Weekly Futures Recap With Mike Seery

Gold Futures

Gold futures in the June contract settled last Friday in New York at 1,287 an ounce while currently trading at 1,279 down about $8 for the week ending on a sour note. I had been recommending a bullish position from around the 1,301 level as it is time to exit and move on as prices hit a two week low experiencing another false breakout. Gold prices hit a five-week high earlier in the week looking to break out, however, then the stock market stabilized as it generally does throughout history sending money flows back into equities and out of the metals. The U.S dollar is hovering near a two year high as I have a bullish position in that currency as that also has put pressure on gold prices which now look to test the major support around the 1,267 area so sit on the sidelines and let's wait for another trend to develop. Silver prices are hitting a five-month low today, and that is also putting pressure on gold as I also have a bearish copper recommendation which continues to drip lower weekly as the commodity markets, in general, remain weak. Gold prices are now trading under their 20 and 100-day moving average as the trend has turned south, however for the real breakout to occur we have to break the May 2nd low of 1,267 and if that does happen, expect lower prices ahead.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: AVERAGE

Copper Futures

Copper futures in the July contract are currently trading at 2.7715 after settling last Friday in New York at 2.7375 a pound continuing its bearish momentum as the whole precious metal sector looks weak in my opinion. I have been recommending a bearish position from around the 2.8240 level, and if you took that trade the stop loss has now been lowered to 2.8410 and then in Tuesday's trade will drop all the way down to 2.8100 as the chart structure will improve daily. Copper prices are trading far below their 20 and 100-day moving average as the trend is lower, however for the bearish momentum to continue we have to break the May 13th low of 2.7090 in my opinion as I will possibly be looking at adding more contracts to the downside. The U.S dollar is right near a two year high as I also have a bullish recommendation in that currency as that is also putting pressure on copper and most of the commodity sectors. The volatility is high as that should remain that way throughout the summer months as historically speaking copper can have crazy daily price swings with high risk so stay short.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

10-Year Futures

The 10-year note in the June contract finished last Friday in Chicago at 123 /31 while currently trading at 124 /22 as prices are right near a seven-week high and fresh contract high. In my opinion, I do think prices will break the March 27th high of 124 /31 as I will be looking at adding more contracts to the upside as this trend is strong. I have been recommending a bullish position from around the 124/15 level, and if you took that trade as I have talked about in previous blogs, you can place the stop loss under the May 3rd low of 122 /30 or the April 17th low 122 /20 as an exit strategy. Uncertainty surrounding the trade agreement with China is supporting bond prices at this time as the volatility in the stock market has exploded over the last several weeks as the bond market is used as a flight to quality as the current yield is 2.37% and I think that could have even lower. The chart structure will start to improve in next weeks trade. Therefore, the monetary risk will be lowered as strong worldwide demand continues to support prices even though the yield historical speaking is extremely low, especially for this type of economic growth that the United States is witnessing. However, the trend is your friend, and this trend is to the upside, so stay long and look to add more contracts.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Orange Juice Futures

Orange juice futures in the July contract is currently trading at 100.50 after settling last Friday in New York at 95.05 having one its best weeks to the upside in months. I was bearish the orange juice market for quite some time, but when prices hit the two week high, and you were short a futures contract which was around the 102 level as it was time to move on and sit on the sidelines and wait for another trend to develop. Juice prices are now trading above their 20 day, but still far below their 100-day moving average which stands around the 117.50 level as I think this was just a kickback due to the oversold conditions. I remain bearish, but I will sit on the sidelines as the risk/reward is not your favor at this time to take a position in either direction, but I still have a bearish bias. Fundamentally speaking this market remains bearish as ideal weather conditions in Brazil and in Florida persist. I think this was just massive short covering, but I think the upside is, especially with no trade agreement with the country of China, which was very disappointing.
TREND: MIXED - LOWER
CHART STRUCTURE: POOR
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.

Cotton Futures

Cotton futures in the July contract settled last Friday in New York at 68.45 while currently trading at 66.15 down about 230 points for the trading week continuing its bearish momentum as I remain bearish despite the collapse in price that we witnessed over the last several weeks. I've been recommending a bearish position from around the 75.74 level, and if you took that trade, the stop loss has now been lowered to 74.72 which is the two week high and the exit strategy, however that will be lowered significantly in the coming days ahead there for the monetary risk will be reduced tremendously. The U.S. dollar is still hovering right near a two year high as I also have a bullish recommendation in that currency as that is also putting pressure on many commodity sectors so stay short as I still think there's a possibility prices could trade down to the 60 level in the coming weeks ahead. Cotton prices are trading far below their 20 and 100-day moving average as clearly the trend is to the downside as the entire soft commodity sector remains bearish. I also have a negative trade in sugar, which continues to hit a contract low in today's session, so stay short while placing the proper stop loss as who knows how low prices can trade.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Sugar Futures

Sugar futures in the July contract settled last Friday in New York at 11.72 while currently trading at 11.67 unchanged for the trading week. I have been recommending two bearish positions with an average price of 12.06, and if you took those trades, the stop loss has now been lowered to 12.15 as an exit strategy as the chart structure is outstanding. Sugar prices are trading under their 20 and 100-day moving average, however for the bearish momentum to continue we have to break the May 8th contract low of 11.64, and then I think prices could accelerate to the downside, however, crude oil maintains its bullish momentum as that is helping support sugar prices at this time. Volatility remains relatively average as the fundamental and technical picture for sugar remains bearish as carryover levels have increased substantially as the country of Brazil continues to be the Garden of Eden so continue to play this to the downside as I still think there's more room to run. The commodity markets, in general, remains bearish as there is no trade agreement with China. However, the agricultural markets have shown some life this week as weather can turn a bearish market into a bullish market very quickly.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Soybean Futures

Soybean futures in the July contract is currently trading at 8.34 a bushel after settling last Friday in Chicago at 8.09 having one of the best weeks in some time all due to delayed planting in the midwestern part of the United States due to extremely wet and cold weather which has been the problem. I have been recommending a short position in soybeans from the 8.35 level and if you took that trade continue to place the stop loss at the 8.48 level on a hard basis only as an exit strategy as the chart structure is outstanding. Soybean prices are still trading below their 20 and 100-day moving average as the trend remains negative and if the wet weather continues all that means is that we will add more acres to soybeans which is an even more bearish situation as fundamentally & technically speaking this market remains negative. The large money managed funds had a record amount of short contracts as they were doing some massive short covering over the last several days so continue to play this to the downside as I also have a bearish soybean meal recommendation as I think this was just a kick back due to oversold conditions.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Soybean Meal Futures

Soybean meal futures in the July contract is currently trading at 298.00 after settling last Friday in Chicago at 287.30 rallying sharply on concerns about delayed soybean planting as we are experiencing extremely wet and cold temperatures in the midwestern part of the United States. I have been recommending a bearish position from around the 302 level and if you took that trade continue to place the stop loss at the 305.5 level as the risk/reward is in your favor in my opinion. If the wet weather continues, that will mean more acres will go into soybeans which is bearish the entire complex so stay short as I still think there's room to run to the downside as this rally was based on massive short covering by the large funds. At the current time, large money managed funds are still short 32,000 contracts as they are also short heavily across the entire grain market as I will be looking at a possible counter trend trade in corn soon, but there could be a little more room to run. Volatility in meal will remain extremely high for the rest of the summer months so make sure you place the stop loss on a hard basis only as I'm not willing to risk anything higher than the 305.5 level.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Trading Theory

Head and Shoulders Top or Bottom---This technical indicator consists of a left shoulder, a head, and a right shoulder and a line drawn as the neckline and occur in many different daily charts over time.

The left shoulder is formed at the end of an extensive move during which volume is noticeably high. This type of indicator takes time to develop usually a couple of months, in my opinion.

After the peak of the left shoulder is formed, there is a subsequent reaction and prices slide down to a certain extent, which generally occurs on low volume.

The prices rally up to form the Head with normal or heavy volume, and subsequent reaction downward is accompanied with lesser volume. The right shoulder is formed when prices move up again but remain below the central peak called the Head and fall down nearly equal to the first valley between the left shoulder and the Head or at least below the peak of the left shoulder. Volume is lesser in the right shoulder formation compared to the left shoulder and the head formation. A neckline is drawn across the bottoms of the left shoulder, the Head and the right shoulder.

When prices break through this neckline and keep on falling after forming the right shoulder, it is the ultimate confirmation of the completion of the Head and Shoulders top formation. In my opinion, I have used this technical indicator in the past, and I think it is one of the more reliable indicators out there especially if you use it with some other indicators it can help improve your trading results.

There are also head and shoulder bottoms that have the exact same characteristics just the opposite because a head and shoulders top is predicting a top while a Head and Shoulders bottom is telling you that the lows might be in just like the copper chart back in August when it had a head and shoulders bottom

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

Michael Seery, President
Seery Futures
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