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.

Natural Gas Futures

Natural gas futures in the June contract settled last Friday in New York at 2.77 while currently trading at 2.72 experiencing extremely low volatility. I have been recommending a bullish position over the last couple weeks from the 2.83 level and if you took the trade continue to place the stop loss which is just an eyelash away at 2.70 on a closing basis only. The energy sector has caught fire in today's action as oil has hit a fresh multi-year high but is having very little impact on natural gas prices as mild temperatures throughout the Midwest are curbing demand at this time, but stay long and do not second guess as this was a low-risk trade to begin with. Natural gas prices are now trading under their 20 and 100-day moving average as the trend is mixed, and if we are stopped out, we could be involved relatively soon again as the chart structure is outstanding. I remain bullish this commodity. However, we must have an exit strategy when you trade the commodity markets. Volatility in natural gas should start to expand as we enter the hot summer months as this has been stuck in the mud over the last several months as I still think historically speaking prices look cheap.
TREND: MIXED - LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

10-Year Note Futures

The 10-year note in the June contract settled last Friday in Chicago at 119/16 while currently trading at 119/20 up slightly for the trading week reversing earlier games this Friday off of the U.S. unemployment number which showed a 3.9% rate sending prices higher originally then selling off as the U.S. stock market is up nearly 300 points in today's action. I have been recommending a bearish position from the 120/18 level as the stop loss now will be today's high at 120/00 as the chart structure is outstanding at the current time, but I still think we will retest the April 25th low of 118/31 possibly in next week's trade. The yield on the 10-year note is 2.95% as we have had a very difficult time cracking the 3% level in recent weeks, but with this type of economic growth and the fact that Warren Buffett actually bought $75 million shares of Apple is sending confidence back into the stock market. I think its just a matter of time before you start to move higher so stay short and place the proper stop loss. I will be looking at adding more contracts to the downside in next week's trade as the risk/reward is back into your favor and I think today's reversal is very important as it confirms the bearish trend.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Orange Juice Futures

Orange juice futures in the July contract are currently trading at 160.00 after settling last Friday in New York at 153.85 continuing its bullish momentum hitting a 5-month high. I still think there is room to run to the upside. I have been recommending a bullish position around the 142.30 level and if you took that trade the stop loss in Monday's trade will be raised to 145.50 as the chart structure remains poor due to the fact of the exponential run-up in prices that we have experienced. Juice prices are trading far above their 20 and 100-day moving average as the trend remains strong. There are major concerns about hot and dry weather in key orange juice regions in Florida and Brazil, and if this drought continues, I still think prices could touch the 200 level in the weeks ahead so stay long and continue to place the proper stop loss. Volatility in orange juice will certainly start to increase as we are also entering the volatile season for the agricultural markets. However, if you have missed this trade you also missed the boat as the risk/reward is not your favor, so move on and look at other markets that are beginning to trend.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Live Cattle Futures

Live cattle futures in the June contract is currently trading at 106.02 as I will be recommending a bullish position if we break the 6-week high which was touched on April 30th at 107.82 then placing the stop loss under the 10-day low standing at 103.82 risking $1,600 per contract plus slippage and commission. Volatility in cattle is high at the current time, and that's why the risk is also above average as we continually have 200/300 point trading ranges on a daily basis as we also filled the price gap 2-days ago which occurred on April 23rd and I think that is a bullish signal to the upside. Cattle prices are trading above their 20-day moving average, but still below their 100-day moving average as the agricultural markets, in general, have caught fire over the last couple of weeks. I think that will start to bleed into this sector. However, the chart structure will not improve for another eight trading sessions, so the risk remains at the same level. If prices break the 6-week high, there is room to run to the upside, and I think we can go all the way back up around the 115 level. You have to remember the Trump tariffs were announced as cattle prices fell out of bed hitting a contract low on April 4th at 97.07 which was a spike low in my opinion as this market has regrouped and looks strong.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

Coffee Futures

Coffee futures in the July contract settled last Friday in New York at 122.40 while currently trading at 123.30 up slightly for the week and traded as high as 125.95 in Wednesday's trade before profit taking ensued as I remain bullish. I have been recommending a bullish position from around the 122 level and if you took that trade continue to place the stop loss under the 10-day low which now stands at 117.55 as the chart structure is improving on a daily basis, therefore, the monetary risk will continue to be lowered. Coffee is trading above their 20-day moving average, but still below their 100-day as I still think the trend is higher as I do believe that the long-term bottom has occurred. We are entering the frost season in Brazil, which is the largest producer in the world and that situation doesn't occur very often. But it did occur in 1994 sending prices up dramatically in just a matter of weeks, and I think traders are putting a price premium into the market basically as an insurance policy. Continue to play this to the upside. The U.S. dollar has hit a 4-month high in today's trade, but has not had much influence on many commodity sectors except for the precious metals as the agricultural markets historically speaking are cheap in my opinion.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

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 3.98 a bushel while currently trading at 4.06 up about 8 cents for the trading week hitting a fresh contract high continuing its bullish momentum as planting is estimated to be around 35% complete after this weekend which is slightly behind the 5-year average. Prices are trading above their 20 and 100-day moving average, and I think higher prices are still ahead. I am advising my farmer clients not to be selling their cash crop as there is room to run to the upside. However, I am not currently involved in a speculative trade at this time as I'm waiting for a price pullback before entering. Therefore, the chart structure would improve. The next major level of resistance is around the 4.20 level, and if that is broken, we could trade as high as 4.50 in the coming weeks ahead as this is now in a full-blown weather market that will dictate where the short-term price action goes as we are entering the extremely volatile summer months. The weather in the Midwest at the current time is ideal with normal temperatures over the next 7/10 days. We have not experienced a drought since 2012 as we are overdue for some type of weather problem so continue to play this to the upside and if you're not involved, wait for a price pullback which could happen in next week's trade before entering.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Cocoa Futures

Cocoa futures in the July contract are currently trading lower by 64 points at 2777 still trading right near a contract high, and I still think higher prices are ahead for this commodity. I have several contacts in West Africa, and they still tell me that prices look cheap as weather conditions are still not ideal. If you are involved in a bullish position, I will place my stop loss at the 2-week low standing at 2698, but for the bullish momentum to continue, we have to break the April 26th high of 2943 as this remains one of the strongest trends to the upside in 2018. If you take a look at the soft commodities, they have all come to life here in recent weeks. I'm currently recommending bullish positions in orange juice and coffee as I had been involved in cocoa for quite some time getting stopped out last month. However, I still think fundamentally and technically speaking that higher prices are ahead. I am keeping a close eye on this market and if prices are lower in tomorrow's trade therefore the chart structure would improve therefore lowering the monetary risk I could be recommending a bullish position so let's be nimble and. Prices are trading above their 20-day moving Prices are still trading above their 20 and 100-day moving average as clearly the trend is to the upside as prices have gone sideways over the last 2-weeks or so consolidating the recent run-up over the last several months.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Sugar Futures

Sugar futures in the July contract is currently trading at 11.67 after settling last Friday in New York at 11.52 a pound up slightly for the trading week after creating a spike bottom on April 25th at 10.93. I think there is a high probability that we finally see the low in sugar prices. Sugar is now trading near a 2-week high but slightly below its 20-day moving average, but still far below their 100-day as this market still technically speaking remains bearish. The downtrend line remains intact, and I will not enter into a short position as I think the downside is very limited especially with strong corn and crude oil prices as sugar is also used as biodiesel and I think that will help support this market down the road. I have bullish recommendations in coffee and in orange juice as the soft commodities have come to life over the last couple of weeks, but be patient as the chart structure remains poor. I will be looking at a bullish position if prices hit the 4-week high and the risk/reward become in your favor, but that is not the case at this time. Fundamentally speaking, sugar remains very bearish as large worldwide supplies continue to keep a lid on prices. Production levels in many different countries around the world are at a record level, and I think all of the poor fundamental news has already been reflected into the price as that's why we have seen a bounce off of the recent 3-year low.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Wheat Futures

Wheat futures in the July contract traded higher by 28 cents this week at 5.27 a bushel hitting a 9-month high continuing its remarkable bullish trend while rallying about $0.55 from the most recent low that was created on April 24th as concerns about the drought expanding in the Great Plains is pushing prices higher. In the second day of the hard red winter, the wheat survey stated that 35.2 bushels per acre were acknowledged as that was far below last year's 46.2 and if moisture is not received in the next 7/10 days, this market will move higher. Wheat prices are trading far above their 20 and 100-day moving average as the trend clearly is to the upside. I am not involved as the chart structure is very poor as this market remained choppy for quite some time before the recent breakout. I will keep a close eye on this market for a possible retracement, therefore, entering a bullish position. Volatility in wheat certainly has increased tremendously over the last several weeks, and it will become more violent as we enter the summer months and if we receive hot & dry weather this market could really take off to the upside. If you are a farmer, I would still not be selling any of your cash crops at this time as I still think higher prices are ahead. The next major level of resistance is around the $6 area which was touched on July 2017 when we also experienced dry conditions as there is room to run to the upside for this commodity.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Trading Theory

What do traders mean when they talk about seasonality and its effects on commodity prices? The definition of seasonality states that a characteristic of a certain time when the data experiences regular and predictable changes which occur every calendar year and in a time series that reoccurs or repeats over one year can be said to be seasonal.

An example of seasonality is the grain market where generally prices head higher in spring and early summer on concerns of a drought or a poor crop, it also happens in the energy sector in the summer months when demand for unleaded gasoline is at its peak and then generally declines to go into winter.

Seasonality also affects the grains in the month of October when historically prices decline during that period due to the fact that harvest is occurring which puts pressure on prices due to the crop being harvested. Traders try to use seasonality to predict or take advantage of prices in a certain month or season with many of the agricultural commodities.