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 August contract settled last Friday in New York at 68.58 a barrel while currently trading at 74.11 up about $5.50 for the trading week up for the 4th consecutive session hitting a 4-year high as this is the only commodity that is experiencing a bullish trend. The next significant level of resistance is around the $80 area as I think there could be a price squeeze in the front month due to the fact that the Trump administration has stated that they will put strict tariffs on any country that buys Iranian oil coupled with the fact that OPEC only increased production by 600,000 barrels as the fundamental picture for this commodity remains very strong in my opinion. Traders reacted very positively off of the API report which was released Wednesday as we had a drawdown of about 9 million barrels as there is robust demand for oil and gasoline as we are consuming record amounts as we head into 4th of July holiday weekend with a record amount people on the roads. Oil prices are trading far above their 20 and 100-day moving average as the trend is higher and if you're extended a futures contract continue to stay long and if you are not participating wait for some price, therefore, lowering the monetary risk to enter into a bullish position. The chart structure is terrible at the current time due to the fact of the exponential run-up in prices that we have experienced over the last several days.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Gold Futures

Gold futures in the August contract are up $4 this Friday afternoon at 1,255 an ounce breaking a 4-day losing streak as the U.S.dollar is down about 70 points today supporting the precious metals which remain in a bearish trend. Gold prices hit a 7-month low this week and if you are short a futures contract continue to place the stop loss above the 10-day high which stands at 1,278 as the chart structure will also improve on a daily basis, therefore, lowering the monetary risk. It looks to me that we will retest the July 7th, 2017 low around 1,230 in the coming days or weeks ahead as I see no reason to own gold. Gold prices settled last Friday in New York at 1,270 while currently trading at 1,253 down about $17 for the trading week as the entire sector continues to melt away on a daily and weekly basis as platinum prices also hit a 29 month low this week. As I have talked about in many previous blogs, all of the interest still lies in the U.S. stock market which is up about 250 points today as money flows continue to come out of the precious metals and into equities. I don't see that trend stopping anytime soon as I'm certainly not recommending any bullish position at this time. Gold prices are trading far below their 20, and 100-day moving average as the trend is to the downside as there is still more room to run as fundamentally speaking demand remains very weak coupled with the fact that interest in gold also has decreased considerably.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Platnium Futures

Platinum futures in the October contract traded lower by $17 for the trading week at 858 an ounce continuing its bearish momentum hitting a 29 month low as the precious metal sector across the board remains very bearish in my opinion. If you take a look at the monthly chart, there is a gap that was created around 830/850 in January 2016 as I think that will be filled as there is still more room to run to the downside in my opinion & if you are short stay short. The U.S dollar is at an 11 month high as that currency remains very strong as I see no reason to buy platinum or any of the metals at this time as prices are trading far under their 20 and 100 day moving average as the short-term and long-term trend is to the downside. The commodity markets across the board look very bearish except for crude oil as the Trump tariffs have certainly put the kibosh on prices in the short term. Fundamentally speaking there's very little demand for platinum coupled with the fact that there is very little buying interest as the chart structure remains solid as we continually grind lower on a daily basis as I'm certainly not recommending any bullish position as this trend is very strong.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Orange Juice Futures

Orange juice futures in the September contract traded down by 255 points this week currently at 160.35 continuing its sideways trend as the downtrend line is still intact in my opinion. If you are bearish this commodity, I would sell a futures contract while placing the stop loss above the 10-day high which was hit on June 25nd at 165.50 as the risk is around $800 per contract plus slippage and commission. However, I am currently sitting on the sidelines as I don't have any recommendations. Prices are trading under their 20-day but still above their 100-day moving average as the trend is mixed as the U.S. dollar has hit an 11 month high this week putting pressure on much of the agricultural sectors at the current time. If you take a look at the commodity markets across the board, they continue to go lower on a daily basis especially the agricultural sectors. The Trump tariffs have crushed some of these markets, and I don't think that situation is going to end anytime soon as juice prices look expensive compared to the rest of the soft commodities in my opinion as I'm certainly not recommending any bullish position at this time. Weather conditions in the state of Florida which is a significant producer of orange juice has improved over the last several weeks as the drought concerns have diminished at this time and that's why the bullish trend in the short term has ended.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Coffee Futures

Coffee futures in the September contract are trading lower for the 3rd consecutive trading session after settling last Friday in New York at 116.95 while currently trading at 115.30 a pound continuing its bearish momentum as prices are right near a 3-year low. Coffee prices look to retest the June 19th low of 114.95 & if that is broken prices could test the 110 level as fundamentally and technically speaking this market remains on the defensive as a large crop is expected out of the country of Brazil which is the largest producer in the world as supplies are still ample at this time. Coffee is trading below its 20 and 100-day moving average as the trend is to the downside is a strong U.S dollar coupled with the fact of the Trump tariff situation continues to put pressure on coffee and the agricultural sector as a whole as I don't think that situation is going to end anytime soon. Volatility in coffee is still extremely low as we continue to grind lower on a daily basis minimal trading ranges as this has been going on over the last 6/8 months. I continually talk about how volatile coffee can become, but there is very little interest in this commodity, and sometimes that can create a bottom as I will still keep a close eye on this market as I will not go short at these depressed levels.
TREND: LOWER
CHART STRUCTURE: SOLID
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 December contract settled last Friday in Chicago at 3.78 a bushel while currently trading at 3.72 down about 6 cents for the trading week ending on a positive note up 7 cents due to profit-taking in my opinion. The USDA crop report was released today showing that we planted 89.1 million acres in the United States which was 1% lower than in 2017 as the crop is off to an outstanding start as 77% of the crop is in good/excellent condition compared to the 5 year average of 67% at this time as it certainly looks like we will produce a terrific crop. The 7/10 day weather forecast remains ideal in the Midwestern part of the United States with above average temperatures, but adequate rain as the state of Illinois has received record amounts of rain in June as this market remains bearish. However, we are in oversold conditions as it would not surprise me that prices have bottomed in the short term. Corn is still trading far below its 20 and 100-day moving average as clearly the trend is to the downside as I think all of the fundamental bad news has probably already been dictated in the price as July will be critical for production numbers going forward as there could still be a weather problem that could develop. As I have talked about in many previous blogs if your short a futures contract I would be taking profits & moving on as I do think the downside is probably limited from these depressed prices and if something positive comes out of the Trump tariffs that would create a very bullish situation.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Wheat Futures

Wheat futures in the September contract settled last Friday in Chicago at 5.04 a bushel while currently trading at 5.04 ending the week on a positive note up $0.20 reacting positive to the USDA crop report which showed planting was 4% higher than 2017 at 47.82 million acres as that was the 2nd lowest of all wheat planted areas since 1919. If you take a look at the daily chart, the 4.80 level has held on multiple occasions as that looks to me that the bottom in this commodity is at hand as I think higher prices are ahead in my opinion. Wheat prices are trading slightly below their 20 and 100-day moving average as the trend is mixed in my opinion as the weather will now be the primary focus on where short-term price action heads. The grain market has been extremely weak over the last several weeks all do to outstanding weather conditions coupled with the fact of the Trump tariffs which affects this sector. Soybean prices hit a 10-year low. However, I do think that wheat is the strongest grain at the current time as it has the highest potential in my opinion as I will not recommend a short position at this time. There are still some concerns in the southern Great Plains part of the United States about the drought expanding although they have received beneficial rains over the last couple weeks, but its a long growing season as traders will keep an eye on the 7/10 day weather forecast as ideal weather conditions still look to be on the horizon.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Sugar Futures

Sugar futures in the October contract settled last Friday in New York at 12.41 a pound while currently trading at 12.13 a pound continuing its bearish momentum as the downtrend line remains intact over the last couple of months as the trend remains negative. Sugar prices are trading below their 20 and 100 day moving average as we have bounced off the 12 level on multiple occasions only to rally, however, if that is breached we should head back down to the 11.50 level as the soft commodities remain bearish across the board as many of the agricultural sectors also remain bearish. Crude oil prices hit a 3-year high today, and that generally supports sugar, but that's not the case so far as the Trump tariffs are not helping out, but eventually I think it will be beneficial for sugar as that is also used as a biodiesel, but with all this uncertainty nobody wants to own anything except oil. Volatility in sugar remains extremely low as we continually grind lower on a daily basis as I will not take a short position in this commodity at these depressed levels as I think the downside is limited. If you take a look at the monthly chart, it looks to me that we are in a bottoming out pattern. We need some fresh fundamental bullish news to prices higher as that could be a conclusion of the Trump tariffs, and then I think the bullish trends across the board will come to life so be patient and sit on the sidelines.
TREND: MIXED - LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Live Cattle Futures

Live cattle futures in the August contract settled last Friday in Chicago at 105.90 while currently trading at 103.30 down about 260 points for the trading week as the trend at the current time is mixed in my opinion. Cattle prices are trading below their 20 and 100-day moving average as the short-term trend is lower despite hitting a 3-month high in last week's trade only come right back into the trading range. I am currently not involved in this market as the chart structure is poor and the risk/reward is not in your favor to take a position in either direction. If you take a look at the monthly chart, we continue to have higher lows which tells me that a bottoming pattern has started to develop over the last several months as historically speaking cattle prices look cheap. I think many of the agricultural markets are very cheap as they seem to be getting cheaper due to the Trump tariffs and a strong U.S. dollar as I still believe once that situation comes to an end we could see some terrific bullish trends across the board. For the bullish momentum to continue, we have to break the 3-month high which was touched on June 20th at 107.62 as the livestock sector in general remains depressed so sit on the sidelines and wait for a trend to develop. I don't have any trade recommendations at the current time as that's how difficult the commodity markets have become in recent weeks.
TREND: MIXED
CHART STRUCTURE: POOR
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.