Weekly Futures Recap With Mike Seery

Natural Gas Futures

Natural gas futures in the December contract settled last Friday at 2.45 while currently trading at 2.58 up about 13 points for the trading week as prices hit a five-week high yesterday before profit-taking took place.

Natural gas prices are trading above their 20 and 100-day moving average as the trend has turned higher as fundamentally speaking the EIA reported Thursday that gas inventories rose 89 bcf higher than expectations of 86 bcf and well above the 5-year average of 65 bcf.

Expectations that the spread of cold temperatures in the U.S. will boost heating demand for gas. The Commodity Weather Group said on Thursday that temperatures would be below normal across most of the lower 48 U.S. states through Nov 14 with "winter-like conditions that include heavy snows in the central U.S."

I am not involved as I still think the price gap that was created on Oct 28 between 2.48/2.50 will be filled soon. Then I will be looking at a bullish position as I believe that the 2.40 will hold, especially as we enter the volatile winter season as price swings will become more violent to the upside.

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

Palladium Futures

Palladium futures in the December contract settled last Friday at 1,744 while currently trading at 1,764 up about $20 for the week hitting another all-time high on Wednesday at the 1,799 level as the gravy train continues.

If you are long a futures contract, continue to place the stop loss under the 10-day low, which stands at 1,703 as an exit strategy as the chart structure will improve in 3 trading sessions as then the monetary risk will be reduced.

The volatility will continue to remain high, especially at these lofty levels. As I have written about in many previous blogs, I still believe prices will hit the 2,000 level in the coming weeks ahead as strong demand and limited supply continues to fuel prices higher. I see no reason to try and pick a top, as trading with the trend is the most successful way to trade over time.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

S&P 500 Futures

The monthly unemployment report stated that we added 128,000 jobs last month, coupled with the fact of sharply higher revisions over the last couple of months pushed the S&P higher by another 12 points at 3048 still hovering near all-time highs.

The S&P 500 settled last week at 3020, up about 28 points for the week. I have been recommending a bullish position from around the 3006 level and if you took that trade, continue to place the stop loss under the two week low standing at 2982 as an exit strategy as the chart structure will improve in next week's trade lowering the monetary risk.

Prices are trading above their 20 and 100-day moving average as this trend is strong to the upside and looks to test the 3100 level in the coming weeks ahead as we enter the strong holiday season.

The unemployment rate stands at 3.6% as the U.S economy is the envy of the world and looks to continue as I see no reason to be short this market as that would be counter-trend trading, which is very dangerous over time so stay long.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Copper Futures

Copper futures in the December contract settled last Friday in New York at 2.6755 while currently trading at 2.6500 down about 255 points for the trading week. I have been recommending a bullish position from around the 2.6440 level, and if you took that trade continue to place the stop loss under the 10 -ay low standing at 2.6145 on a closing basis only as the chart structure is excellent at the current time.

The U.S stock market has hit all-time highs this week as I also have a bullish recommendation in the S&P 500, however it has not supported copper prices as weakening demand continues to keep a lid on prices.

The chart structure is excellent at the current time, however for the bullish momentum to continue, prices have to break major resistance at the 2.70 level, which has acted like cement, so stay long as I remain bullish.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
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.

Cocoa Futures

Cocoa futures in the March contract is trading up by 48 points at 2496, hitting a three week low in yesterday's trade. I will be recommending a bearish position if prices close below the six week low standing at 2414, which was hit on Oct 8 while then placing the stop loss above the October 11th high of 2568 as the risk would be around $1,550 per contract plus slippage and commission.

Fundamentally speaking, stronger supplies from Ghana, the world's 2nd largest cocoa producer, are on the defensive after the Ivory Coast government on Monday reported that Ivory Coast farmers sent 82,900 MT of cocoa to ports during Oct 21-27, up +12.2% from the year-earlier period. The total arrivals for the season beginning Oct 1 rose +23.7% y/y to 284,961 MT. Another bearish factor is speculation that an increase in cocoa prices may prompt Ivory Coast and Ghana cocoa farmers to boost cocoa production. Cocoa prices are trading below their 20-day but slightly above their 100-day, which stands at the six week low, so look to play this to the downside as the trend has turned negative.

TREND: LOWER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

Cotton Futures

Cotton futures in the December contract settled last Friday in New York at 64.90 while currently trading at 64.40 down about 50 points for the week stuck in a two-week consolidation.

I have been recommending two bullish positions initially from the 61.50 level, then adding a 2nd contract at 63.60 and if you took those trades continue to place the stop loss under the 10-day low which stands at 63.97 on a hard basis only as an exit strategy as the chart structure is excellent.

Cotton prices are still trading above their 20 and 100-day moving average as the trend remains to the upside as this is my only soft commodity recommendation at the current time. For the bullish momentum to continue, prices have to break the Oct 30 high of 65.99 in my opinion as the volatility has come to a crawl for the time being as I do not think that will continue much longer, so stay long.

TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Sugar Futures

Sugar futures in the March contract settled last Friday at 12.35 a pound while currently trading at 12.43 up about 8 points for the trading week as prices remain choppy looking for some fresh fundamental news to push prices higher.

I will be recommending a bullish position if prices break the October 15th high of 12.62 while then placing the stop loss under the Sept 12 contract low of 11.84 as the risk would be around $900 per contract plus slippage and commission.

Sugar prices are trading above their 20-day but still below their 100-day moving average, which stands at 12.72 which also stands at major resistance.

The volatility remains low at these depressed prices as we are in the midst of a bottoming out pattern as historically speaking prices look cheap so look to play this to the upside as I think the downside is limited. Remember, when you take a trade, make sure that you risk only 2% of your account balance on any given trade as a proper money management technique.

TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Lean Hog Futures

Hog futures in the December contract settled last Friday in Chicago at 64.92 while currently trading at 63.90 down about 100 points for the trading week continuing its bearish momentum.

As I have written about in previous blogs, you understand that I do not like price gaps. If you take a look at the daily chart, a gap was created on Sept 12 at the 61.75 level as I think prices will test that level in next week's trade as then I might be looking at a counter-trend trade because I feel the 60 level will hold.

The swine flu in China has killed about 250 million hogs, which is astonishing, in my opinion, but has not supported hogs in the short term. However, if you take a look at the back months, prices are trading around the 90 level, which is about a 50% premium.

Be patient and wait for the price gap to be filled as prices are still trading below their 20 and 100-day moving average. Still, I do think the downside is limited, especially if the swine flu enters the United States as we enter the volatile winter season.

TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH

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.

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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Twitter–@seeryfutures
Phone #: 630-408-3325
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There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.