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 February contract settled last Friday in New York at 1,322 an ounce while currently trading at 1,333 up about $11 for the trading week right near a four-month high. I'm currently not involved in any of the precious metals as they have rebounded sharply over the last month. The U.S. dollar has now hit a four-month low in today's trade continuing its bearish trend which has supported gold and the precious metals recently, but the chart structure is poor coupled with the fact that we are in overbought territory. I will be patient & wait for a better chart pattern to develop before entering into a trade. Gold prices are trading above their 20 and 100-day moving average as the trend is higher as we now look to retest the September 8th high around 1,365 in my opinion. This market has rallied substantially from the recent low, that was hit on December 12th at 1,238 as we have now rallied nearly $100 in a blink of an eye despite the fact that U.S. stock market hits all-time highs every day, but this rally is based on a weak U.S. Dollar. Gold is also riding the coattails of the energy market which is right at a three-year high in crude oil as both of these are considered inflationary commodities as the U.S. economy and worldwide economies are improving significantly as that should bolster commodity prices across the board in 2018.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY:INCREASING

Silver Futures

Silver futures in the March contract is trading at 17.17 an ounce after settling last Friday in New York at 17.28 down slightly for the trading week still consolidating the recent run-up in prices over the last couple of weeks as volatility remains surprisingly low. If you take a look at the daily chart, it's mirroring the gold chart to the upside as the U.S. Dollar is hitting a four-month low in today's trade as that is supporting silver prices over the last month. Silver is trading above its 20, and 100-day moving average as the trend is to the upside, and I will be looking at a possible bullish position if prices breakout above major resistance at the 17.50 level. The risk/reward will start to become in your favor as the chart structure improves in next week's trade. As I've talked about in many previous blogs, I thought 2018 would be bullish for the commodity markets as so far only the energies and the precious metals have rallied, but the agricultural markets remain on the defensive as oversupply issues continue to keep a lid on those sectors. I do think prices will start to rally across the board eventually. If the U.S. Dollar continues its bearish trend and that's a real possibility that could push silver prices into the low $20 range as I'm looking at a bullish position possibly next week.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY:LOW

Crude Oil Futures

Crude oil futures in the February contract settled last Friday in New York at 61.44 a barrel while currently trading at 63.69 up over $2 for the trading week continuing its bullish momentum right near a three-year high. If your long a futures contract I would continue to place the stop loss at the 10-day low which now stands at 60.10 as that will start to improve next week, therefore, lowering the monetary risk as the chart structure will start to turn outstanding. Strong demand for crude oil and the energy sector as a whole has continued to push prices higher as we continue to have a draw down on supplies on a weekly basis coupled with the fact that the U.S. Dollar has now hit a four-month low which is supportive commodity markets and especially the energy sector. The next major level of resistance is around the 65/66 level & if that is broken, I still think we could trade into the low 70s. I don't think this market has peaked just yet as there is more room to run especially as the U.S. stock market is hitting another all-time high today. That will also increase demand for unleaded gasoline as economies around the world are improving. Oil prices are trade far above their 20 and 100-day moving average telling you that the trend is to the upside as traders await the next supply report which will be released later next week & should send some high volatility back into this market as volatility remains relatively low.
TREND: HIGHER
CHART STRUCTURE:SOLID
VOLATILITY:LOW

Natural Gas Futures

Natural gas futures in the February contract are trading higher for the 2nd consecutive session hitting a six-week high after settling last Friday in New York at 2.79 while currently trading at 3.12 up about 32 points for the trading week all based on a cold weather forecast ahead. I have been recommending a bullish position from around the 2.78 level and if you took the trade place the stop loss which now has been raised to 2.74 and will remain at that level for another five trading sessions so you will have to accept the monetary risk. Natural gas prices are now trading above their 20, and 100-day moving average as the trend has turned positive as the volatility indeed has come to life as well, and that is expected especially in January and February. This market will move on weather forecasts as we sold off last week on the warm weather & now have rallied this week due to a polar vortex possibly entering the Midwestern part of the United States so stay long & place the proper stop loss as the next major level of resistance is 3.20. If that is broken, I think we could retest the contract highs around 3.50 in the coming weeks ahead.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY:HIGH

10-Year Note Futures

The 10-year note in the March contract settled last Friday in Chicago at 123/16 while currently trading at 122/26 down about 22 points for the trading week. I have been recommending two short positions with the original around the 123/24 area and the 2nd around the 123/12 level and if you took those trades place the stop loss come Monday's trade will be lowered to 124/00 as the chart structure will improve on a daily basis next week. The 10-year note is trading below its 20, and 100-day moving average as this trend has accelerated to the downside, and we are now yielding about 2.58% as the U.S. stock market is hitting another all-time high in today's trade. As the higher stock prices go, the higher the bond yields will go in my opinion so stay short. I still think we could trade as high as 3.50% later this year. Money flows are coming out of the bond sector and into the equity market, and I think that will continue for some time to come. I still don't see any ceiling happening in the U.S stock market as I think we will trading above 30,000 in the months ahead in the Dow Jones Industrials and that should put pressure on bond yields, however, if you are not short this market wait for some price retracement before entering a fresh position, therefore, lowering the monetary risk. Historically speaking the yield on the 10-year note is extremely low as we used to trade around the 6% level so there is a lot of room to run especially if we can get a 4% GDP in the months ahead.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY:LOW

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 settled last Friday in Chicago at 3.51 a bushel while now trading at 3.46 down about 5 cents for the trading week hitting a fresh contract low once again. I currently have no recommendations in the grain sector as this market remains extremely weak in my opinion. The USDA released its crop report this afternoon stating that we produced 14.604 billion bushels as that was raised by 26 million coupled with the fact that bushels per acre hit 176.6 which was another record. The problem with corn and the grain market as a whole is we keep producing record crops year in and year out, therefore, ballooning carryout levels to historic highs. Weak demand is also continuing to put pressure on corn prices despite the fact that the U.S. Dollar hit a four-month low which is supportive of grain prices. This market looks to head lower as the large money managed funds are still holding near record short positions as they genuinely believe the bearish trend will continue here in the short term. In my opinion, I do think the downside is limited as the volatility in corn at present is extremely low as I am looking at a possible bullish position if prices break 3.55 as the chart structure remains excellent because we have a tight trading range over the last several months.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY:LOW

Coffee Futures

Coffee futures in the March contract settled last Friday at 128.45 while currently trading at 121.45 down about 700 points for the trading week lower for the 6th consecutive session looking to retest major support at the 120 level in my opinion. This market has been incredibly choppy over the last six months as I will continue to look for a bullish position, but at this point be patient as the fundamental picture remains bearish as ideal weather conditions in the country of Brazil continue to hamper prices here in the short term. Coffee futures are trading under their 20 & 100-day moving average as the trend is lower, however, I will not take a short position, but the agricultural markets continue to be under pressure across the board despite the fact that the U.S. Dollar has hit a four-month low as overproduction and large global supplies continue to put pressure on these commodities here in the short term. The entire soft commodities except for cotton continue to move lower as anything grown in Brazil at the current time is bearish including soybeans, orange juice, sugar, and coffee as I still think that this market will rebound we just need some spark to ignite this commodity higher so look at other markets that are beginning to trend to the upside as we probably will not be involved for several more weeks.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY:LOW

Sugar Futures

Sugar futures in the March contract have now traded lower for the last eight consecutive sessions remaining in an extremely irregular pattern. I am not currently involved in this market, and I am advising clients to avoid this commodity. If you take a look at the daily chart, prices tested major resistance around the 15.30 level and then traded all way down to the 13.71 level in a matter of weeks & then back up and now only to fall out of bed again looking to retest major support around the 13.75 level which has been touched on a dozen occasions while rallying every single time. It looks to me that level could be retested again, and it could be very good buying opportunity as this market has very large supplies and that's why these rallies continue to fizzle despite strong ethanol usage. Crude oil hit another contract high as sugar can ride the coattails of crude oil, but that's not the case due to a poor fundamental picture. Sugar prices are trading under their 20 and 100-day moving average as the trend is to the downside, but it is very choppy in my opinion, and the chart structure is poor as prices have gone straight up and straight down on too many occasions. Wait for a true pattern to develop, but if you're looking to pick a bottom look to buy around the 13.75 level as that could be at hand in tomorrow's trade as we are starting to enter the oversold territory.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY:AVERAGE

Cocoa Futures

Cocoa futures in the March contract is currently trading at 1909 after settling last Friday in New York at 1895 up slightly for the week. I've been talking about a bullish trade if prices broke 1953 on a closing basis and we traded above that level twice this week but was unable to close above that breakout level. The chart structure is starting to improve on a daily basis as we have been basically stuck in a five-week consolidation and I will continue to look at a bullish position if the 1953 level is broken on closing basis possibly next week as the risk/reward is becoming in your favor due to the sideways trading manner. Cocoa prices are still trading above their 20-day but below their 100-day moving average as the West African harvest is starting to wind down and should be complete several weeks from now as a seasonal bottom might be occurring at this time. If you take a look at the daily chart, there might be a possible head and shoulders bottom being created coupled with the fact that there may have been a spike bottom also created on December 22nd around the 1804 level which was also the contract low. The soft commodities remain bearish except for the cotton market as that is my only recommendation at the current time so keep a close eye on this market as we could be involved in next week's trade.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY:INCREASING

Trading Theory

What Is A Triple Bottom Chart Pattern? A pattern used in technical analysis to predict the reversal of a prolonged downtrend. The pattern is identified when the price of commodity creates three sell-offs at nearly the same price level. The third bounce off the support is an indication that buying interest (demand) is outweighing selling interest (supply) and that the trend is in the process of reversing.

Once the first bottom is created, the price reaches a peak and retraces back toward the prior support. This is when buyers enter again and push the price of the asset higher, creating bottom No.2. The price of the asset then creates another peak and heads lower for its final test of the support.

The final bounce off the support level creates bottom No.3 and traders will get ready to enter a long position once the price breaks above the previous resistance (illustrated by the black line on the chart). This pattern is considered to be a very reliable indication that the downtrend has reversed and that the new trend is in the upward direction.