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 February contract is currently trading at 1,252 after settling last Friday in New York at 1,226 up about $26 for the trading week breaking out to a five-month high. Money flows are coming out of the U.S equity market which is sharply lower once again today while now entering the precious metals across the board as I am looking closely at a bullish position in silver as well as it seems to me that the precious metals are going higher. I am now recommending a bullish position from around the 1,252 level and if you're going to take this trade place the stop loss under the 10-day low which now stands at 1,216 as the risk is around $3,600 per large contract plus slippage and commission or about $800 per mini contract. Gold prices are trading above their 20 and 100-day moving average as the trend is clearly to the upside as this commodity is used as a flight to safety as investors are getting spooked by the volatility in the S&P 500 while taking money out of that sector and heading into gold. The chart structure will start to improve later next week as the monetary risk will also be lowered as the volatility remains relatively low with the next major level of resistance all the way up around the 1,275 level as I think there is room to run as I have not recommended a gold position for quite some time
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Silver Futures

Silver Futures in the March contract is currently trading at 14.67 after settling last Friday in New York at 14.49 up about $0.18 for the trading week right near a four week high. If you take a look at the daily chart many of the commodities have the same chart pattern as prices have continually gone sideways over the last several months. It looks to me that silver wants to trade higher as I will be recommending a bullish position if we close above 14.75 while then placing the stop loss under the contract low which was hit on November 14th at 13.98 as the risk would be around $4,000 per large contract plus slippage and commission or $1,600 on 2 mini contracts. Gold futures are trading right near a five-month high, and that is also helping support silver as money flows are finally coming out of the U.S. equity market and into the precious metals. Look to play this to the upside as I think the risk/reward will be in your favor coupled with the fact that the chart structure will start to improve later next week therefor the monetary risk will also be lowered. Silver prices are trading above their 20 and 100-day moving average as the trend finally has turned to the upside as I still think historically speaking silver looks cheap especially compared to gold prices as the ratio is historically high between the two metals.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the January contract is trading at 52.85 a barrel filling the price gap that was created on Monday when expectations of a U.S. Chinese trade agreement came about, but now there are doubts about that situation. There is significant support around the $50 level as we have bounced off that area on about a half a dozen occasions as OPEC stated that they would cut production by at least 1.2 million barrels which was considered bearish as expectations were around 1.4 million, but they can change their minds in the coming days ahead. The commodity markets, in general, remain weak as the U.S stock market is down another 400 points today as there is panic everywhere. However, I do think oil prices are becoming cheap as I will wait for the chart structure to improve before entering into a bullish position. Oil prices are still trading far below their 20 and 100-day moving average as clearly this trend is to the downside, but with what OPEC did today I think that will stop the bleeding to the downside as now we are worried about a worldwide recession as that is also putting pressure on prices. The volatility in oil is very high at present so if you do get involved make sure that you place the proper amount of contracts as we have many $3 & $4 price swings on a daily basis.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Natural Gas Futures

Natural gas futures in the January contract settled last Friday in New York at 4.61 while trading at 4.51 down about 10 points for the trading week, however ending the week on a positive note closing up about 18 points. If you take a look at the daily chart an ascending triangle is starting to develop which is a bullish technical chart pattern as I still think prices will crack the 5.00 level in the coming weeks ahead as inventories are 19% below their 5 year average & the lowest seasonally speaking since 2002 as technically & fundamentally speaking this market remains bullish. Volatility in natural gas is extremely high and could even become more violent in the coming months ahead as we are off to a frigid start temperature wise and if this situation continues higher prices will be coming. Gas prices are trading far above their 20 and 100-day moving average as the trend is to the upside as this is the strongest bullish trend out of all commodity sectors at this time. The energy sector as a whole has sold off tremendously over the last couple of months, but natural gas and crude oil can trade in opposite directions, and that's precisely what you have seen over the previous month. If you are long a futures contract stay long in my opinion as I'm certainly not recommending any bearish position.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Coffee Futures

Coffee futures in the March contract is currently trading lower for the 4th consecutive session down another 185 points at 104.10 a pound hitting a ten-week low continuing its bearish momentum. If you have followed any of my previous blogs, you understand that I thought coffee prices could go down to the 105 level which happened in today's trade as the commodity markets, in general, remain very weak with very little interest which is frustrating. There is the possibility prices could we test the contract low which was touched on September 18th at 98.55, but I do think the downside is limited as we enter the very volatile January and February months as drought could occur in Brazil which is the largest producer of coffee in the world. The Vietnamese crop was raised from 29.9 to 30.4 million bags also putting pressure on prices here in the short-term coupled with the fact that the Brazilian Real continues its weakness against the U.S dollar as at present there is very little bullish fundamental news to push prices higher. Coffee is trading far below its 20 and 100-day moving average as clearly the trend is to the downside and if you're not involved be patient as there will be an opportunity to buy soon in my opinion.
TREND: LOWER
CHART STRUCTURE: POOR
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 March contract settled last Friday in Chicago at 3.77 while currently trading at 3.85 right near a four week high as it looks to me that a possible head & shoulders bottom chart pattern has developed over the last five months. Corn prices are trading above their 20 and 100-day moving average as the trend has turned higher. However, the only problem that I have is there is a price gap that was created on Monday due to the fact that there were rumors that China and the United States would come up with a trade agreement which has not developed as that gap stands between 3.78 / 3.80 as I would be shocked if that were not filled. If you are bullish corn, I will wait for that situation to develop as there is no reason for that gap to have occurred as at the current time I might have a bullish wheat recommendation as that is also breaking out to the upside. Strong demand for corn is the reason why prices have rallied over the last several weeks as exports have been outstanding. I think that situation is going to continue as it looks to me that the grain market across the board is bottoming, but I do believe the upside in corn is also limited, however I am advising my farmer clients not to be selling their cash corn as I still think come springtime higher prices will come about.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Cotton Futures

Cotton futures in the March contract is trading at 79.84 continuing its remarkable choppy trend this week with high volatility as prices filled the gap that was created on Monday. I have been recommending a bullish position over the last couple of months originally in the December contract at 79.60 & if you took that trade continue to place the stop loss at the contract low which was hit on October 1st at 76.50 as I still believe prices are in a bottoming out pattern and look to move higher. The commodity markets remain extremely choppy to negative as the U.S stock market now has fallen out of bed over the last several days as all the euphoria that was created on Monday with the possible trade agreement with China has faded very quickly. For the bullish momentum to continue, we have to break the 82 level in my opinion & if that does occur I think prices could trade much higher as the fundamental picture for cotton remains bullish so stay long & continue to place the proper stop loss.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

Sugar Futures

Sugar futures in the March contract is trading at 12.87 a pound as the soft commodity markets are mostly higher across the board today as nobody seems to want to own anything as the U.S stock market is down another 400 points putting pressure on most sectors this week. If you have read any of my previous blogs you understand I've been bearish sugar for quite some time and if prices break the November 27th low of 12.32 as I think we will head back down and possibly test the contract low around the 10.80 level. Sugar prices are trading below their 20-day but still above their 100-day moving average which also stands at support at 12.22 as the Brazilian Real continues to weaken against the U.S dollar as that is problematic towards prices. Crude oil is down another $2.50 today as the commodity markets across the board look weak and look to head even lower as we head into 2019 as overproduction coupled with weak demand continue to keep a lid on prices. Coffee prices have also hit a 10-week low as these two commodities have mirrored each other to the up and downside as I still think prices look expensive and if you are short stay short in my opinion.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Soybean Meal Futures

Soybean meal futures in the March contract is trading lower for the 3rd consecutive trading session down by 100 points at 314.50 filling the gap that was created in Monday's trade. If you have followed any of my previous blogs, you understand that I hate gaps as they generally are filled as that is exactly what has occurred in today's session. I had written about a possible bullish position once the gap was filled. However, I will not take this trade as there is too much uncertainty about the Chinese U.S trade agreement as I will sit on the sidelines and wait for a stronger breakout to occur. Soy meal prices are trading above their 20-day, but still below their 100-day moving average as we have been going sideways over the last couple of months. Soybean prices are also lower in today's trade as all of the excitement that happened on Monday has all been erased including the U.S stock market which is now down 1300 points over the last three trading sessions. I've been trading the commodity markets for 25 years as I can't ever remember such a boring non-trendy lack of interest type of markets as I am currently witnessing as I'm hoping 2019 the bullish trends will come about so be patient as I do think the downside is limited.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Wheat Futures

Wheat futures in the March contract settled last Friday in Chicago at 5.21 a bushel while currently trading at 5.29 up about 8 cents for the trading week hitting a five-week high. I will be recommending a bullish futures position if we close above the 5.29 level while then placing the stop loss under the contract low which was hit on November 19th at 5.03 as the risk would be around $1,400 per contract plus slippage and commission. Wheat prices are now trading above their 20-day but still slightly below their 100-day moving average standing at 5.42 which is also acting as resistance as it looks to me that wheat prices have finally bottomed out. There are concerns about Australia's crop as that is pushing prices higher at this time as this market has been stuck in a tight consolidation with very little volatility over the last several months. Wheat is now entering the very volatile winter season which can push wheat prices substantially higher so play this to the upside in my opinion as I think the risk/reward are in your favor if we close above that critical level.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

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.