Weekly Futures Recap With Mike Seery

Copper Futures

Copper futures in the July contract settled last Friday in New York at 2.6275 while currently trading at 2.6435 up about 160 points for the trading week as prices have gone sideways the past two weeks.

I have been recommending a bearish position over the last couple of months from the 2,8240 level and if you took that trade continue to place to stop loss above the 10-day high standing at 2.7020 as an exit strategy as we are just an eyelash away from getting stopped out.

My only other precious metal recommendation is a bullish palladium position which continues to climb as I am also bullish gold and silver as I think higher prices are ahead.

Copper is still trading below its 20 and 100-day moving average as the trend remains negative, however for the bearish momentum to continue we have to break the June 7th low of 2.5995 as we need some fresh fundamental news to send some volatility back into this commodity.

Continue to place the proper stop loss, and if we are stopped out, then look at other markets that are beginning to trend as the commodity markets are starting to develop strong trends.

TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Gold Futures

Gold futures in the August contract settled last Friday in New York at 1,346 while currently trading at 1,351 up about $5 for the week trading higher for the 4th consecutive session as prices have hit a new contract high.

I'm not involved in gold, but I do think higher prices are ahead as I see no reason to be short as politically speaking there are geopolitical concerns boosted safe-haven buying of the precious metals when two oil tankers were damaged in a suspected attack in the Gulf of Oman near the Straits of Hormuz.

One of my trading rules is when a commodity hits a contract high that means higher prices are ahead as you never want to sell contract highs or buy contract lows as that is not a successful way to trade. If you are long a futures contract, I would continue to place the stop loss under the 10-day low, which stands at 1,310. However, the chart structure will start to improve in Monday's trade as the stop loss will be raised to 1,323 as an exit strategy.

I have a bullish palladium recommendation and a bearish copper trade as I do think gold and silver prices are going higher. Gold prices are trading above their 20 and 100-day moving average as this trend is strong to the upside as we have rallied nearly $80 over the last 12 trading sessions.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Palladium Futures

Palladium futures in the September contract is trading higher for the 7th consecutive session up another $14 at 1,452 continuing its bullish momentum hitting a 2 1/2 month high.

I have been recommending a bullish position from around the 1,388 level, and if you took that trade, the stop loss remains under the 10-day low standing at 1,305, however in next weeks trade that will start to improve therefor lowering the monetary risk. The next major level of resistance is the all-time high which was hit on March 21st at 1,563 as I think prices will test that area as a nice rounding bottom technical pattern has developed so continue to play this to the upside as there is room to run in my opinion.

Palladium prices are trading far above their 20 and 100-day moving average as the trend is strong to the upside as strong demand continues to support prices as the whole precious metals sector looks bullish except for copper.

Volatility in palladium is high, and it will remain that way so make sure you place the proper stop loss as I will not add to this commodity because the contract size is so large already as that would be overtrading.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Australian Dollar Futures

The Australian dollar in the June contract is trading lower for the 5th consecutive session hitting a five year low as this currency remains bearish.

I had been recommending a bullish position from around the 6979 level as it is time to move on as I certainly don't want to be a buyer of anything that's hitting a five year low.

If the Australian dollar could talk, it would bark in my opinion as that's how much of a dog this trade was. The original risk on this was around $1,000 as I thought the risk/reward was in your favor because this currency can become extremely volatile with large price swings as $1,000 risk for this currency is relatively low.

The Australian dollar is now trading far below its 20 and 100-day moving average as it looks to head lower. However, I will not take a short position as the chart structure needs to improve so look for other trends.

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 July contract settled last Friday in Chicago at 4.15 a bushel while currently trading at 4.54 up nearly $0.40 for the trading week hitting a five year high. If you have been following my previous blogs, you understand that I am bullish the corn market, and I still believe that corn will break the $5 level soon.

I think the crop estimates are way too high at this time and with such a long growing season ahead traders are now putting a price premium in case of some drought or early frost that could devastate the crop. The large money managed funds are now long 147,000 contracts, and I'm sure they're adding more to that position in today's trade as more rain might enter the Midwestern part of the United States this weekend as we await Monday's highly anticipated crop progress report.

The volatility in corn is very high, and it will become even more violent in the coming weeks ahead as there is just so much uncertainty at this time as I see absolutely no reason to be short corn.

The fundamental situation is the complete opposite of soybeans which has the highest carryover in history as corns carryover dropped 800 million bushels in the last month and I think will go even lower as this market is very strong to the upside.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Coffee Futures

Coffee futures in the July contract settled last Friday in New York at 100.95 while currently trading at 96.00 down nearly 500 points for the trading week hitting a three week low.

I had been recommending a bullish position from around the 95.80 getting stopped out around the 97.30 level as now it's time to sit on the sidelines as this market remains choppy.

In my opinion, I do think 14 year low which was hit on May 7th around the 87 level will hold, but we need the chart structure to improve as the agricultural markets have started to come to life.

Coffee prices are now trading below their 20 and 100-day moving average as the trend is mixed as the volatility has also increased, which is a good thing to see. Fundamentally speaking dry weather in key growing regions in the country of Brazil is allowing harvest to be in full swing coupled with the fact that they took the possible frost out of the weather forecast as the weather premium is starting to bleed out of this commodity.

I do not have any soft commodity recommendations as the strongest out of that sector is cocoa currently.

TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Live Cattle Futures

Live cattle futures in the August contract settled last Friday in Chicago at 103.30 while currently trading at 104.85 up about 150 points for the trading week bouncing off major support.

I have been recommending a bearish position from around the 106.30 level, and if you took that trade place the stop loss above the 10-day high standing at 107.17, however, the chart structure will not improve for another eight trading sessions so the stop loss will remain the same.

Cattle prices are still trading under their 20 & 100 day moving average as the trend is lower coupled with the fact that the downtrend line remains intact so continue to play this to the downside while placing the proper stop loss.

In my opinion, for the bearish momentum to continue, we have to break the May 31st contract low of 102.30 as volatility is high and it will remain that way throughout the summer months.

Corn prices are up another $0.09 today hitting a five year high as that is negative towards feeder cattle and I think corn prices are going to break the $5 level soon and that could push cattle prices under 100 so stay short.

TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Soybean Oil Futures

Soybean oil futures in the July contract is currently trading at 27.80 as I have recommended a bullish position from the 28.00 level while placing the stop loss under the contract low at 26.21 which was hit on May 13th as the risk is around $1,100 per contract plus slippage & commission.

I am bullish the entire grain market as I think higher prices are ahead as soybean oil is probably the weakest out of the entire sector, however, play this to the upside as I still think soybean production numbers will be lowered eventually.

Soybean oil is trading above its 20-day but still below its 100-day moving average which stands at 29.07 as the volatility is low, but that will not remain for much longer as we enter the very volatile summer months.

If you take a look at the daily chart soybean oil bounced off of the critical 27.00 level on multiple occasions and now has broken out to the upside as I see no reason to be short the grain market as there is so much uncertainty as nobody understands what final production numbers will be.

If the $1,100 risk is too much, you can place the stop loss under the 10-day low which was hit in yesterday's trade at 26.93 as the risk would be about $700 per contract plus slippage & commission.

TREND: HIGHER - MIXED
CHART STRUCTURE: EXCELLENT
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.