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 trading higher for the 3rd consecutive session up another $0.07 at 14.33 an ounce after settling last Friday at 14.14 up nearly $0.20 for the trading week. Silver prices hit a contract low on November 14th at 13.86 as we are right near a three year and ten year low as the strong U.S. dollar has undoubtedly put pressure on this commodity as I am currently sitting on the sidelines waiting for a trend to develop. Silver prices are trading under their 20, and 100-day moving average as the trend is to the downside, but this market has been very choppy over the last several months in a directionless trend. I'm advising clients to avoid silver and look at other markets that are beginning to trend as I still believe we will have bullish trends come 2019 as I think demand will come back to many commodities sectors, but I don't see anything developing in silver for the next several months. Gold prices are also still hovering around the 1,200 level as that is also experiencing a choppy to lower trend as the precious metals need a weaker dollar not a stronger dollar & until that happens prices will remain depressed.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the January contract is currently trading at 57.00 a barrel after settling last Friday in New York at 60.36 experiencing its longest losing streak of 13 consecutive sessions in its history as this market has fallen off a cliff. Oil prices topped out on October 3rd at 76.56 and now has dropped about $20 hitting a low of $55 earlier in the week trading far below its 20 and 100-day moving average as oversupply concerns have sold off prices. Several of the last API inventory reports have shown that we are building huge inventories of oil coupled with the fact that the Iranian sanctions were not nearly as strict as once thought as we are allowing eight countries that can still buy oil from Iran. Volatility and the chart structure are terrible in this commodity so move on and look at other markets with a better risk/reward scenario as I think we will consolidate and trade in a sideways pattern for the rest of 2018. If the $55 level is broken, you could head down to the 50 level as I don't think we'll see that $76 level anytime soon, but wait for a better chart pattern to develop before entering into a position.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Natural Gas Futures

Natural gas futures in the December contract settled last Friday in New York at 3.71 while currently trading at 4.22 up about 50 points for the week and traded as high as 4.92 earlier in the week before profit taking ensued. Record cold in the Southern and Midwestern part of the United States is to blame for the skyrocketing prices. Many gas wells were frozen as production levels hit an all-time low coupled with the fact that supplies are also at a 15 year seasonal low. Volatility will remain extremely high for the rest of the winter months in my opinion. The chart structure in natural gas is terrible as I missed this trade to the upside by a couple of points. I was bullish around the 3.10 level, but that's just the way it goes sometimes, but I'm certainly not advising any short position as there could still be a lot of room to the upside especially if the extremely cold weather continues in the coming months ahead. Natural gas prices are trading far above their 20 and 100-day moving average as the trend is to the upside as it's the strongest out of the energy as crude oil took a beating this week, however, gas and oil can move in opposite directions.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Orange Juice Futures

Orange juice futures are trading lower for the 7th consecutive session down another 90 points at 132.20 hitting a fresh contract low. I have been recommending four bearish positions and if you took those trades continue to place the stop loss above the two week high on a hard basis only at 139.25 as the chart structure will improve next week as the monetary risk will also be lowered as I still think there is room to run to the downside. Orange juice prices hit a one year low with the next major level of support around the 125.00 level, and if that is broken like I've talked about in many previous logs, I think 120 could be in the cards. Juice prices are trading far below their 20 and 100-day moving average as clearly this trend is strong to the downside as harvest has begun in the State of Florida as ideal weather conditions persist as that is putting major pressure on prices so stay short.
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.

Coffee Futures

Coffee Futures in the March contract traded lower by 115 points for the trading week currently at 116.20 ending the week on a positive note finishing higher by over 200 points. Coffee prices are trading right around there 50% retracement from the contract low to the recent high as they finally filled that gap at the 112.80 level as I had talked about weeks on end as that is a bullish technical indicator. The Vietnam harvest will start in the next couple of weeks as they are expected to produce around 30 million bags. I think this market will remain choppy for the rest of 2018 and then we will start to focus on the Brazilian crop as the volatility will start to expand to the upside in my opinion. The El Nino weather phenomenon could produce a drought, and if that's the case, you could see prices exponentially higher. Coffee prices are still trading slightly below their 20 and 100-day moving average as the weather will be the main focus on where prices go in the coming months. The chart structure currently remains poor as prices went straight up and straight down as I will wait for that situation to improve, but I do believe the 95 level will hold.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Cocoa Futures

Cocoa Futures in the December contract settled last Friday in New York at 2250 as I had been recommending a bullish position from around the 2232 level getting stopped out around the 2270 level earlier in the trading week as prices hit a two week low. Cocoa prices were unable to crack the double top which was created around the 2400 level as then prices sold off rather quickly as the trend is mixed at present, however, I do think the downside is limited as we are in the strong demand season for chocolate as Christmas is right around the bend. Cocoa prices are now trading under their 20 and 100-day moving average, however, I will not take a short position and at present as I have two soft commodity recommendations which are a bullish cotton and a bearish orange juice trade. Volatility in cocoa remains relatively low as we could be involved in this commodity in the coming weeks ahead so keep a close eye on this market.
TREND: MIXED - LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Sugar Futures

Sugar futures in the March contract settled last Friday in New York at 12.73 while now trading at 12.73 a pound unchanged for the trading week still hovering near a six week low. As I have talked about in previous blogs, I thought prices could go down to the 50% retracement level from the recent low to the recent high which stands at 12.50, and if that is broken, I think prices are likely to head down to the 12.00 level. The fundamental and technical picture for this commodity, in my opinion, remains bearish as prices have followed crude oil lower over the last several weeks as sugar is used as biodiesel as the world is still awash in supplies. The chart structure at the current time is very poor as prices went straight up and are now headed straight back down. We are trading under the 20-day but still above their 100-day moving average as the trend is mixed as I will wait for the chart structure to improve before entering into a position which still could take a couple more weeks as I am advising clients to avoid sugar at this time.
TREND: MIXED - LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Soybean Futures

Soybean futures in the January contract settled last Friday in Chicago at 8.86 a bushel while currently trading at 8.93 up about $0.07 experiencing very low volatility as prices look to break out above the critical $9 level. If you take a look at the monthly chart, there's a possibility of a head and shoulders bottom technical pattern developing as I do believe the September 18th low of 8.26 will hold. Fundamentally speaking this market remains extremely bearish as we almost have 1 billion bushels of supply which is an all-time record, but that has already been reflected into the price as there's a possibility that a bullish trend is starting to develop. Estimates of 2019 planted acres are around 82 million which is 8 million less than 2018 as that is a good thing to see as we continue to overplant as that is why we have such huge carryover levels. Volatility remains relatively low as I expect that situation to continue for the rest of 2018 as we will then focus on the Brazilian crop which is off to an outstanding start once again. Soybean prices have been trading in a $0.75 range over the last several months as a possible break out to the upside could occur in next week's trade, however, at present, I do not have a recommendation in this commodity.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Trading Theory

How long does a meaningful consolidation have to last before you enter into a trade? In my opinion, I always want to see a consolidation that lasts at least 8 or more weeks before I would consider entering.

The reason that I want a longer consolidation is to try and avoid a bunch of false breakouts such as a ten or fifteen-day consolidations which happen all the time. So I am trying to put the odds in my favor by trading the breakout of at least eight weeks or more and the longer such as a ten or thirteen-week consolidation, the better.