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 is currently trading at 14.64 unchanged for the trading week continuing its low volatility as prices have been stuck in the mud over the last month or so. I have been recommending a bullish position from around the 14.50 level & if you took the trade continue to place to stop loss under the contract low which was hit on September 11th at 13.96 an ounce. Gold futures hit a two month high in this week's trade as the U.S stock market was sharply lower as funds came out of equities and into the gold market as a flight to quality as gold is used as a safe haven as that has helped support silver prices here in the short term. Silver futures are trading above their 20 day, but still under their 100 day moving average which stands at 15.47 and for the bullish momentum to continue we have to break the 15.00 level in my opinion as I think that could happen in next week's trade so stay long and continue to place the proper stop loss. I think the volatility will come back into this market as historically speaking silver is very volatile, but that has not been the case in 2018 as I still think prices look very cheap especially compared to gold and crude oil as they are all inflationary commodities.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the November contract is trading lower for the 3rd consecutive trading session down another $0.15 at 70.82 a barrel after settling last Friday in New York at 74.34 experiencing one of the worst trading weeks in quite some time as prices are right near a three week low. Prices topped out on October 3rd at 76.90 as volatility has increased substantially as this commodity is now following the U.S stock market which has been down significantly over the last several days as economic growth is now in question. I'm currently sitting on the sidelines. However, I do think the downside is limited as major support stands at the 68/70 level as there are still major problems with production around the world including sanctions that we are levying on the country of Iran as I think the sell-off is due to panic selling. Crude prices are now trading below their 20-day, but still above their 100-day moving average which stands around the 68 level as the chart structure is terrible at the current time as I think the volatility is going to remain high for quite some time as I will be looking at a possible counter trend trade if prices drop much further. The Trump administration announced that they will increase the ethanol mandate from 10% to 15% as that will put a damper on gasoline demand and that is precisely what has happened this week as unleaded gasoline was sharply lower.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Coffee Futures

Coffee futures in the December contract settled last Friday in New York at 108.95 a pound while currently trading at 116.50 up sharply for the trading week as the Brazilian Real has stabilized significantly against the U.S dollar as that is pushing prices higher in the short term. I'm kicking myself as I missed this trade, however, I have many clients who did buy at the four week high around the 104 level and if you took the trade continue to place the stop loss under the 10-day low which stands at 101.10. However, the chart structure will improve on a daily basis; therefore, the monetary risk will be lowered significantly. Coffee prices are now trading above their 20 and 100 day moving average for the 1st time in months as prices are at major resistance as I still believe the price gap that was created at 109.40 will be filled as it came very close in yesterday's trade as the low was 109.75 as volatility is coming back into this sleeping giant. The soft commodities across the board have come to life in recent weeks as inflation concerns are starting to enter the commodity markets for the first time in several years so if you long continue to place the proper stop loss. I'm certainly not recommending any short position as I think we are in the midst of a secular bullish trend for coffee prices.
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 December contract settled last Friday in Chicago at 3.60 a bushel while currently trading at 3.69 unchanged for the week reacting positively to yesterday's crop report. Carryover levels are 1.813 billion bushels which were around 100 million lower-than-expected and 300 million less than last year's level as the bullish fundamental situation for corn is improving. Corn prices hit a six week high, and if you are bullish, I would place the stop loss under the 10-day low standing at 3.60 as the risk is around $450 per contract plus slippage and commission as I am currently sitting on the sidelines. Corn prices are trading above their 20-day, but still below their 100-day moving average as the trend is mixed as I still believe the upside and downside in corn are limited as I don't see much movement for the rest of 2018. However, come 2019 we could have a bullish trend develop as tightening world stocks coupled with the fact that we possibly could reduce acres once again as I think the worst is over at this time. If your a farmer I am advising that you hold on to your crop as I believe you will get higher prices down the road as I still think the commodity markets in 2019 will catch up to the U.S equity market as demand will start to pick up due to economic growth in my opinion.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: NORMAL

Cotton Futures

Cotton futures in the December contract are currently trading higher by 176 points at 78.57 after settling last Friday in New York at 76.10 up over 250 points for the trading week. The crop report was released yesterday stating that the United States will produce around 19.76 million bales which were slightly higher than expected with world carryout at 77.45 million bales as it looks to me that prices have bottomed out. Prices hit their contract low on October 1st at 75.37 as prices have now hit a two week high looking to move even higher in my opinion as I am keeping a close eye on this market looking at a possible bullish position in next week's trade. Prices are now trading above their 20-day moving, but still far below their 100-day which stands at the 84.00 level as that tells you how far prices have come as in late July we were at the 90 level. Volatility has picked up in recent days as the harvest in the southern part of the United States is in full swing and should be wrapped up in the next 4/5 weeks as a seasonal bottom could be at hand in my opinion.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Orange Juice Futures

Orange juice futures in the November contract is currently trading at 144.35 after settling last Friday in New York at 143.20 up over 100 points for the trading week as I have been recommending 3 bearish positions over the last couple of months and if took those trades place the stop loss on a hard basis only at the 10-day high at 149.15. The chart structure will start to improve on a daily basis next week as the stop loss will be lowered to 147.85 in Tuesday's trade as volatility has come to a crawl as Hurricane Michael had minimal impact on orange growing regions as there is very little fresh fundamental news to push prices in either direction at this time. Juice prices are trading under their 20, and 100-day moving average as the trend remains negative as I still believe we could touch the 130 level in the coming weeks ahead, however the soft commodities have had a significant rally especially sugar & coffee, but the fundamental and technical picture for this commodity remains bearish in my opinion. If you take a look at the daily chart, the downtrend line remains intact as prices have had a difficult time going through the 142 level as that has to be broken for the bearish momentum to continue so stay short while placing the proper stop loss.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Wheat Futures

Wheat futures in the December contract settled last Friday in Chicago at 5.21 a bushel while currently trading at 5.15 down slightly for the trading week still trading at major support as I still believe prices are in the midst of a bottoming out pattern. Wheat prices are still trading below their 20 and 100 day moving averages as prices have been stuck in the mud over the last 6 weeks as I still believe the 4.90 level will hold as the head and shoulders bottom chart pattern is still intact in my opinion as I still think prices look relatively cheap at this time. Weather conditions in the Great Plains part of the United States are ideal at this time as that is what's continuing to put pressure on this market as the crop report which was released yesterday was slightly bullish lowering carryover levels, but did not have much impact on prices. The next major level of resistance is at the four week high standing at 5.31. I will be recommending a bullish position if prices break that level then placing the stop loss under the 10-day low as the risk/reward would be in favor due to the fact of the low volatility & the excellent chart structure as I will not take a bearish position as I think the downside is minimal. Volatility should start to increase as we head into the volatile winter season as I still believe a breakout to the upside is looming so be patient at the current time & let's see what develops in next week's trade.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Trading Theory

What Does An Inverted Market Mean? Its 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.