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.

Silver Futures

Silver futures in the May contract settled last Friday in New York at 16.27 an ounce while currently trading at 16.60 up about 33 cents for the trading week still stuck in a six week consolidation as prices continue to flip-flop on a daily basis. I am not involved in silver at this time, but I'm looking at a bullish position if prices break 16.89 as the chart structure is solid, therefore, the risk/reward would be in your favor. Volatility has started to increase this week as prices reacted positively off of the Federal Reserve announcement on interest rates earlier in the trading week. Silver prices are trading above their 20-day but still below their 100-day moving average which stands at 16.78 as that is also acting as resistance so be patient and wait for the breakout to occur. The U.S. dollar continues to trade in a sideways manner over the last several months and is lending very little support to silver. I think the Trump tariffs are pushing up the precious metals at this time as they are used as a flight to quality and if you have read any of my previous blogs you understand that I think historically speaking silver is very cheap. I do think prices are in a bottoming pattern with major support at the $16 level.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

10-Year Note Futures

The 10-year notes in the June contract is currently up 1 point at 120/18, and I am now recommending a bearish position at this level. If you read my blog yesterday, I was looking to sell at the 120/10 level but was a little more patient as the market spiked up to 120/25 all on concerns about a trade war developing. As I wrote about yesterday I was going to place the stop loss above the 120/23 level, but I changed my mind, and I will place the stop loss with a $1,000 risk at 121/18 as the volatility has kicked up from here. So, give this a little more room as the risk/reward is still in your favor in my opinion. The 10-year note hit a three week low in yesterday's trade near the 119/22 level, but then massive short covering occurred on concerns of a trade war developing. But perception is the reality at this time as everyone is running out of the stock market which is down about 400 points in the Dow Jones and running into the bonds as I think this will be short-lived so take a shot at the downside risking $1,000 per contract plus slippage & commission. The yield on the 10-year note is currently around 2.83% & traded as low as 2.80% earlier in the session as yesterday's high yield was 2.92% as the volatility certainly has come back and is expected to stay
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: INCREASING

Wheat Futures

Wheat futures in the May contract is currently trading at two month lows continuing its bearish momentum to the downside. The whole grain is lower across the board once again as the tariffs are punishing the entire agricultural sector. Wheat futures settled last Friday in Chicago at 4.67 a bushel while currently trading at 4.50 lower by around 17 cents for the trading week as improving weather conditions in the Great Plains part of the United States are also helping push prices lower with the next major level of support around the 4.25 level which was also the contract low. Wheat prices are trading below their 20 and 100-day moving averages as this trend is lower as the volatility certainly will increase as the summer months are around the bend. At present wheat prices are in oversold territory if you look at the stochastic indicator and the RSI oscillator it tells me that a kickback is probably due. So, sit on the sidelines and avoid this market at the current time while waiting for better chart structure to develop which could take a couple more weeks as the risk/reward is not your favor to enter any position as we have to see how these tariffs play out which might take some time.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Soybean Futures

Soybean futures in the May contract is currently trading at 10.22 still hovering right near a four week low all on concerns about the Trump tariffs which is having a major impact on U.S. soybeans. China could retaliate with its own tariff which would be a huge negative towards prices, and that is why prices have dropped about $0.50 over the last three weeks coupled with improving Argentina crops. At present, I am not involved as I'm looking for a possible short position. If we get any type rally towards the 10.40 level, the chart structure will start to improve in next weeks trade, and I do think prices will crack the $10 level in the weeks ahead as there is nothing bullish about this commodity. Now you throw in the tariff situation, and it just gets worse to the downside in my opinion. Soybean prices are still trading under their 20-day moving average and slightly above their 100-day and I don't have any grain recommendations at the current time. Look for a rally tomorrow while maintaining a 2% risk on any given trade of your account balance as the proper money management technique as the agricultural sectors are extremely bearish at this time and looking to head even lower in my opinion. Estimates of this year's planted acres are around 92 million which is ridiculous in my opinion as we need to produce less, not more as we have a 555 million carryover level which is historically extremely high.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 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.

Sugar Futures

Sugar futures in May contract settled last Friday in New York at 12.65 a pound while currently trading at 12.57 unchanged for the trading week still hovering near a three year low as I'm currently sitting on the sidelines. The chart structure is starting to improve as we have been going sideways at major support around the 12.50 level over the last several weeks. A possible spike bottom may have occurred on March 19th at the 12.30 level, but it is too early to tell at this point as the energy sector continues to move higher and I think that will start to support sugar down the road as that is used as an ethanol product as well. Sugar is clearly trading under their 20 and 100-day moving average as this trend continues to grind lower on a weekly basis and if 12.50 is broken as I think we test the 12.00 level prices are getting awful cheap at this time is all the bad news is already reflected in my opinion is overproduction is currently not prices. The agricultural markets continue to wither away due to the Trump tariffs as we will have to see how that situation plays out as I think prices are flat-out cheap at these levels as I will be looking at a bullish position as I will not go short as I think the downside is very limited. The only soft commodity recommendation I have is cocoa which is a strong bullish trend. However, they are grown in different parts of the world & can go in opposite directions so avoid sugar at the current time.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Cotton Futures

Cotton futures in the May contract traded lower for the 3rd consecutive session currently trading at 81.55 after settling last Friday in New York at 81.55 down by around 130 points for the trading week continuing its short-term bearish momentum as prices are right near a four week low. The agricultural sector across the board continues to head lower as the Trump tariffs are spooking the market big time as we are waiting for China's reaction as they will certainly not stand idle in my opinion pushing prices lower across the board. Cotton is now trading under their 20-day but still above their 100-day moving average as I think the next possibility is that prices retest the 77.50 level which was hit in February as that stands as the next major level of support. Private estimates of this year's planted acres are around 13.5 million which would be a record as we are expected to produce an outstanding crop, and that is also putting pressure on prices here in short-term. We continue to overgrow the agricultural commodities here in the United States as soybean acres will be a record for the 3rd consecutive year as well. It is a long growing season as we could experience a drought as we did in 2012, but at this point, this market looks weak although I am not involved. However, I'm not recommending any bullish position at this time.
TREND: LOWER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Coffee Futures

Coffee futures in the May contract settled last Friday in New York at 118.05 a pound while currently trading at 118.80 up slightly for the trading week after hitting a contract low of 116.90 last week. Prices remain extremely quiet with unbelievably low volatility for such an extended period. Coffee remains negative as prices are unable to break the downtrend line which has been in effect over the last several months as ideal growing conditions in the largest coffee producer in the world which is Brazil continues to keep a lid on prices here in short. If you take a look at the monthly chart, there is major support which was tested in a six month period in 2015 as I have a hard time believing that we will break that critical area as all of the poor fundamental news has already been reflected into the price. Coffee is trading under their 20 and 100-day moving average as that has been the case for several months as the agricultural markets continue to decline due to the tariff war possibly brewing with China. I'm still looking at a bullish position if price break the four week high standing at 124.20 which is not too far away as the chart structure is outstanding at present, therefore, the risk/reward would be in your favor. If that does occur so keep a close eye on this market as we still could be involved in a bullish position soon.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Cocoa Futures

Cocoa futures are currently trading at 2545 after settling last Friday in New York at 2522 up slightly for the trading week continuing its bullish momentum and by far is the strongest commodity in 2018. Poor growing conditions in West Africa is the main reason why prices are up about 25% this year as my contacts in that region continue to tell me that they are very concerned about the cocoa crop at this time as they still think higher prices are ahead. I have been recommending a bullish position originally in the March contract around the 1990 level and if you took that trade place the stop loss under the two week low which was created last Tuesday at 2480 as the chart structure is solid at present. However, the stop will not be raised for another seven trading session so you will have to accept the monetary risk at this time. For the bullish momentum to continue we have to break the March 14th contract high of 2581 and if that does occur I think we could be off to the races to the upside as next major level of resistance is at the 2700 area as the volatility still remains relatively low despite the fact of elevated prices so stay long & continue to place the proper stop loss as who knows how high prices can go. Cocoa prices are trading far above their 20 and 100 day moving average as clearly the trend is to the upside as many of the agricultural sectors continue to trade lower, but cocoa prices at this time are only based on weather conditions in West Africa.
TREND: HIGHER
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.