugar futures in the May contract settled last Friday in New York at 17.71 a pound while currently trading at 16.78 down nearly 100 points for the trading week continuing its bearish momentum as I am not involved in this commodity at present, but do have clients who are short a futures position and if that is the case place your stop above the 10-day high which now stands at 18.17. Sugar prices are trading well below their 20 and 100-day moving average telling you that the short-term trend is lower as prices are retesting the May 2016 lows and I do think there's a possibility that we could even go as low as 12.50 which was hit in February 2016 as this market remains bearish in my opinion so stay short. The chart structure will not improve for another week so you're going to have to accept the monetary risk as overproduction and lack of demand continue to put pressure on sugar prices here in the short term as I still do believe lower prices are ahead, however, if you have missed the trade like I did move on and look at other markets that are beginning to trend as the risk/reward is not in your favor.
TREND: LOWER
CHART STRUCTURE: POOR

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

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 75.75 while currently trading at 73.50 as I have been recommending a short position from the 77.45 level & if you took the trade continue to place your stop loss above the 10-day high which stands at 78.25 as the chart structure is terrible at present and will not improve for another 5 trading sessions. Hog prices are trading under their 20 and 100-day moving average telling you that the short-term trend is lower with the next major level of support around the 72.50 level & if that is broken, I think we could head substantially lower. Hog prices have experienced high volatility over the last week which is a good sign in my opinion as cattle prices also look like they have topped out, but I'm not involved in that market so continue to stay short as I'm looking at adding more contracts once the chart structure & the monetary risk have improved. Traders are awaiting the USDA report which comes out this afternoon as it might have some influence on the livestock sector as it certainly will have an influence on the grain market which I'm also recommending several short positions.
TREND: LOWER
CHART STRUCTURE: POOR

Copper Futures

Copper futures in the May contract settled last Friday in New York at 2.63 a pound while currently trading at 2.65 as I was recommending a bearish position from around 2.61 getting stopped out in Thursday's trade around the 2.70 level taking the loss and moving on as this market remains choppy. Copper prices are trading right at their 20-day but still above their 100-day moving average telling you that the trend is mixed as prices hit a 3 week high following the stock market which is hovering right near at all-time highs as the NASDAQ 100 did hit all-time highs as I was also stopped out of that trade as I have no precious metal recommendations at the current time. The chart structure in copper is relatively solid as we could be involved once again in the next couple of weeks so keep a close eye on this market as it still looks expensive.
TREND: MIXED
CHART STRUCTURE: SOLID

Soybean Futures

Soybean futures in the May contract which is considered the old crop which was grown in 2016 settled the last Friday in Chicago at 9.76 a bushel while currently trading at 9.50 reacting negatively to the USDA crop report with estimates of nearly 90 million acres being planted in 2017 continuing to put pressure on this commodity. I have been recommending a bearish position around the 10.48 level & if you took that trade continue to place your stop loss above the 10-day high at 10.08 as the chart structure is poor because prices continue to collapse on a daily basis. I'm also recommending a short position in the November contract which is considered the new crop and will be grown this summer in the Midwestern part of the United States from around the 10.01 level as we are now trading at 9.56 & if you took that trade continue to place the stop loss at 10.04. Soybean prices are trading lower for the 3rd consecutive trading session as the momentum is to the downside while increasing on a weekly basis as we are flat outgrowing too many acres of this commodity in the United States coupled with the fact that Brazil is also raising their estimate to another record crop so stay short as who knows how low prices can go, as I still think $9 in the May contract is a possibility in a relatively short period of time.
TREND: LOWER
CHART STRUCTURE: POOR

Corn Futures

Corn futures in the May contract settled last Friday in Chicago at 3.56 a bushel while currently trading at 3.62 reacting positively off of the USDA crop report which estimated around 90 million acres being planted which was 1 million acres less than expectation. I have been recommending a short position from the 3.80 level and if you took the trade continue to place your stop loss above the 10-day high standing at 3.71, however, in Monday's trade will be lowered to the high of today's session. At the current time I have also recommended short positions in the soy complex as they are down sharply as we are planting too much in my opinion as I think this is just a kickback in price so remain short as spring planting starts next week. Corn prices are still trading under their 20 and 100-day moving average selling telling you that the short-term trend is lower as the grain market in general still looks bearish in my opinion, so I will continue to place the proper stop loss as I'm looking at adding more contracts as the risk/reward are highly in your favor as I do not believe today's price action.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Trading Theory

How Can You Use Moving Averages To Your Advantage? A simple moving average is calculated by adding the closing price of a commodity such as crude oil for a number of time periods and then dividing this total by the number of time periods. Short-term averages respond quickly to changes in the price of the underlying commodity, while long-term averages are slower to react.

I generally follow the 20 and 100-day moving averages when commodity prices break below or above in my opinion that establishes a trend which in my opinion should always be followed as the saying goes the trend is your friend. If the 20 and 100-day have crossed to the downside and you have a long position that is telling you that you are trading against the trend which can be dangerous over the course of time.

I generally like to buy a commodity or sell a commodity when the price has hit a 20-day high or low and the simple moving average also should have crossed at that point confirming or establishing that the trend is starting.