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 December contract have traded lower for the 4th consecutive trading session at 14.55 an ounce continuing its bearish momentum as the U.S dollar is up 45 points trading off of a four week low. If you are short a futures contract place the stop loss above the 10-day high which was hit in Tuesday's trade at the 15.07 level as an exit strategy as it looks to me that we will retest the August 16th low of 14.40 soon as prices are still trading under their 20 and 100-day moving average as clearly the trend remains negative. Silver prices are stuck in a three-week trading range consolidating the recent sell-off in price. I still see no reason to own any of the precious metals as the U.S. stock market is hitting another all-time high this week. I'm also recommending a bullish S&P 500 trade which continues to roll along on a daily basis as money flows continue into U.S equities and out of the precious metals so stay short & place the proper stop loss. If you take a look at the daily chart, the downtrend line remains intact. However, if the 15.07 level is broken that will also be breached as then it would be time to sit on the sidelines while waiting for another trend to develop.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: AVERAGE

Crude Oil Futures

Crude oil futures in the October contract settled last Friday in New York at 68.72 a barrel while currently trading at 69.97 up about $1.25 for the trading week continuing its bullish momentum all on concerns about the Iranian sanctions which will take place in next couple of months therefore cutting production levels as inventories are already tight. The chart structure is terrible as the 10-day low stands at 64.85 as the risk is around $5,000 per contract plus slippage and commission which is way too much risk in my opinion, however I'm certainly not recommending any bearish positions as this market is one of the only bullish trends to the upside out of all commodity sectors. Oil prices are trading above their 20 and 100-day moving average as the trend remains strong. However, the 70.00/71.50 level has been touched on a dozen occasions only to fail every single time as we are right at major resistance as we probably need some fresh fundamental news to break that critical level. Unleaded gasoline is experiencing record demand as that is also supporting oil prices here in the short term as the U.S. economy is extremely strong with very low unemployment. There's a lot of people out on the roads especially this Labor Day holiday weekend so let's see what next week's trade brings as it looks to me that higher prices are ahead.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

S&P 500 Futures

The S&P 500 is trading lower for the 2nd consecutive session at 2896 after settling last Friday in Chicago at 2876 up about 20 points for the trading week continuing its bullish momentum hitting an all-time high earlier in the trading week. I have been recommending a bullish position from around the 2803 level & if you took that trade, the stop loss has now been raised to 2846 as the chart structure will start to improve on a daily basis next week; therefore, the monetary risk will continue to be lowered. For the bullish momentum to continue we have to break the August 28th high of 2917 as the recent sell-off over the last couple days is blamed on the Trump tariff situation with China as we escalated that situation by adding another 200 billion sending the market down on profit-taking and concerns of an escalating trade war. I remain very bullish as I still think higher prices are ahead as the retail industry has been on fire. Lululemon released their earnings yesterday which were outstanding as they're not the only retail company doing great as the rumors about Amazon taking over the entire retail world are not coming to fruition as the U.S. economy is doing extremely well coupled with the fact that the U.S consumer is spending money like a drunken sailor. The S&P 500 is still trading far above its 20 and 100-day moving average as the trend is apparently to the upside as we are up about 8% in 2018. As I've written about in many previous blogs, I think that could double come year-end as the GDP number for the 3rd quarter is expected to be about 4.5% which is remarkable so stay long & place the proper stop loss.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Orange juice Futures

Orange juice futures in the November contract settled last Friday in New York at 156.45 while currently trading at 154.50 down about 200 points for the trading week hitting a fresh four-month low as fundamentally and technically speaking this market looks to move lower in my opinion. I've been recommending a bearish trade from around the 163.20 level then adding more contracts around the 154.00 level with an average price around 158.60 and if you took those trades place the stop loss above the 10-day high which stands at 158.75 as the chart structure is outstanding due to the fact that we have consolidated over the last couple of weeks. Juice prices are trading under their 20, and 100-day moving average as the trend remains to the negative and I still believe we will fill the gap that was created on April 24th around the 147 level as the chart structure will not improve for another six trading sessions. So, you will have to accept the monetary risk at this time so stay short and continue to place the proper stop loss. The soft commodities, in general, remain weak across the board as the U.S dollar is up 45 points today which continues to be strong against the Brazilian Real as that has been one factor why you have seen anything grown in the country of Brazil trade lower over the last several months.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: AVERAGE

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 3.62 while currently trading at 3.62 unchanged for the week as the trend remains bearish in my opinion as it still looks to me that prices will break the contract low of 3.50 in the coming weeks ahead. On Wednesday prices traded as low as 3.55 before rallying this afternoon as private estimates are showing 177.7 bushels per acre which is astonishing as we are going to produce another record crop around 14.6 billion bushels which are not a record due to lower planted acres in 2018, but still an excellent crop. Corn prices are still trading below their 20, and 100-day moving average as the trend is to the downside as prices are still hovering right near a six week low. The grain market, in general, remains bearish as we enter the harvest season in the next couple of weeks and that should continue to put pressure on the corn market as we have ample worldwide supplies. Traders are awaiting the following USDA crop report which will be released in two weeks, and I think that report will come out bearish as the crop seems to get larger and larger as each month passes. If you are short, continue to stay short in my opinion as there still room to run to the downside, however, volatility will come to a crawl as that is generally the seasonal effect that harvest has on corn prices as I still see 3.00/3.25 come late October.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: LOW

Soybean Futures

Soybean futures in the November contract settled last Friday in New York at 8.55 a bushel while currently trading at 8.33 down about $0.22 for the trading week continuing its bearish momentum as prices are right near a 10-year low. Private estimates have come out stating that they believe that the soybeans bushel per acre could be around 53.8 which would be a record producing just under 4.8 billion bushels which is an astounding number in my opinion as we have massive supplies and I still believe prices move lower. If you have read any of my previous blogs, you understand that I have been bearish and I think the contract low which was touched on July 16th at 8.26 will be broken. I still believe prices will trade out of the 7.50 level once the harvest is wrapped up in a couple of months as the 785 billion bushel carryover could even be raised which is shocking in my opinion, we need to stop planting so many acres in the United States and South America. I think that's the only solution to end the bearish trend. Soybean prices are trading far below their 20 and 100-day moving average as the trend is getting stronger to the downside. I'm also bearish the corn market which continues to grind lower as it looks to make a fresh contract low in the coming days ahead as well & if you are short stay short as I see absolutely no reason to buy soybeans.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Coffee Futures

Coffee futures in the December contract settled last Friday in New York at 104.70 a pound while currently trading at 102.10 down about 260 points for the trading week still hovering right near a 13 year low which was touched on August 22nd at 99.35 as I will continue to sit on the sidelines and wait for a bottoming pattern to develop. The main problem with coffee prices in the short term is a combination of about 90 bags produced between Brazil and Vietnam as that is an astounding amount of coffee coming onto the market. At one point as Brazil's harvest is around 85% complete and should have about two more weeks for that to completely be wrapped up as seasonally speaking a bottoming pattern can occur after harvest. Coffee prices are still trading below their 20, and 100-day moving average as the trend is lower, however I do believe the downside is minimal from these price levels as the chart structure has also started to improve on a daily basis; therefore, the monetary risk will be lowered to take a bullish position in the coming weeks ahead. Volatility is also starting to show some life as historically speaking coffee is an extremely volatile commodity, but has not been over the last couple of years as the trend line remains intact at this time so be patient and don't try to pick a bottom as that is very dangerous and difficult to accomplish. Sugar prices have rebounded and hit a two week high today which I think is a good situation for coffee as sugar is also grown in the country of Brazil as their chart patterns almost mirror each other as that might help support coffee prices.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Sugar Futures

Sugar futures in the October contract is currently trading higher by 3 points at 10.60 a pound as a possible rounding bottom might be taking place as I'm currently sitting on the sidelines looking to enter into a bullish position. Sugar prices are now trading right at their 20-day but still below their 100-day moving average which stands at 11.62, and that tells you how far this market has come as the downtrend line remains, but is on the brink of being violated if prices break the two week high of 10.56. I would use that level as an exit strategy if you are short a futures contract. The chart structure is starting to improve on a daily basis due to the fact of the very low volatility at these depressed price levels and that could give us a buying opportunity possibly in next weeks trade as prices may have bottomed out at the ten year low on August 22nd at 9.91 as the bearish trend might be coming to an end. At present, my only soft commodity recommendation is a bearish orange juice trade which continues to move lower, but sugar and coffee have very similar charts as they both look to be bottoming out in my opinion as these bearish trends might be getting long in the tooth as historically speaking prices look cheap.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Wheat Futures

Wheat futures in the December contract are ending the week on a positive note up 7 cents at 5.42 a bushel after settling last Friday in Chicago at 5.36 up about 6 cents for the trading week experiencing high volatility which has been occurring over the previous several months and I think that situation will remain for the rest of 2018. I'm not involved in wheat as the chart structure is poor as the market remains extremely choppy as we are still trading below the 20-day moving average but above the 100-day as I do think the downside is limited as prices bumped off of support earlier in the week at the 5.20 level. If you have read any of my previous blogs, you understand that I am bearish corn and soybeans as they continue to move lower and they are also putting pressure on this commodity. However, wheat can go in opposite directions especially going into the autumn and winter months as I think this has the best opportunity to the upside, but wait for a better chart pattern to develop coupled with a trend as you could flip the coin at this time in what direction wheat prices are headed. Traders are awaiting the next USDA crop report which will be released in 2 weeks as that should send some fresh fundamental news to dictate short-term price action in my opinion so be patient as I do think the $5 level will hold as I would be surprised to see prices break that critical area.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Trading Theory

What Does An Inverted Market Mean? It’s when a futures market where the nearer month contracts are more expensive than the distant month's contracts as an inverted market occurs during periods of shortages. Typically, the further months are more expensive because the goods have the additional costs of insurance, storage, and interest costs incurred in borrowing funds to hold the commodities. Take a look at what has developed in crude oil prices over the last month with the October contract higher than all the back months due to demand.