Weekly Futures Recap With Mike Seery

Palladium Futures

Palladium futures in the December contract is currently trading at 1,629 after settling last Friday at 1,600 continuing its bullish momentum hitting an all-time high once again as strong demand continues to fuel prices higher.

I was looking at a bullish position a couple of days back but was not executed as I am currently sitting on the sidelines, however, if you are long a futures contract I would stay long as I think higher prices are ahead and if you've been following any of my previous blogs you understand I think prices could hit the 2,000 level. Palladium is trading far above its 20 and 100-day moving average as this is the strongest precious metal as I do not have any recommendations out of this sector at the current time.

If you are long a futures contract I would continue to place the stop loss under the 10-day low standing at 1,518 as an exit strategy, however, the chart structure will improve next weeks trade therefore the monetary risk will be lowered as I see no reason to be short as that would be counter-trend trading which is very dangerous over the course of time.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Silver Futures

Silver futures in the December contract settled last Friday in New York at 17.56 an ounce while currently trading at 17.87 up about $0.30 for the week still consolidating the bullish move that we have witnessed over the last several months.

I had been recommending a bullish position initially from the 14.93 level getting stopped out last Friday as currently, I'm sitting on the sidelines waiting for the chart structure to improve as I still have a bullish bias to the upside as I think the downside is limited.

The U.S. dollar is still hovering right near a 2 year high, and that is also putting some pressure on silver here in the short-term, but historically speaking prices still look cheap in my opinion. Silver is now trading under its 20-day but still above their 100-day moving average as the trend as mixed as the U.S. stock market is right near all-time highs as money flows have entered the equities and out of the precious metals over the last couple of weeks.

For the bullish momentum to continue prices have to break the contract high which was hit on September 4th at 19.75 as we have had a nice retracement as I still believe prices will be trading in the $20 range in the coming months ahead as I see no reason to be short.

TREND: MIXED - HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

S&P 500 Futures

The S&P 500 in the December contract settled last Friday in Chicago at 3008 while currently trading at 3016 as we are just an eyelash away from the all-time high which was hit on July 26th at 3032.

I was looking at entering a bullish position earlier in the week but never followed through as I'm kicking myself, however, if you are long a futures contract I would continue to place the stop loss under the 10 day low which stands at 2958 as an exit strategy. However, the chart structure will improve in next week's trade, therefore, the monetary risk will be reduced.

This market has been incredibly resilient as there has been a lot of worldwide turmoil including the bombing of Saudi Arabia's oil production facilities, but nothing seems to put cold water on this market as I see no reason to be short as I think higher prices are ahead.

The S&P 500 is trading above its 20 and 100-day moving average as the trend is to the upside as I'm certainly not recommending any type of bearish position. I think we will finish out the year on a very strong note as the U.S. economy by far is the strongest in the world as the tax cuts and regulations being sliced which is very bullish towards U.S. corporations so stay long.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Coffee Futures

Coffee futures in the December contract is trading higher by 65 points at 99.00 a pound after settling last Friday in New York at 102.75 down about 375 points for the trading week unable to crack the 105 level which was hit earlier in the week.

I have been recommending a bullish position from around the 101 level and if you took that trade continue to place the stop loss under the 14-year low which stands at 93.40 as I want to give this trade some room due to the increasing volatility. Fundamentally speaking Conab cut its Brazil 2019 coffee production estimate to 49 mln bags from a previous estimate of 50.9 mln bags as adverse weather cut coffee yields as coffee posted a 6-week high last Wednesday on crop concerns in Brazil.

Coffee prices are now trading right at their 20-day but still below their 100-day moving average as we're looking for some fresh fundamental news to dictate short-term price action, however, I will continue to place the proper stop loss and play this to the upside as I think the downside is very limited especially if the hot and dry weather conditions persist in Brazil as that is the main factor.

TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

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.

Cocoa Futures

Cocoa futures in the December contract is trading higher for the 8th consecutive session after settling last Friday at 2337 while currently trading at 2473 up around 136 points for the trading week as prices have now hit a 7 week high.

I am not involved, but I do have a bullish bias to the upside as I am certainly not recommending any type of bearish position as that would be counter-trend as I think prices will test the contract high which was hit on July 8th at 2606 in the coming weeks ahead.

I will be looking at a bullish position on some type of price decline; therefore, the monetary risk would be lowered coupled with the fact that the risk/reward would be more in your favor so be patient as I think we're starting to experience overbought conditions.

Cocoa prices are trading above their 20 and 100-day moving average as fundamentally speaking the latest leg higher in cocoa prices was fueled by Wednesday's report from Reuters that the Ivory Coast and Ghana are considering an output ceiling on cocoa production to support prices and discourage overproduction.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Cotton Futures

Cotton futures in the December contract settled last Friday in New York at 62.28 while currently trading at 60.50 down nearly 180 points for the trading week as weakening demand has put pressure on prices here in the short-term.

I have been recommending a bullish position from around the 61.50 level and if you took that trade continue to place the stop loss under the multi-year low standing at 56.59 as an exit strategy. Cotton prices are still trading above their 20-day but below their 100-day moving average, which stands at the 64.00 level as crop conditions in the United States remain ideal.

For the bullish momentum to continue prices have to break the September 13th high of 63.39 in my opinion as the next level of resistance after that is around the 65 area as the downtrend line has been broken as I think this week was basically based on profit-taking while consolidating the recent run-up in price as I remain bullish.
Many of the agricultural markets I believe have bottomed as I'm looking at many bullish positions, however, at the current time, coffee and cotton are my only soft commodity recommendations as I'm also keeping a close eye on cocoa which continues to run daily.

TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Soybean Meal Futures

Soybean meal futures in the December contract settled last Friday in Chicago at 301.5 while currently trading at 296.0 down over 500 points for the trading week still stuck in a very tight 7-week consolidation pattern looking to break out on some fresh fundamental news.

I am keeping a close eye on a possible bullish position if prices break the 305 level while then placing the stop loss under the contract low on May 13th at 291 as the risk would be around $1,400 per contract plus slippage and commission.

The next crop report won't be released until mid-October as that certainly will send some volatility into this market as there are still wide variances on what the soybean production number will be as I think a bottoming pattern is at hand.

Soybean meal is trading right at its 20-day but still below their 100-day moving average standing at the 309 area & if you have followed any of my previous blogs you understand that my consolidation rule states that the longer the consolidation, the more powerful the breakout and I think that situation will occur here in the coming weeks ahead so look to play this to the upside.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Trading Theory

Trade with the short-term trend, as the saying goes in futures trading the trend is your friend but sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade.

If it were up to me, I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side.

I define a trend as a commodity hitting a 20-day high or low as a trendy market if the market is in a consolidation stay away from it and find something that is trending.up or down and go in that direction remembering the money management rules of 2% maximum loss if you are wrong.