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 June contract is currently trading lower by $0.15 at 71.35 a barrel after hitting a fresh 4-year high earlier in the week at 72.30 as profit-taking has come about. However, this market remains bullish in my opinion. If you are long a futures contract continue to place the stop loss under the 2-week low standing at 67.63 as you will have to roll over into the July contract in the next couple of days as the stop loss will be changed, but I do think higher prices are ahead. One of the main reasons why this market has turned bullish is the fact that Venezuela has turned into a complete nightmare as that socialist country has utterly imploded over the last several months as they are not producing near as much oil as they used to, therefore, supply concerns in the short term are at hand. If you take a look at heating oil and unleaded gasoline they are both hitting multi-year highs in today's trade as the whole sector is extremely bullish so continue to play this to the upside & if you're not involved in the market wait for some profit-taking before entering into a bullish position, therefore, lowering the monetary risk. Oil prices have probably been the strongest trend in 2018 as we are trading far above their 20 and 100-day moving average as the volatility remains relatively low except for last week when President Trump revoked the Iranian deal as the fundamental and technical picture remains bullish in my opinion so stay long & continue to place the proper stop loss.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Silver Futures

Silver futures in the July contract settled last Friday in New York at 16.75 an ounce while currently trading at 16.45 down about $0.30 for the trading week still bouncing off of major support around the 16.25 level which has been touched half a dozen times, but unable to penetrate on a closing basis. Gold futures have also hit a 5-month low in this week's trade as the precious metals have turned bearish here in the short-term because the U.S. dollar continues its bullish trend hitting a 5-month high this week. That is a fundamental bearish indicator towards silver and gold prices. Silver is now trading below its 20 and 100-day moving average as the trend is lower to mixed as I am not involved. However, I will not take a short position as I do think the downside is limited as the chart structure is poor at present and the risk/reward are not in your favor so avoid this commodity and look at other markets with a better scenario. If you take a look at the monthly chart, the 16.25 area has acted like cement, and I don't think prices could go much lower than that. We could be involved in a bullish position in the next several weeks as volatility remains relatively low for such a historically volatile commodity especially if the U.S. dollar tops out, but at the current time, that trend is strong to the upside. If you take a look at crude oil prices, they have hit a 4-year high as that is considered an inflationary commodity as I think that will also start to support silver prices down the road.
TREND: MIXED - LOWER
CHART STRUCTURE: POOR
VOLATILITY: LOW

Natural Gas Futures

Natural gas futures in the June contract are currently trading higher by 1 point at 2.87 as I have been recommending a bullish position over the last several weeks from the 2.83 level as I am now recommending to offset that position and roll over into the July contract as expiration is upon us. Gas prices in the July contract settled last Friday in New York at 2.82 while currently trading at 2.89 hitting a 2-month high in today's trade continuing its slow grinding momentum to the upside. If you continue to take this trade place the stop loss which now stands at 2.73. The chart structure will not improve for another four trading sessions so you will have to accept the monetary risk at this time as the volatility remains strangely low. Natural gas prices are trading above their 20 and 100-day moving average with the next major level of resistance around 2.93 and if that is broken I think we can test the January 30th high of 3.01 in the coming weeks. I remain bullish so continue to place the proper stop loss while risking 2% of your account balance on any given trade. The energy sector as a whole continues to move higher as strong demand has entered this entire sector as we enter the extremely volatile summer months for natural gas as I still think higher prices are ahead.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

10-Year Note Futures

The 10-year note in the June contract is currently yielding 3.09% hitting a 7-year high today breaking a 4-day losing streak as prices settled at 119/13 last Friday in Chicago while currently trading at 118/22 continuing its bearish momentum. I have been recommending a bearish position from the 120/18 level & if you took the trade, the stop loss has been lowered to 119/23 as the chart structure will start to improve next week; therefore, the monetary risk will also be reduced as this trend is getting stronger and stronger on a weekly basis. The 10-year note is trading below its 20 and 100-day moving average as the trend is powerful to the downside, and I still believe we will be at the 3.50% level in the coming weeks ahead as the volatility remains relatively low. The U.S stock market continues to grind higher and has stabilized over the last several months as the U.S economy is in excellent shape as I see no reason for the 10-year note to be yielding 3.09% as the extremely low-interest-rate scenarios are behind us as that is a thing of the past in my opinion. The next major level of support is today's low of 118/12, and if that is broken, we can head down to the 117/16 level rather quickly so continue to play this to the downside. I will be looking at adding more contracts if prices rally up to the 118/28 level possibly in next week's trade as I think this is just a kickback due to the oversold conditions.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Orange Juice Futures

Orange juice futures in the July contract settled last Friday in New York at 169.35 while currently trading at 168.25 having one of its 1st losing weeks in over a month hitting a 1-week low. Heavy rains this week in the state of Florida has put some pressure on prices as a drought in that state and Brazil continues to support prices. I have been recommending a bullish position from the 142.30 level, and if you took the trade, the stop-loss stands at 158.80 as the chart structure will improve tremendously in next week's trade, therefore, the monetary risk will be lowered. Juice prices are still trading far above their 20 and 100-day moving average as I think this week's setback was primarily blamed on profit-taking and overbought conditions as prices have gone up exponentially over the last several weeks. I still think 200 is a real possibility especially if the dry conditions persist over the next several weeks. At present, this is my only soft commodity recommendation as I was stopped out of the coffee market earlier this week while I'm also keeping a close eye on a possible position in sugar. However, the orange juice trend is powerful so stay long & continue to place the proper stop loss. I still think there's more room to run to the upside despite the fact that the U.S. dollar has hit a 5-month high in this week's trade which generally has a negative influence on agricultural prices. However, we are in a full-blown weather market at this time as that is what will dictate the short-term price action.
TREND: HIGHER
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.

Corn Futures

Corn futures in the July contract settled last Friday in Chicago at 3.96 a bushel while currently trading at 4.00 up about 5 cents this Friday afternoon reversing losses that we witnessed over the last couple of days as this market is now entering the extremely volatile summer months. Estimates of completed corn planting at this time will be around 80% as we are not having any weather problems as ideal weather conditions across the Midwestern part of the United States are prevalent. Corn prices are still trading above their 20 and 100-day moving average as the trend is higher. However, we have been trading sideways over the last couple weeks, and for the bullish momentum to continue, we have to break the May 3rd high of 4.08. I am currently not involved in this market, but I do have a bullish bias to the upside as the fundamental and technical picture remains strong. A possible breakthrough with China on the trade war is what the main reason is for today's gains as there is a lot of political news surrounding the agricultural markets at this time as any positive news that arrives that could definitely send prices to the upside as I think all of the downside negative news has already been reflected into the price. I am advising my farmer clients not to be selling their cash crop as I still think higher prices are ahead as the volatility indeed will expand in June and July as that's when the hot & dry weather arrives as temperatures currently are still very mild.
TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Coffee Futures

Coffee futures in the July contract are trading slightly higher for the 3rd consecutive session up 5 points at 118.00 a pound. I was recommending a bullish position from around the 122 level getting stopped our earlier this week around the 177.50 area as this market cannot get out of its way at present. Coffee prices are still hovering right near a contract low which was hit last month around the 115 level as I will sit on the sidelines and wait for another bullish trend to develop as I will not go short as I still think we are in a longer-term bottoming out pattern. The harvest has started in Brazil which is the largest producer of coffee in the world as the U.S. dollar is also at a 5-month high with estimates of this year production around 55 million bags as the fundamental picture remains bearish. However, I still believe a lot of that news has already been reflected in the price. Coffee prices are now trading below their 20 and 100-day moving average as the trend is lower, but the chart structure is poor at present as we traded right near the 126 level a couple of weeks back, but then fell out of bed once again. The selling pressure continues to come into this market on any rally so be patient and let's see what next week's trade brings.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: LOW

Soybean Futures

Soybean futures in the July contract are trading higher by 2 cents selling off from session highs on rumors that China and the United States were making progress with the tariff situation, but that does not look to be the case just yet as this market remains bearish in my opinion. Soybean prices are at a 3-month low after settling last Friday in Chicago at 10,03 a bushel while currently trading at 9.98 looking to retest the January 12th low of 9.65 in the coming weeks as weather conditions in the Midwestern part of the United States are outstanding at present. Estimates of soybean planting after this weekend are around 55% as the combines are in full swing as we are experiencing dry and mild weather conditions as estimates are still around 4.4 billion bushels being produced in 2018 would be another outstanding crop as we already are experiencing large worldwide supplies. Soybean prices are trading under their 20 and 100-day moving average as the trend clearly is to the downside. I'm not involved, however historically speaking late May is generally bearish and then the summer months arrive, and that's where you get the weather scare pushing prices to the upside. I think this market is headed lower, but I will not take a short position as the downside is limited as we have not had a drought since 2012 as we are overdue for a poor crop cycle. At present, I do not have any grain recommendations, but I do have a bullish bias in wheat and corn as their fundamental and technical situations are entirely different from soybeans, but once this tariff situation is concluded you will see a relief rally occur in this market.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Wheat Futures

Wheat futures in the July contract is currently trading higher for the 4th consecutive session up 6 cents at 5.04 a bushel after settling last Friday in Chicago at 4.98 up 6 cents for the trading week while remaining in a very choppy trading manner. If you take a look at the longer-term chart, the uptrend line remains intact as we have been extremely mixed over the last several months peeking out last month around the 5.40 level as we are entering into a full-blown weather market. Hot and dry conditions in the Great Plains persist although some rains were beneficial to the wheat crop over last weekend. I do not have any grain recommendations; however, I think the fireworks will start June as that is when the hot & dry summer season begins. I still think wheat prices historically speaking look cheap as I think the downside is limited as I will not take a short position as I want to wait for the chart structure to improve therefore lowering the monetary risk to enter into a bullish position. Wheat prices are still trading above their 20 and 100-day moving average as the shorter-term trend is to the upside as trade negotiations with China are showing some signs of light at the end of the tunnel. I think you've seen prices rebound here over the last several trading sessions so be patient & let's keep a close eye on this market as the volatility certainly is going to increase tremendously in the weeks ahead.
TREND: HIGHER - MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Trading Theory

Trade with the short-term trend as the saying goes in futures trading that the trend is your friend. Sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade.

If it were up to me, I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side.

I define a trend as a commodity hitting a 20-day high or low as a trendy market if the market is in a consolidation stay away from it and find something that is trending up or down and go in that direction remembering the money management rule of 2% maximum loss you are wrong.