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 57.36 a barrel while currently trading at 57.16 unchanged for the trading week as we enter the holiday markets which experience low volatility. I'm not involved in this market, and I had a bullish recommendation over the last couple months getting stopped out when prices hit the 2-week low. I am now sitting on the sidelines waiting for another trend to develop, but for the bullish momentum to continue we have to break the November 24th high of 59.05 and for the bearish momentum to continue we have to break the December 7th low of 55.82. Crude oil prices are trading right at their 20-day but far above their 100-day moving average as we still are in a longer-term bullish trend with strong worldwide demand for crude oil and the energy sector as a whole continues to keep prices near contract highs. Volatility in crude oil will certainly expand once 2018 comes about and I see sideways action for the rest of 2017. However, with worldwide economies improving, especially in the United States as the tax cuts certainly could spur demand next year, I think we could be probably trade in the $70 range at this time in 2018.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY:LOW

Gold Futures

Gold futures in the February contract are trading higher for the 3rd consecutive session reacting positively to the FOMC minutes earlier in the week after settling last Friday in New York at 1,248 an ounce while currently trading at 1,262 up about $14 for the trading week rallying on oversold conditions. I'm not involved in gold or any of the precious metals as they remain choppy to bearish as prices are still trading under their 20 and 100-day moving average as the short-term trend is lower as we traded as low as 1,238 in Tuesday's trade before rallying to end the week. The U.S. dollar continues to move sideways having very little influence on the precious metals as were about to close out 2017. I'm advising clients to avoid this market so look at other markets that are beginning to trend. I'm just not sure where prices are headed in the short term. Gold prices hit a 5-month low earlier in the week, and this just might be a kickback in price, but I'm not convinced the bottom is in place as there's been a lot selling across the board in many agricultural markets as well as the precious metals. The Bitcoin phenomenon certainly has taken the luster out of gold as all of the interest still lies in the U.S. equities which hit another all-time high this week and Bitcoin which will start officially trading on Sunday night.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY:INCREASING

S&P 500 Futures

The S&P 500 in the March contract settled last Friday in Chicago at 2654 while currently trading at 2678 up about 23 points for the trading week hitting another all-time high. I sound like a broken record as this market continues to move higher on a daily and weekly basis and I see absolutely no reason to go short the entire equity market as the Trump rally is extremely strong. The tax cuts are getting finalized today, and that is pushing the market higher once again as growth above 3% has entered this economy for the 1st time in nearly a decade, and it's going to increase in 2018 so stay long & continue to place the proper stop loss standing at 2622. I had been advising clients to take something off the table about a week ago as this has been an incredible rally over the last several months so stay long remaining contracts. I see no reason to exit as I believe we will close right near yearly highs on the last day of December. The S&P 500 is trading far above its 20, and 100-day moving average and this trend clearly is to the upside & has been the strongest trend in 2017. I think in 2018 could be a remarkable year as well with optimism about the U.S. economy at an all-time high and that's what reducing regulations and implementing tax cuts can do. As I've talked about in previous blogs, I thought the S&P 500 could hit 2700 come year-end, and I still think that is going to happen as J.P. Morgan stated today that they believe the S&P 500 will be trading around the 3000 level at the end of 2018. I agree with them so stay long as there's no reason to exit.
TREND: HIGHER
CHART STRUCTURE:SOLID
VOLATILITY:LOW

Orange Juice Futures

Orange juice futures in the January contract settled last Friday in New York at 152.85 while currently trading at 146.10 down nearly 700 points for the trading week continuing its bearish momentum right at a 10-week low. I have talked about orange juice lately with a bearish bias as I thought prices were headed lower and if you are short stay short with the next major level of support around the 141 level. If that is broken, I think we could test the contract low which is around the 130 level which was hit in July as excellent weather conditions in Brazil and the state of Florida continue to pressure on prices here in the short term. Orange juice prices are trading below their 20 and 100-day moving average as the trend is is to the downside as we have now declined for eight straight sessions and I still don't think we're in oversold conditions and I still believe there could be room to run to the downside. Volatility in orange juice is average at the current time, and it should pick up tremendously in January as that's when the frost or freeze possibility can take place in the state of Florida. That can send prices up tremendously. However, the weather forecast at this time still has above average temperatures with no frost on the horizon.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY:AVERAGE

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 are currently trading at 3.46 a bushel after settling last Friday in Chicago at 3.52 down another 6 cents for the trading week and still experiencing extremely low volatility which I think will continue for the rest of 2017. Currently, I am not involved, but I've written about in previous blogs that I think prices can head down to the 3.25 level in January as the real volatility will not take place until early spring when we will have concerns about the 2018 crop. If you are short a futures contract place the stop loss at the 10-day high which in Monday's trade is 3.56 as the chart structure is excellent. The grain market, in general, continues to meltdown on a weekly basis and I think that will also stay in the weeks ahead and I see no reason to be involved with positions at this time as the fundamental and technical picture remain bearish across the board. Corn prices are trading below their 20 and 100-day moving average telling you that the trend is to the downside as this trend has been bearish over the last five months as I do think prices are getting cheap, but I think they can still get less expensive in early 2018. For corn to sustain any bullish trend, I think we have to suffer a drought in the Midwestern part of the United States like the one that occurred in 2012 sending corn prices to around $8.50 a bushel. But that's not going to possibly happen until the summer months as large worldwide supplies are keeping the lid on prices.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY:LOW

Cotton Futures

Cotton futures in the March contract is trading sharply higher for the 3rd consecutive session after settling last Friday in New York at 73.72 while currently trading at 76.13 hitting another contract high and blowing through major resistance up about 240 points for the trading week. I have been recommending a bullish position from around the 70.50 level and if you took the trade continue to place the stop loss under the 10-day low standing at 72.10 as the chart structure is poor due to the recent run-up in prices. However, the stop loss will be raised three days from now, therefore, lowering the monetary risk. Strong demand for this commodity continues to push prices higher as this is by far the strongest agricultural commodity as most of the other sectors continue to melt away, but this trend is getting stronger on a weekly basis. If you take a look at the daily chart the main reason for the recommendation was when prices broke out of a 9-week tight consolidation as the original risk was around $1,000 per contract plus slippage and commission. I will not add any more positions as the risk/reward at this time is not in your favor, but I do think we could head up to the 80 level in the weeks ahead so stay long & continue to place the proper stop loss.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY:AVG

Wheat Futures

Wheat futures in the March contract settled last Friday in Chicago at 4.19 a bushel while currently trading at 4.19 unchanged for the trading week experiencing extremely low volatility. I think that will continue until year-end as there is very little fresh fundamental news to push prices in either direction. Wheat hit another contract low on December 12th around 4.10 a bushel, and I remain negative on this commodity. I think we could trade down to the 3.95 level and if you are short a futures contract place the stop loss above the 10-day high which in Monday's trade will be 4.36 as that will also start to improve on a daily basis, therefore, lowering your monetary risk. The ideal weather conditions in the Great Plains continue to push prices lower coupled with weak demand and huge worldwide supplies, and there is very little bullish fundamental news to push prices higher. Large money managed funds are still heavily short wheat and corn which also hit a contract low in this week's trade and I'm certainly not recommending any bottom fishing. That would be counter-trend trading as this has been in the bearish trend now for over five straight months as prices are still trading far below their 20 and 100 days moving average. However, I do believe that the volatility will increase tremendously once 2018 arrives.
TREND: LOWER
CHART STRUCTURE: SOLID - IMPROVING
VOLATILITY:LOW

Lean Hog Futures

Lean hog futures in the June contract settled last Friday in Chicago at 83.27 while currently trading at 81.80 down about 150 points for the trading week right near a 3-week low. I'm keeping a close eye on this market for a possible short position in the next week's trade. Hog prices are trading below their 20-day moving average, but still above their 100-day which stands at the critical 80 level which is also at major support as we experienced a wild trading session yesterday which is a good thing to see as volatility is starting to come back into the hog market. I think the June hogs topped out around the 84.40 level just a couple of weeks ago and now have been in a slow, steady downturn. I do believe that level will be breached the coming weeks ahead as we are experiencing holiday markets which are nonvolatile, but we are entering January, and the volatility increases tremendously. The chart structure is solid, but the trend still is mixed, so I will be patient before entering into a short position as the risk/reward could change next week. Many of the agricultural markets have sold off in recent weeks due to year-end selling in my opinion, and I think that hog prices are too expensive compared to the rest of the markets as we are only 250 points or so from their contract high.
TREND: LOWER - MIXED
CHART STRUCTURE: SOLID - IMPROVING
VOLATILITY:INCREASING

Trading Theory

What’s the difference between old crop and new crop in the agricultural commodities? When analysts and traders talk about agricultural commodities such as soybeans and corn, the one thing they mention is old crop versus new crop and that might confuse some beginners on what exactly is the difference. I will keep it simple because the only difference between the old crop and the new crop is that old crop in soybeans is any month other than November. As an example is March or May and all months that were grown last year while the new crop is the November soybeans and will be harvested this October of 2017 and will be grown this summer.

That’s why sometimes there is a price difference between the old crop and the new crop because this year’s harvest in soybeans could be as high as 4.5 billion bushels pushing prices lower in the November contract as the old crop and the new crop can also have different carryover levels or supply levels.

Old crop corn is any month other than the December contract while the new crop is only the December contract which will be grown this summer and harvested in October and sometimes there’s a price difference between old crop and new crop as well because as we will be harvesting around 14 billion bushels in October which is the reason why the December corn can be lower than the May corn because that was old crop which was harvested last October also having a different supply situation.

Many of the agricultural commodities are affected by old crop & new crop including the grains, meats, coffee, and cotton. So if you need help understanding which month you should be trading feel free to give me a call at any time & I will be more than happy to make sure that you are trading the correct month.