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 January contract settled last Friday in New York at 58.36 a barrel while currently trading at 57.27 down about $1 for the week. I was recommending a bullish position from around the 53.15 level getting stopped out earlier in the week around 56.20 as prices hit a two week low as that is my exit strategy if I have a bullish position. Crude oil prices are still trading right at their 20-day but above their 100-day moving average as the trend is mixed to higher in my opinion as heating oil and unleaded gas are both ending the week sharply higher as strong demand continues to push prices near contract highs. The commodity markets, in general, this week saw some significant selling to the downside including crude oil over the last couple of days, and I think a lot of this is just year-end selling as my only trade recommendation at the current time is a bullish position in cotton as many trends are mixed. However, I do believe when we enter 2018 bullish trends across the board will come back as the U.S. economy certainly is improving. Volatility in crude oil has started to accelerate which is not surprising in my opinion, and I think volatility in all of the commodities is going to expand significantly next year as that has been the problem in 2017. We experienced have low volatility across the board including the stock market despite the fact that we are at all-time highs so sit on the sidelines & let's wait for another trend & the risk/reward to become in your favor once again as I still think higher prices are ahead.
TREND: MIXED - HIGHER
CHART STRUCTURE: SOLID
VOLATILITY:INCREASING

Lumber Futures

Lumber futures in the January contract finished slightly higher currently at 429. I have been recommending a short position from around the 426 level as I have not talked about for quite some time, but the risk/reward are in your favor in my opinion while placing the stop loss above the 10-day high standing at 439 risking around $1,400 per contract plus slippage and commission. Lumber futures are extremely volatile as they hit all-time highs just last month based on the fact that the housing market in the United States was on fire. However, I think there is room to run to the downside. Prices are trading under their 20-day but far above their 100-day moving average which tells you how far prices have come as we topped out around the 460 level. I will take a shot at the short side as historically speaking prices are extremely expensive especially if interest rates continue to climb slowly on a monthly basis as that affects the housing market more than any other fundamental indicator. If prices do break the November 27th low of 416, I think we could head down to the 400 level very quickly so look the play this to the downside while making sure you risk 2% of your account balance on any given trade as this is a high-risk situation.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY:HIGH

Orange Juice Futures

Orange juice futures in the January contract are trading lower for the 3rd consecutive session right near a five week low. I have a bearish bias to the downside as I've written about in previous blogs I do think oranges prices are headed lower due to beneficial weather in Florida & Brazil. Juice prices settled last Friday in New York at 162.70 while currently trading at 151.90 down over 1000 points for the trading week and looking to retest major support at the 150 level & if that is broken, I think prices could head substantially lower, so continue to play this to the downside as a bearish trend has developed. Prices are trading below their 20-day moving average but slightly above their 100-day which stands at 149 as I also think there will be orders to sell this market if that level is breached. I do believe prices have topped out here in the short term and I will be looking at a recommendation on any type of price rally as the chart structure needs to improve. Anything grown in the country Brazil right now continues to move lower including sugar, soybeans, coffee, and orange juice as this has been a tough week for many commodity sectors to the downside as I think it just might be year-end selling.
TREND: LOWER
CHART STRUCTURE:POOR
VOLATILITY:INCREASING

Lean Hog Futures

Lean hog futures in the June contract settled last Friday in Chicago at 83.37 while currently trading at 82.00 down about 137 points for the trading week right near a two week low. I think hog prices have topped out roughly at the 84 level and I will be looking into a possible short position in the weeks ahead. Hog prices are trading below their 20-day, but far above their 100-day moving average which tells you how far prices have rallied over the last several months. However, the chart structure is poor at present. Therefore, the risk/reward is not in your favor so I will be patient and keep a close eye on this market. The commodity markets this week sold off in many different sectors as the choppy and trendless markets continue as we are about to enter 2018 at present. I think hog prices are awfully expensive in the June contract as generally, I trade the front month which is in the February contract, but the June situation looks more appealing in my opinion. Cattle prices this week also finished lower putting pressure on hog prices as we're entering the volatile winter season for hogs as I think prices are headed to the downside as the fundamental picture is more bearish than prices reflect in my opinion.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY:INCEASING

Coffee Futures

Coffee futures in the March contract settled last Friday in New York at 129.55 a pound while currently trading at 123.20 down about 600 points for the trading week. I was stopped out in yesterday's trade around the 124 level in a disappointing trade as prices have now hit a contract low and a fresh yearly low. Coffee prices are now trading under their 20, and 100-day moving average and the trend clearly is to the downside as the soft commodities except for cotton continued to move lower this week as the next major level of support is around the 110 level. However, I will not take a short position as I will sit on the sidelines once again and look for some type of bullish trend to develop which probably will not happen until 2018. Coffee prices broke the contract low which was hit on June 22nd at 122.65 as weather conditions in Brazil, which is the largest producer of coffee in the world, are ideal putting pressure on prices coupled with the fact that Honduras is having political problems as they are also a large producer of coffee and that is causing some concern as well. It's time to move on and let's look at other trends that are developing.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY:INCREASING

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.

Corn Futures

Corn futures in the March contract is currently trading at 3.53 a bushel after settling last Friday in Chicago at 3.58 down about 5 cents still experiencing extremely low volatility as I am currently not involved in this market. However, I'm keeping a close eye on a bullish position in the coming weeks ahead. Corn prices are stuck in a four-week tight consolidation between 3.50/3.60 as the large money managed funds are still short on about 230,000 contracts which is an all-time record as they clearly think lower prices are ahead. Corn currently is trading below its 20, and 100-day moving average and the trend is to the downside, but over the last month, it has basically been sideways as the chart structure is outstanding due to low volatility. I think that situation could turn once we enter 2018, but for the next several weeks I don't see anything exciting developing in this commodity. The corn crop in South America is off to a good start as we will now focus on next year's crop with estimates around 94 million acres being planted which is 5 million more than what was planted in 2017 and could produce a crop near 15 billion bushels unless some weather event affects yields. We are still looking at abundant supplies for the foreseeable future.
TREND: HIGHER
CHART STRUCTURE: SOLID - IMPROVING
VOLATILITY:LOW

Cotton Futures

Cotton futures in the March contract are currently trading at 74.23 after settling last Friday in New York at 73.28 up slightly for the trading week hitting an eight-month high looking to retest the March 20th contract high of 75.57 in next weeks trade. I have been recommending a bullish position from around the 70.50 level & if you took that trade continue to place the stop loss under the two week low which now stands at 71.02 as that will also be raised in Tuesday's trade to 71.75. The chart structure will turn outstanding because prices are experiencing relatively low volatility over the last week or so. Cotton prices are trading above their 20, and 100-day moving average as this trend clearly is to the upside as the harvest in the southern part of the United States is almost complete. I think there is still room to run to the upside as strong demand has come back into this market as the fundamental situation remains strong in my opinion. Volatility in cotton as we enter 2018 certainly will expand as historically speaking this is an extremely volatile commodity and can have huge price swings on a daily basis. I don't see this low volatility lasting much longer as we continue to grind slowly higher to the upside on a weekly basis so continue to place the proper stop loss as who knows how high prices can actually trade.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY:INCREASING

Soybean Futures

Soybean futures this week have experienced increased volatility which is a good thing to see in my opinion. After settling last Friday at 9.94 while currently trading at 9.88 a bushel down about 6 cents for the week and traded as high as 10.15 in Wednesday's trade only come off that critical level as the true breakout on a closing basis stands at 10.13. Prices are still trading above their 20, and 100-day moving average as the trend is higher as the trend is higher in soybean meal which is the strongest commodity out of the soy complex which is still trading at a multi-month high. Traders are keeping a close eye on the South American weather as the soybean crop is off to a good start. Estimates of this year's crop in Brazil are around 107.6 MTTs which would be another all-time record. However, it is a long growing season, and there are some concerns about dryness in certain parts of Brazil as you have to remember the weather phenomenon known as La Niña which could impact soybean yields, but at the current time, weather conditions are solid. The grain market in recent months really has gone nowhere and has been an incredibly choppy trade in 2017. We produced about 4.5 billion bushels which were another record as the main problem is that we continue to plant too many acres in the United States as we are awash in soybeans at present and that's why the volatility is limited to the upside.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY:INCREASING

Wheat Futures

Wheat futures in the March contract settled last Friday in Chicago at 4.38 a bushel while currently trading at 4.24 down about $0.14 for the trading week and hitting another contract low as this bearish trend continues on a month-to-month basis. I am currently not involved in this market, but if you are short a futures contract place the stop loss at the 10-day high standing at 4.43 as an exit strategy. The winter wheat is off to an excellent start in the Great Plains of the United States, and that is what is putting pressure on prices here in the short term as we're trading below it's 20 and 100-day moving average. Every time this market looks to be bottoming out it just continues to make new lows as the large money managed funds are still heavily short as they believe lower prices are ahead and have been right so far. The next major level of support is down around the 3.95 area which I think could be tested in the next couple weeks as traders are awaiting the next USDA crop report which will be released next week which could put some volatility back into this market as we are just slowly grinding lower on a weekly basis with extremely low volatility.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY:LOW

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.