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 in New York at 1,314 an ounce while currently trading at 1,321 up about $7 for the trading week still experiencing low volatility. At the present time I'm not involved in any of the precious metals but does look to me that gold may have bottomed out around the 1,300 level as that was tested on a half-dozen occasions while rallying every single time as I think the fact that crude oil prices are now at a 4 year high that will start to support the precious metals which still look cheap historically speaking. The U.S. dollar hit a four month high this week as that has been the main culprit pushing prices lower as the Iran deal was revoked and I think that will be a fundamental bullish indicator for gold and the precious metals down the road. The chart structure at the current time is improving as gold prices are at a two week high as we could be involved relatively soon, but at the current time prices are still trading under their 20 and 100-day moving average as the trend is lower to mixed in my opinion. Money flows were coming out of the European countries and into the U.S dollar on fears of the Iranian deal being reversed and that has now happened as it could be "buy the rumor and sell the fact" as the U.S. dollar sold off over the last 2 trading sessions stopping the bleeding in gold prices so be patient & let's see what next week's trade brings.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Silver Futures

Silver futures in the July contract finished higher by 24 cents this week at 16.74 an ounce trading higher for the 3rd consecutive session near a two week high as I'm currently not involved. However, I still have a bullish bias to the upside as the precious metals look cheap in my opinion especially compared to the stock market and now crude oil prices. Silver prices are trading right their 20 and 100-day moving average as this trend is mixed as it continues to hold major support around the 16.25 level which been touched on that level about a half-dozen times only to rally every single time as I still think historically speaking prices look cheap and if you're not a trader, but a longer-term investor I would just buy and hold. The chart structure at the current time is poor so I will be patient and wait for the breakout to the upside which could take a couple more weeks as I will not go short as I think the downside is very limited at this time. Inflationary commodities are starting to come to life as gold prices also continue to bounce off of the 1,300 level as I think the path of least resistance is going to be to the upside as the risk/reward is not in your favor at this time. The U.S dollar is still hovering right near a four month high as that has been the main culprit keeping a lid on silver prices here in the short-term as I do think prices could break the $17 level possibly in tomorrows trade.
TREND: HIGHER - MIXED
CHART STRUCTURE: POOR
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the June contract settled last Friday in New York at 69.72 while currently trading at 71.12 a barrel up about a $1.40 for the trading week experiencing extremely high volatility due to the fact that President Trump revoked the Iranian deal sending prices sharply lower and then sending prices sharply higher hitting a new four year high. I had several clients that were lucky enough to buy crude oil around the 68 level & if you took that trade continue to place the stop loss under the two week low standing at 66.92 as the chart structure will start to improve later next week as I still believe higher prices are ahead. Crude oil has been the strongest commodity in 2018 as gasoline and heating oil continue to hit multi-year highs as I'm certainly not recommending any type of bearish position as that would be counter-trend trading and very dangerous over the course of time. Crude oil prices are trading above their 20 and 100-day moving average as the trend is higher as there is a lot of uncertainty in the Middle East right now, and the fact that Venezuela has cut production tremendously due to the terrible economic conditions in that socialist country as production levels will also be cut in Iran as well so the fundamental and technical picture remains bullish and if you are not involved in this market wait for some type of price pullback to enter into a bullish position.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Natural Gas Futures

Natural gas prices traded higher by 10 points at 2.80 this week as I have been recommending a bullish position over the last several weeks from around the 2.83 level and if you took the trade continue to keep the stop loss under the two week low standing at 2.70 as the chart structure will not improve for another seven trading sessions. Gas prices are now trading above their 20 and 100-day moving average as the short-term trend is positive in my opinion. However, it is mixed, and for the bullish momentum to continue, we have to break the April 26th high of 2.84 which was the original day of the recommendation as I still think higher prices are ahead. The energy sector has caught fire hitting a multi-year high, however natural gas can move in opposite directions than crude oil as they are different products, but it was good to see that the energy sector is bullish at this time as I think that will start to lend some support to gas prices. Prices have been stuck in the mud over the last six weeks and if we could break the 2.84 level I might be recommending more bullish positions to the upside as the risk/reward are still in your favor due to the extremely low volatility as I don't think that situation is going to last much longer as we enter the volatile summer months here in the Midwest.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Orange Juice Futures

Orange juice futures in the July contract have now traded higher 14 out of the last 16 trading sessions up another 130 points closing at 169.30 & traded near the 170.00 level early in the day before profit taking ensued sending prices off session highs. In my opinion orange juice is the strongest commodity at the current time as you could argue that crude oil also is extremely strong as the commodity markets in general I think are headed higher as I have been recommending a bullish position from around the 142.30 level & if you took the trade the stop loss now stands at 153.55 as the chart structure will improve on a daily basis. Juice prices are trading far above their 20 and 100-day moving average as clearly this market is strong to the upside as trying to pick a top and selling this commodity would be counter-trend trading and very dangerous in my opinion as I still think there is a lot of room to the upside and if this drought continues in the state of Florida and in key growing regions in Brazil you could see volatility explode to the upside. The next major level of resistance is around the 180/200 level which is still quite a distance away as I will wait for better chart structure to develop before adding more recommendations to the upside as the risk/reward are not your favor at this time, so continue to stay long as who knows how high prices could trade.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

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.

Corn Futures

Corn futures in the July contract are currently trading at 3.97 a bushel after settling last Friday in Chicago at 4.06 down about 9 cents for the trading week as ideal weather conditions in most of the Midwestern part of the United States except for the state of Iowa have pushed prices lower. Corn prices are now trading right at their 20-day but still above their 100-day moving average as yesterday's crop report stated that we should produce around 14 billion bushels in the United States in 2018 which will not be a record crop with an average of around 174 bushels per acre. However, its a long growing season and weather problems can arrive pushing prices higher. In my previous blogs, I was recommending to buy at 3.96. However, I did not take that trade because prices are now at a two week low as I am currently neutral corn prices as I have no grain recommendations at present. Volatility in corn will certainly start to expand as we enter the hot and dry summer season as I still think the downside is very limited as I'm still advising my farmer clients not to sell their cash crop as I don't think the high that was created on May 3rd around the 4.08 level will be the high for the year as I still think a weather situation will develop as we have had ideal weather conditions over the last 5 years as we are overdue for a poor crop cycle in my opinion.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Sugar Futures

Sugar futures finished lower by 29 points this week in New York at 11.22 a pound continuing its bearish momentum to the downside as this is probably the most bearish commodity out of all sectors as it looks to retest the April 26th low of 10.93 in my opinion, however I do believe prices are becoming extremely cheap. At the present time I am not involved as I will not take a short position as I think the downside is very limited as we are right near a three year low and we are very close to a ten year low as crude oil prices are up over $2 today hitting a three week high and I think that will start to support sugar at present as the fundamentals are just so terrible as that is what's keeping a lid on prices. Sugar prices are trading far below their 20 and 100-day moving average, however the chart structure is starting to improve as we have basically been going sideways over the last month as I will be looking at a possible bullish position in the weeks ahead as overproduction in key sugar producing countries throughout the world is a huge problem at this time, but eventually that will be reflected in the price as a bottom is coming soon in my opinion so be patient & don't catch a falling knife at this time.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Soybean Futures

Soybean futures in the July contract settled last Friday in Chicago at 10.36 while currently trading at 10.05 a bushel down about $0.30 for the trading week right near a three month low as the fundamental picture for this commodity is terrible in my opinion. China has cut imports for the 1st time in 15 years coupled with the fact that we are experiencing ideal weather conditions in most of the Midwestern part of the United States as planting is in full swing as estimates of the 2018 crop are around 4.3 billion bushels which is not a record but still outstanding. Carryover levels were released in yesterday's crop report stating that the new crop will have around 415 million bushels which was lower than expected but historically speaking remains high, but the main problem is from the tariffs on soybeans with China as they are a huge importer of U.S soybeans as now they are going to other countries which stymies demand putting pressure on prices and that's exactly what is occurring at this time. Soybean prices are trading under their 20 and 100-day moving average as the trend is lower as I'm certainly not recommending any bullish position at this time as I think prices could trade as low as around 9.60 as I do not have any grain recommendations at present as they are lower across the board in today's action.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

Wheat Futures

Wheat in the March contract settled down 9 cents at 4.98 a bushel continuing its short-term bearish momentum filling the gap that was created on April 30th as I think most of the downside action, in my opinion, is over with as I will be looking at a possible bullish position in tomorrows trade. Wheat prices have dropped about $0.40 from last week's high as we are in a full-blown weather market as the Great Plains have received some adequate rain which is sending prices lower. However, historically speaking I think wheat prices look very cheap as I will not take a short position as the risk-reward is not in your favor for that kind of trade. Wheat prices are still trading above their 20 and 100-day moving average as I still believe the grain market in general except for soybeans looks to move higher as soybeans look interesting in my opinion if they drop another $0.20/$0.30 as I think they will be a buy going into the summer months as the commodity markets, in general, are starting to move higher as crude oil has become the leader hitting a new four year high in today's trade. Volatility in the wheat market will start to expand in the coming weeks as I think prices will become even more violent as we enter the summer months with the possibility of hot and dry weather conditions creating havoc possibly disrupting yields just like they did in 2017 so look to play this to the upside.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Live Cattle Futures

Live cattle futures broke out this week hitting a 7 week high up around 160 points currently at 107.60 as I'm now recommending a bullish position while placing the stop loss under the 10-day low standing at 103.82 as the risk on this trade stands around $1,600 per contract plus slippage and commission and should only be taken with a large trading account. Cattle prices are now trading above their 20-day moving average but still below their 100-day which stands around the 111.00 level as that just tells you how bearish this market has been over the last couple of months as the commodities are starting to look strong in my opinion as I think the risk/reward are in your favor at this time. The volatility is starting to increase as that is a good thing to see as we saw a spike bottom due to the Trump tariffs created on April 4th at the 97 level as I think all of the bearish fundamental news has already been reflected into the price so play this to the upside. However, if the risk is too high wait for some type of price pullback, therefore, lowering the monetary risk as the chart structure will not improve until later next week so you will have to accept the large monetary risk at this time.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

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.