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.

Crude Oil Futures

Crude oil futures in the January contract are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside settling in New York last Friday at 41.90 a barrel while currently trading at 42.40 up around 50 cents for the trading week as prices have been going sideways recently improving the chart structure dramatically. At the current time I’m not involved in this market, but it sure looks to me that lower prices are ahead as the U.S dollar hit 100 this morning putting pressure on the precious metals and the energy sector once again despite the fact that rig counts hit a 6 year low meaning that we should be producing less oil which should prop up prices, however at the current time worldwide inventories are massive. Prices spiked lower in Tuesdays trade at around the $40 level which was also hit in the month of August as a possible double bottom may have formed, but the trend is your friend and clearly the trend in the U.S dollar is higher and I think that trend will continue throughout 2016 as the U.S is going to raise interest rates while many other countries will continue to keep rates as low as possible. If you are looking to take a short position in this market my recommendation would be to sell at today’s price level and place your stop above the 10 day high which stands at $43.46 risking around $1.10 or $550 per mini contract plus slippage and commission, however I’m sitting on the sidelines looking at other markets that are beginning to trend as this trade is long in the tooth.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Natural Gas Futures

Natural gas futures in the January contract settled last Friday in New York at 2.29 while currently trading at 2.22 hitting another multi-year low as I was recommending a short position all away from September exiting about a week ago as I’m now sitting on the sidelines waiting for better chart structure to develop. I was recommending a short position in the December contract which expired as that was the main reason why I’m currently not involved in this market coupled with the fact of a short holiday trading week as I took profits and moved on, however I’m certainly not bullish this commodity as extremely warm temperatures here in the Midwestern part of the United States continues to pressure prices lower as we were 65° on Thanksgiving Day which was remarkable in my opinion. Natural gas prices are trading far below their 20 and 100 day moving average continuing their remarkable trend to the downside as it certainly looks to me that prices will retest 2.00 but look at other markets that are beginning to trend as this trend was terrific to the downside.
TREND: LOWER
CHART STRUCTURE: POOR

Gold Futures

Gold futures in the December contract settled last Friday at 1,076 an ounce while currently trading at 1,055 ending the week in a sour note down $14 this Friday afternoon continuing its bearish trend hitting is six year low. Gold prices are trading far below their 20 and 100 day moving average continuing its bearish trend as the U.S dollar has crossed 100 once again putting pressure on the precious metals and as I’ve talked about in many previous blogs I see no reason why to own gold as I think $1,000 an ounce could be hit before the end of the year. At the current time there is very little bullish fundamental news to prop up gold prices as the stock market is right near all-time highs as all the interest lies in other markets at the current time as money flows are coming out of the precious metals and into equities as that trade has been working for the last five years. At the current time I’m sitting on the sidelines in this market as the chart structure is poor meaning that the monetary risk is too high not meeting my criteria to enter into a trade, however I’m certainly not recommending any type of bullish position so avoid this market at the current time as I see lower prices ahead.
TREND: LOWER
CHART STRUCTURE: POOR

Silver Futures

Silver futures in the March contract are trading below their 20 and 100 day moving average continuing their bearish trend hitting a 6 year low as the daily chart pattern is almost identical to that of gold as prices settled in New York at 14.12 an ounce last Friday while currently trading at 13.96 down about $.16 for the trading week. The problem with silver is the fact of very weak demand especially coming out of China as the precious metals as a whole have oversupply issues and waning demand as this commodity looks to head lower in my opinion. At the current time I’m not involved in the silver market as the chart structure did not meet my criteria to enter into a trade but I’m certainly not recommending a bullish position as prices remain weak as who knows how low silver can actually go. The one recommendation I did have in the precious metals was copper as copper prices continue to move lower pushing silver and gold prices down as well as the U.S dollar is also the culprit here cracking 100 as that is a negative influence on all commodity prices and especially the precious metals so avoid this market at the current time. The trend is your friend in the commodity markets as silver prices five years ago hit $50 an ounce and that is why you must trade with the trend as you do not know how high prices could go or how low prices could go so trade with the path of least resistance as your success rate should be higher over the course of time.
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 continues their choppy and volatile trade despite hitting a new high at 15.78 in Tuesdays trade but then reversed closing lower for the day while currently trading at 15.04 after settling last Friday in New York at 15.30 as I’m sitting on the sidelines in this market due to the fact of extreme volatility and lack of trend. The U.S dollar continues to move higher pushing many commodities lower, however sugar prices are trading above their 20 and 100 day moving average telling you that the short-term trend is to the upside, however oil prices continue to remain weak and that should hamper sugar prices as well as sugar is used as a biodiesel so look at other markets that are trading with less volatility and better chart structure as this does not meet any of my criteria to enter into a trade. I enjoy trading the sugar market as its highly liquid and can have some long-term trends, but I just don’t know where prices are going as the risk is too high as volatility certainly has come back into this market due to lower production in Brazil and demand which is off the charts right now which is why this is one of the few bullish commodities at the present time.
TREND: HIGHER
CHART STRUCTURE: POOR

Cotton Futures

Cotton prices are now trading above their 20 and 100 day moving average trading higher for the 3rd consecutive trading session as I feel like slitting my throat at the current time as this trade has been extremely frustrating as I was recommending a short position getting stopped out in today’s trade around the 64 level as I’m now 0 for 3 trading cotton in 2015, however all were relatively small losses. This was an extremely aggravating trade as prices were sharply lower earlier in the week only to rebound in light volume over the last several days and sometimes you shake your head and wonder why are prices going higher, but prices hit a four week high in today’s trade so it’s time to move on and look at other markets that are beginning to trend. I probably will not be trading this market for quite some time as prices have been extremely choppy over the last six months as they have the same characteristics of the grain market which is limited to the upside and limited to the downside and if prices actually break 64.50 that would be 3 month high despite the fact that the U.S dollar cracked 100 in today’s trade, but trading is all about risk and at this time I don’t want to be involved.
TREND: HIGHER
CHART STRUCTURE: POOR

Soybean Futures

Cattle futures in the February contract settled last Friday in Chicago at 132.02 while currently trading at 133.82 as I am currently sitting on the sidelines as I exited the December contract last week due to expiration as I will look at this trade come Monday as this was a short holiday trading week with low volume. Cattle prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as the chart structure has improved tremendously as the 10 day high currently stands at 135.02 which is only 120 points away or $480 risk per contract plus slippage and commission, but like I stated earlier I will wait for the volume to come back into this market and take a look at this trade next week so avoid cattle at the current time. The U.S dollar cracked 100 in today’s trade putting pressure on many commodity sectors; however cattle prices have been beaten down over the last several weeks as this looks just to a kickback in my opinion. I will be looking at a possible short position over the next couple of days as I still think lower prices are ahead, but seasonally speaking cattle prices generally rally during the holidays, but expansion is occurring right before our eyes as hog prices still remain weak and I think that will start to pressure cattle eventually so be patient as a possible trade is in the cards.
TREND: LOWER -MIXED
CHART STRUCTURE: EXCELLENT

Rough Rice Futures

Rough Rice futures currently is the only trade recommendation that I’m still involved in as I’m on the sidelines in the entire commodity sector but this trade as I was recommending a short position from around the 12.40 level as prices are currently trading at 12.00 and if you took the original trade place your stop loss above the 10 day high which stands at 12.32 a bushel. Rice prices are trading below their 20 and 100 day moving average settling in Chicago last Friday at 12.13 down about $.13 for the trading week with major support at 11.60/11.75 and if that level is broken you talking about hitting a 3 month low as then I think the bear market could catch some steam to the downside in my opinion. Many of the commodity markets I exited last week due to the holidays as I don’t like trading with low volume or I was stopped out like in soybeans and cotton, but the rough price long-term downtrend line is still intact coupled with the fact that the short-term downtrend line is still intact so continue to remain short as I do think the true breakout could happen in next week’s trade.
TREND: LOWER
CHART STRUCTURE: SOLID

Coffee Futures

Coffee Futures in the March contract settled last Friday in New York at 124.40 a pound while currently trading at 123.80 in a relatively quiet holiday trading week as prices are still right near a 4 week high. Coffee prices are trading above their 20 day but still below their 100 day moving average which stands at 127 as the trend currently are mixed as I’m sitting on the sidelines waiting for better chart structure to develop and a short-term trend to occur. As I’ve talked about in many previous blogs I think coffee prices are in the process of bottoming as we are starting to enter the volatile months seasonally speaking as a price premium seems to be coming back into this market at the current time. Many of the commodity markets have been under pressure due to the fact of a very strong U.S dollar but traders are going to be focusing on Brazilian weather as that will be the main driver of prices in the next several months so be patient and wait for a trend to develop as coffee is one of the largest contracts in the commodity world which can offer high risk and high reward and should only be traded with large monetary trading accounts. The next major level of resistance is around 127/130 as prices have been very choppy over the last six months so a breakout is looming in my opinion.
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.