Weekly Futures Recap With Mike Seery

We've asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.

Copper Futures

Copper futures in the December contract settled last Friday in New York at 216.80 a pound while currently trading lower once again at 2.0530 finishing down over 1100 points for the trading week as I’ve been recommending a short position from the 2.31/2.32 level and if you took that trade continue to place your stop loss above the 10 day high which currently stands at 2.2420 as the chart structure will start to improve on a daily basis. Copper prices have absolutely collapsed finishing down 12 of the last 13 trading sessions trading far below its 20 and 100 day moving average hitting a 6 year low as I think prices will crack 2.00 in next week’s trade as there is very little demand for this commodity at the current time so remain short and accept the risk parameter’s. As a trader you must follow the trend as the path of least resistance is the most successful way to trade in my opinion over the long haul as anybody who has been buying copper at the current time is suffering as there’s no reason to buy this product as who knows how low prices can actually go as the commodity markets in general still look extremely weak in my opinion. Just because prices are oversold does not mean that prices can’t go lower as I don’t like looking at stochastic or RSI indicators as they are countertrend indicators so remember trade with the trend and keep the stop at the proper level trying to capture 70%/80% of the trend as you will never pick the top or bottom in my opinion as that’s a very dangerous way to trade.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Crude Oil Futures

Crude oil futures in the January contract are up 90 cents this Friday afternoon in New York settling at 42.00 last Friday while currently trading at 42.60 as this market has been on the defensive for quite some time due to the fact of massive worldwide supplies as I’ve been sitting on the sidelines at the current time. Oil prices are trading below their 20 and 100 day moving average hitting a double top at the 52 dollar level with the next major level of support at the contract low which was hit in late August around 40.00 as we could be entering a short position next week as the chart structure is starting to improve dramatically on a daily basis. Crude oil has stabilized in recent days due to the fact of terrorism and especially the possibility of that spreading to the Middle East, however worldwide supplies are massive and that is the real problem coupled with the fact of a strong U.S dollar which is higher once again today as the Federal Reserve basically will raise interest rates in the month of December which is also another negative, but as a trader I look for risk/reward to be in your favor and that could be in next week’s trade to the short side as I’m not convinced that prices are headed lower. In my opinion think if the oil market moves higher you’re going to need OPEC to cut production and I’m not sure if they are willing to do that at the current time, but if that does happen that would certainly put the short-term bottom into this market.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Gold Futures

Gold futures in the December contract settled in New York last Friday at 1,081 an ounce while currently trading at 1,081 unchanged for the trading week still trading below its 20 and 100 day moving average telling you that the short-term trend is to the downside, however I’m sitting on the sidelines in this market as prices have dropped $100 in the last three weeks as the chart structure is awful at the current time. Earlier in the week prices traded at a new contract low of 1,062 and now has rallied for the 2nd straight day as I still see no reason to own gold at current time as money flows are coming out of the precious metals once again and into the equity markets as I think that trend will continue for the rest of 2015. Gold prices have stabilized here in recent days due to the fact of all the terrorism that is occurring throughout the world and it looks to me that that probably could continue here in the short-term, but the easy money to the downside has been made in gold as I think you will start to see a consolidation of the recent downdraft in prices so avoid this market at the current time and look at other markets that are beginning to trend with less risk.
TREND: LOWER
CHART STRUCTURE: POOR

Silver Futures

Silver prices are currently trading at 14.21 an ounce cracking the $14 level in Wednesdays trade only to rebound slightly as a possible double bottom may have been created re testing the August low, however this market has been extremely bearish dropping $2 in the last three weeks. At the current time I’m sitting on the sidelines as the chart structure is very poor at the current time as prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside while at the current time my only recommendation in the precious metals is selling the copper market which has worked out very well as I still see lower prices ahead as demand for these products are very weak currently. All of the interest at the present time is in the stock market which is higher for the 5th consecutive trading session I don’t think that’s going to change especially as we enter the holiday season so avoid this market at the current time as silver prices have remained very choppy in 2015 with very few tradable trends.
TREND: LOWER
CHART STRUCTURE: POOR

If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 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.

Sugar Futures

Sugar futures in the March contract settled last Friday in New York at 15.04 a pound while currently trading at 15.04 unchanged for the trading week still in a very volatile trade as prices are swinging up and down on a daily basis as the chart still looks bullish in my opinion, however I am sitting on the sidelines as the chart structure is poor at the current time. Sugar prices are actually trading above their 20 and 100 day moving average which is one of the only few commodities you can say that about as the trend still remains higher with major resistance at 15.50 as strong demand continues to prop up prices here in the short-term coupled with the fact of lower production numbers coming out of Brazil. Sugar prices have rallied around 35% over the last three months as this was a very bearish trend for the several years as prices used to trade in the 30’s in 2011 as that’s how far prices have come down due to over production in Brazil, but that scenario has changed going into 2016 as weather is now the main focus to drive prices higher.
TREND: HIGHER - MIXED
CHART STRUCTURE: POOR

Cotton Futures

Cotton futures in the March contract settled in New York last Friday at 61.99 while currently trading at 62.95 up around 100 points for the trading week as I’ve been recommending a short position over the last several weeks as the original recommendation was in the December contract as we will have to rollover into March due to exploration. Cotton prices are trading above their 20 day moving average but still below their 100 day so the short-term trend is mixed, however the chart structure is outstanding at the current time and if you took the original recommendation place your stop loss in the March contract above the 10 day high at 63.55 as prices have been very nonvolatile in recent weeks. Many of the soft commodities have rallied in recent weeks except for cotton as it has been stuck in the mud as export sales that were reported by the USDA yesterday were solid, however the year-to-date commitments are at 39.4% of the full-year forecast as demand still remains weak worldwide due to the fact that China which holds around 50% of the world reserves is just not importing like they used to in the past. If you have not taken this trade I’m still recommending it at today’s price level as the risk/ reward is in your favor at today’s price risking around 60 points or $300 per contract plus slippage and commission.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Soybean Futures

Soybean futures in the January contract settled last Friday in Chicago at 8.55 a bushel while currently trading at 8.58 slightly higher for the trading week as I have been recommending a short position from around the 8.72 level and if you took that trade the chart structure has improved tremendously so place your stop loss at the 10 day high of 8.68 as prices have gone nowhere in the last 2 weeks. Soybean prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside with major support around the 8.50 level which has been touched on several different occasions, but I do think prices are headed lower due to the fact that South America is off to another outstanding growing season, but it’s too early as planting is still not completed, but stick with the trend as the trend is lower. At the current time there is very little fundamental news to dictate short-term prices as the next USDA crop report will be announced for another three weeks as we enter the Thanksgiving holiday next week which generally has low volatility. I think that low volatility will continue here in the short term, but the chart structure is outstanding and if you have not taken this trade I’m recommending it even at today’s price levels while risking $.10 or $500 per contract plus slippage and commission as the risk/reward is your favor in my opinion.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Corn Futures

Corn futures in the December contract settled last Friday in Chicago at 3.58 a bushel while currently trading at 3.65 up 7 cents for the trading week and has now traded higher for the 5th consecutive trading session as I’ve been recommending a short position for several weeks from around the 3.79 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 3.75 as the chart structure is outstanding at the current time. Volatility in corn has come to a crawl in recent weeks as the 10 day high will also be lowered in Monday’s trade as the risk/reward is highly in your favor as solid demand has propped up prices in the short-term due to the fact of very low prices. Corn prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as there’s very little fresh fundamental news to send volatility back into this market, but remain short in my opinion as I’m still recommending many short positions in the grain market as I think prices are still headed lower. Remember when you decide to enter into a trade the first decision you must make is that the risk must be suitable for your account size as the corn trade met that criteria on the original recommendation as we were only risking 8 cents or $400 at the time of the trade and we might possibly add more contracts in Monday’s trade.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Coffee Futures

Coffee futures in the March contract settled in New York last Friday at 115.80 a pound while currently trading at 122.75 up nearly 700 points for the trading week having one of the strongest weeks in quite some time bottoming out at the 115 level. As I’ve written about in previous blogs as I think coffee is in the process of bottoming, however at the current time I’m sitting on the sidelines waiting for a trend to develop as prices are trading above their 20 day but still below their 100 day moving average telling you that the trend currently is mixed. The contract low was hit around the 115 level as prices are getting very cheap in my opinion as we are starting to enter the volatile season as I think we are squeezing blood out of a turnip at these levels, but I will be patient and wait for better chart structure to develop therefore lowering monetary risk as I think over the long haul prices are headed higher. The next major resistance is at 125 which is just an eyelash away as the soft commodity markets except for cotton have rallied over the last several weeks as traders remember in early 2014 a drought hit key coffee growing regions in the country of Brazil sending prices sharply higher in just a matter of weeks.
TREND: MIXED
CHART STRUCTURE: POOR

Trading Theory

What Does Risk Management Mean To You? I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from. For example if a customer has $100,000 account in my opinion on any given trade he or she should risk 2% – 3% of the account value meaning if you are wrong the worst-case scenario is still a $97,000 remaining balance, however what I always see is traders risking ridiculous amounts of money and instead of the 3% stop loss will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar account could dwindle down to nothing very quickly and I’ve seen it many times throughout my career. What many traders forget to realize is they might have 4 or 5 commodity positions on and if you have too many contracts on all at the same time and all of those trades go against you which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from and your still in the game.