Weekly Futures Recap With Mike Seery

S&P 500 Futures

The S&P 500 futures in the December contract settled last Friday in Chicago at 2970 while currently trading at 2993 up about 23 points for the week as this market looks to move higher, in my opinion, however, I'm currently not involved.

The S&P is trading above its 20, and 100-day moving average as the trend has turned higher. However, the chart structure is poor at the current time. Therefore, the risk/reward is not in your favor. Still, I am not recommending any short position as I do think going into the holiday season prices will hit all-time highs.

We are in the midst of earnings season as that will undoubtedly dictate short-term price action, and so far, the earnings have been very solid as the U.S economy by far is the best in the world. If you take a look at the daily chart, there is major resistance at the 3000 level, and if we can close above that area, I think prices could be off to the races as extremely low-interest rates are also helping to support stock prices at this time.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Platinum Futures

Platinum futures in the January contract settled last Friday in New York at $900 an ounce currently trading at 892 down about $8 for the trading week as prices are stuck in a three-week consolidation pattern.

Platinum prices are trading below their 20-day but still above their 100-day moving average as the trend is mixed. However, historically speaking, prices look very cheap, in my opinion, especially compared to gold, as I will be looking at a bullish position if prices hit a four-week high as I think the downside is very limited.

Volatility at the current time is relatively low as prices remain mixed to choppy, so keep a close eye on this market as we could be involved in the coming days ahead.

Platinum prices have sold off about 10% from their August highs, and I still think we will crack that $1,000 level once again. But be patient as trading in a consolidation is very difficult to be successful. You want to trade with the trend, so look at other markets that are breaking out at the current time as I have multiple bullish recommendations.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Palladium Futures

Palladium futures in the December contract settled last Friday at 1,670 while currently trading at 1,725 up about $55 for the trading week hitting another all-time high as this commodity has the strongest trend out of all sectors.

If you are long a futures contract, continue to place the stop loss under the 10-day low standing at 1,605. However, next Tuesday, that will be raised to 1,630 as the chart structure will start to improve daily, therefore, lowering the monetary risk.

If you have been following my previous blogs, you understand that I think there is a realistic chance prices could hit 2,000 in the coming weeks ahead as strong demand and limited supplies continue to push prices higher as I see no reason to be short. Palladium prices are trading above their 20 and 100-day moving average as the trend is strong to the upside as the volatility will remain high for months to come.

For the bullish momentum to continue, prices have to break the October 17th high of 1,750 as this is the perfect example of why you trade with the trend as going with the path of least resistance is the most successful way to trade in my opinion.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Orange Juice Futures

Orange juice futures in the November contract is currently trading lower by 20 points at 99.60 in a relatively quiet trade this Friday afternoon in New York. There is very little fundamental news to dictate short term price action, in my opinion.

If you take a look at the daily chart, a bottoming pattern is being created as we have been stuck in a 6-week consolidation pattern. As we start to enter the winter season as orange juice prices could have a possible frost, crippling the orange juice crop in Florida, sending prices sharply higher as I think the risk/reward is to the upside, not the downside.

Orange juice prices are trading right at their 20-day but still below their 100-day moving average as this trend has remained mixed over the last six months as we are right at major support, so look to play this to the upside on a possible breakout in the coming weeks ahead.

The chart structure will start to improve on a daily basis. Therefore, the monetary risk also be lowered as my only other soft commodity recommendation is a bullish cotton trade, which continues to march higher every week as we were stopped out of the coffee trade yesterday as that market remains in the doldrums.

TREND: MIXED
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.

Corn Futures

Corn futures in the December contract settled last Friday in Chicago at 3.97 a bushel while currently trading at 3.92 down about 5 cents for the trading week looking for some fresh fundamental news to dictate short-term price action.

I have been recommending a bullish position from the 3.80 level, and if you took that trade, continue to place the stop loss under the October 10th low of 3.78% as an exit strategy as the chart structure is outstanding due to the low volatility.

Corn prices are trading above their 20-day but still below their 100-day moving average, which stands at major resistance at 4.07, and if you take a look at the daily chart, the uptrend line remains intact as I remain bullish.

Heavy snow has entered certain parts of the Midwest, which could hurt production numbers. Still, we will not find out until the next crop report, which will be released in the second week of November as I also have bullish recommendations in wheat and soybean meal as I think the commodity markets are headed higher. For the bullish momentum to continue prices, have to break the October 14th high of 4.02, and if that situation occurs, then prices could head up to the 4.25 level.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Cotton Futures

Cotton futures in the December contract is trading higher for the 4th consecutive session currently trading at 65.32 after settling last Friday in New York at 63.88 up about 140 points for the week hitting a 31/2 month high.

I have been recommending two bullish positions initially from the 61.50 level, then adding a 2nd contract at 63.60. If you took those trades, continue to place the stop loss under the 10-day low, which stands at 60.79 as an exit strategy. The chart structure will also improve in next week's trade. Therefore, monetary risk will be lowered.

The next major level of resistance stands at the 66 level, and I think that could be touched in next week's trade as there is significant room to run. There is optimism about a U.S. and China trade agreement coming about next month as that certainly would be a very bullish fundamental factor towards higher prices ahead.

I will be looking at adding more contracts once the risk/reward becomes more in your favor as a nice rounding bottom occurred in September, so stay long and continue to place the proper stop loss as I see no reason to be short.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Soybean Meal Futures

Soybean meal futures in the December contract settled last Friday in Chicago at 310 while currently trading at 309 unchanged for the trading week still hovering right near a three month high.

I have been recommending a bullish position from around the 306 level, and if you took that trade, continue to place the stop loss under the contract low, which stands at 291 as an exit strategy as I believe the whole grain market is headed higher.

I also have bullish recommendations in corn and wheat, as it looks to me that soybeans are also moving higher. If we can finalize that trade agreement next month with China, that certainly would be a fundamental bullish factor for higher prices ahead.

Soybean meal prices are trading above their 20 and 100-day moving average as the trend is to the upside. However, prices will have to break the October 14th high of 313 for the bullish momentum to continue, so stay long & continue to place the proper stop loss as the risk/reward is in your favor.

TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Wheat Futures

Wheat futures in the December contract is currently trading at 5.28 a bushel after settling last Friday in Chicago at 5.08 up about $0.20 for the week hitting a three month high. I am recommending a bullish position over the last month or so from around the 4.82 level, and if you took that trade continue to place the stop loss under the 10-day low, which stands a 4.85 as an exit strategy as I still think there is significant room to run to the upside.

Heavy snow has entered key wheat-growing regions as that is what is supporting prices at the current time with the next major level of resistance at the July 15th high of 5.43. If that is broken, I think we could test the June 27th contract high of 5.65 in the coming weeks ahead as the volatility certainly will start to expand to the upside.
Wheat prices are trading above their 20 and 100-day moving average as that tells you that the trend is higher as the chart structure will not improve for another five trading sessions, so you will have to accept the monetary risk at this time.

I will be looking at adding more contracts to the upside once the risk/reward becomes more in your favor as adding to winners while cutting losers is the way to trade over time, so stay long as this trend is getting stronger every week.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Trading Theory

What do traders mean when they talk about seasonality and effects on commodity prices? The definition of seasonality states that a characteristic of a particular time when the data experiences regular and predictable changes that occur every calendar year and in a time series that reoccurs or repeats over one year can be said to be seasonal.

An example of seasonality is the grain market generally prices head higher in spring and early summer on concerns of a drought or a poor crop. It also happens in the energy sector in the summer months when demand for unleaded gasoline is at its peak and then generally declines going into winter.

Seasonality affects grains in October when historically, prices decline during that period because that harvest is occurring, which puts pressure on prices.

Traders try to use seasonality to predict or take advantage of prices in a certain month or season with many of the agricultural commodities.