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.

Gold Futures

Gold futures in the December contract settled last Friday in New York at 1,233 an ounce while currently trading at 1,211 down over $20 for the trading week as the precious metals across the board look to move lower in my opinion. Gold prices are trading below their 20 and 100-day moving average as the trend has turned negative because the U.S. dollar is right near another contract high as interest rates in the United States are on the rise and should continue to climb into 2019. If you are bearish, I would place the stop loss at 1,239 as an exit strategy as it looks to me that prices will retest the 1,195 level possibly in next week's trade as the commodities across the board look very week as now everything is following crude oil to the downside. Silver prices are down over $0.25 today as it looks like that will retest their contract low of 13.96 possibly in next weeks trade as that is also putting pressure on gold as the only bullish commodity is the S&P 500 which reacted very positively to the midterm elections. Volatility in gold is starting to increase and remember if you're trading a smaller account you can trade the mini contract which is 1/3 of the size of the large contract, therefore, reducing the monetary risk.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Silver Futures

Silver futures in the December contract are trading lower for the 2nd consecutive session ending the week on a sour note down $0.30 at 14.12 an ounce after settling last Friday in New York at 14.75 dropping over $0.60 for the trading week hitting a seven-week low. Silver prices are starting to follow oil to the downside couple that with the fact that the U.S. dollar is right near a yearly high. It looks to me that silver will retest its September 11th low of 13.96 and if that is broken, you're looking at a two year low with the next major level support at 13.73 which was the January 2016 low & if that is broken you're looking at a 10 year low for silver prices which is remarkable in my opinion. Historically speaking I think silver looks cheap but could go even lower as the trend remains negative. We are trading under the 20 and 100-day moving average as there doesn't seem to be any demand for the precious metals at this time as all of the interest remains in the U.S. equity market which I think will rally for the rest of 2018. Gold prices hit a four week low in today's trade, and that is also putting pressure on silver as prices could not break above the 14.95 level which was touched on two different occasions. They are going the other direction as we will have to see if the contract low holds or not and if it doesn't, I think lower prices are ahead.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Crude Oil Futures

Crude oil futures in the December contract settled last Friday in New York at 63.14 a barrel while currently trading at 59.70 down about $3.50 for the trade. Prices have fallen from their October 3rd high of 76.72 which is a drop of over 20% and the longest losing streak since 1984 as prices have dropped for ten consecutive sessions. Oil prices are trading far under their 20 and 100-day moving average as the trend is clearly to the downside as heating oil and unleaded gasoline have dropped substantially as well. The API inventory reports over the last several weeks are showing a huge build in supplies as we are awash in oil at the current time. Volatility in oil remains high, and I'm sitting on the sidelines as we are experiencing extremely oversold conditions. I would expect some price kickback in next week's trade as I'm shaking my head not understanding what is happening. The U.S. economy is outstanding, and that generally means strong demand for gasoline, but that is just not the case as oversupplies are overwhelming this market. I do think prices are nearing a bottom as OPEC, in my opinion, will start to cut production as they do not want to see oil drop much more from this level.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Oat Futures

Oat futures in the December contract settled last Friday in Chicago at 2.84 a bushel while currently trading at 2.86 up about 2 cents for the trading week. I'm now recommending a bearish position from this level while placing the stop loss above the contract high which was on October 15th at 3.07 as the risk is around $1,100 per contract plus slippage and commission. The oat market has been the strongest grain over the last several months rallying over $0.60 in a matter of a month, but now this market looks toppy on the daily chart. The rest of the grain market also looks weak as the commodity markets, in general, continue to move lower despite all this talk about higher inflation. Oat prices are trading below their 20-day moving average for the first time in a month, but still above their 100-day as the chart structure is excellent, and I think the risk/reward are in your favor to take a short position. However, make sure that you only risk 2% of your account balance on any given trade as a proper risk management technique as the oat volatility can experience large price swings.
TREND: LOWER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: AVERAGE

Orange Juice Futures

Orange juice futures in the January contract settled last Friday in New York at 138.15 while currently trading at 136.15 down 200 points for the trading week continuing its bearish momentum while experiencing extremely low volatility. This is my only bearish recommendation out of the soft commodities as I have bullish trades in cotton and cocoa. I have been recommending three bearish trades in orange juice over the last several months and if you took those trades continue to place the stop loss at 139.80 on a hard basis only as the chart structure will not improve for another five trading sessions. Juice prices are trading under their 20 and 100-day moving average as clearly this trend is one of the strongest to the downside out of all the commodity sectors. The downtrend line remains remarkably intact over the last several months as I will be recommending selling another contract if prices close below 135.50 as I still think we can trade at the 120 level in the coming weeks ahead. Fundamentally speaking weather conditions in the state of Florida are ideal as harvest is underway as production numbers are high as carryover levels are at their highest level in years so continue to play this to the downside.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
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 are currently trading at 117.55 after settling last Friday in New York at 121.90 down over 400 points for the trading week as it is starting to look like a descending triangle on the daily chart which is a bearish technical chart pattern. Vietnam is close to harvesting its coffee crop with estimates around 30 million bags which would be a record. We will also start to focus on the 2019 Brazilian crop as the El Niño weather phenomenon will develop which can produce a drought. I think prices have bottomed out, but I think we will close the gap that was created on October 8th at 112.80/113.70 area before the bullish trend comes about once again. Coffee prices are trading under their 20 day but still above their 100-day moving average as we have been consolidating the recent run-up that we experienced in October as many of the commodity markets are lower across the board today all on concerns of a stronger U.S dollar. Volatility in coffee is starting to pick up which is a terrific thing to see, and I think it will tremendously increase as we enter 2019 especially if some weather situation develops. However, I'm currently recommending to sit on the sidelines as I still believe that gap will be filled soon.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Cotton Futures

Cotton futures in the December contract experienced a wild trading session yesterday all due to the crop report which was released sending prices to a seven-week high at 80.50 before selling off as prices are now trading lower by 144 points at 77.57 to close the week off. The crop report stated that production was estimated to be around 18.408 million bales which was 1.355 lower than expected due to the fact of major cuts in the states of Georgia and Alabama due to Hurricane Michael sending prices sharply higher before profit taking ensued. The report also stated that carryover levels or ending stocks were lowered in the United States and worldwide which is a fundamental bullish indicator as well, but weak demand has been the main culprit to keeping a lid on prices here in the short term. I have been recommending a bullish position from around the 79.60 level, and if you took the trade, I would continue to keep the stop loss at the contract low of 75.37 as the volatility is very high as I don't want to be stopped out and then see the market rally right afterward. Prices are still trading above their 20-day but below their 100-day moving average as I will raise the stop loss in next week's trade, therefore, the monetary risk will be lowered significantly, but I still believe the fundamental and technical picture for this commodity remains bullish as I think prices are cheap.
TREND: NIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

Wheat Futures

Wheat futures in the December contract last Friday in Chicago at 5.08 while currently trading at 5.02 a bushel down about six cents for the trading week still stuck in a seven-week consolidation reacting pretty neutral to yesterday's crop report. I have been sitting on the sidelines as this market remains extremely choppy as we will have to see if the October 25th contract low of 4.85 will hold. I think wheat prices are becoming rather cheap as I will not take a short position as I'm looking at a possible breakout to the upside if prices break the 5.27 level as a breakout is looming in my opinion as the volatility should start to increase as we enter the winter months. Wheat prices are still trading below the 20 and 100-day moving average as the trend remains to the downsides the whole grain market remains choppy to week I don't see that situation changing the rest of this year but in 2019 bullish scenarios could start to occur. The U.S. dollar is still hovering right near a one year high, and that has been a negative towards wheat and many other commodity sectors. There is a lot of red on my screen this afternoon as all of the interest remains in the U.S. equity market which was also sharply lower in today's trade, but I think that bullish trend will continue for the rest of this year.
TREND: CHOPPY - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Sugar Futures

Sugar futures in the March contract is trading lower for the 2nd consecutive trading session down another 17 points at 12.67 after settling last Friday in New York at 13.44 a pound as I still think lower prices are ahead. If you have been following any of my previous blogs you understand that I have been bearish sugar as the 50% retracement from the recent low to the recent high stands at 12.50. I think that level will be tested as then I think we can head down to the 12.00 level in next week's trade as sugar is used as biodiesel and is now following oil prices lower. The fundamental picture for sugar remains bearish as the 300 point rally we experienced in October was way overdone in my opinion as now reality has come back into this market as I'm certainly not recommending any bullish position. Prices are trading below their 20-day, but still above their 100-day moving average as the trend is lower to mixed in my opinion as the chart structure is terrible as prices went straight up then straight down, however, if you are short my recommendation would be to stay short as we continually close right near session lows on a daily basis.
TREND: LOWER - MIXED
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Cocoa Futures

Cocoa futures in the December contract is currently trading at 2268 after settling last Friday in New York at 2267 experiencing high volatility as yesterday prices dropped over 100 points due to profit-taking in my opinion as prices had rallied for seven consecutive days. I have been recommending a bullish position from the 2232 level & if you took that trade, the stop loss has now been raised to 2169. However, you will have to roll over into the March contract early next week due to expiration as that number will change. Cocoa prices are still trading above their 20 and 100-day moving average as the trend remains higher as the volatility is starting to come to life like I have written about in many previous blogs as cocoa historically speaking can have tremendous price swings. For the bullish momentum to continue, we have to break the November 7th high of 2396 as the 2400 level has been difficult to break, but if that does occur I think we could have significant room to the upside so continue to play this higher. The chart structure will also start to improve in next week's trade; therefore, the monetary risk will be lowered as we are in the strong demand season as Christmas is right around the bend as that should help support prices.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: AVERAGE

Trading Theory

If you follow this rule you will have a chance of being successful over the course of time, if you don’t follow this rule you will be sure to lose your money quickly. This rule is simple Do Not OVERTRADE EVER for this is an easy way to lose all your capital quickly. My definition of over trading is risking too much money on any given trade, for example if you are trading a $100,000 dollar account and you place a gold trade today you should limit your loses to 2% of the account value which in this case is $2,000 which allows you to be wrong on many trades and still be around to play another day. In futures and option trading you will have losing trades that is for certain so make sure you manage those losses and move on to another trade.