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.

Gold Futures

Gold futures in the December contract settled last Friday in New York at 1,235 an ounce while currently trading at 1,233 unchanged for the trading week hitting a three week low in Wednesday's trade before rallying sharply yesterday because the U.S. dollar was down 90 points. I'm sitting on the sidelines as this market remains extremely choppy with no trend even though we are trading above their 20 and 100-day moving average as gold prices have been supported by the breakout which has occurred in the platinum market which is also higher once again in today's trade. The next major level of resistance is around the 1,245 level as that has to be broken for the bullish momentum to continue. I still have a bullish bias towards the U.S. dollar despite the recent setback so keep an eye on this market while looking at other commodities that are beginning to trend as many of the sectors have come to life. Volatility in gold is average at the current time as we are experiencing $20 up and down days, but that's pretty normal for this market over the course of time and remember if you have a smaller account you can always trade the mini contract which is 1/3 of the large contract.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Natural Futures

Natural gas futures are unchanged in the December contract currently trading at 3.23 after settling last Friday in New York at 3.22 unchanged experiencing an 18 point trading range for the week as volatility is coming back as we enter the volatile winter season. Gas prices are trading below their 20-day but still above their 100-day moving average as the trend is mixed. I am currently sitting on the sidelines looking at entering into a bullish position around the 3.10 level which is also the 50% retracement from the contract low to the recent high as warmer weather has kept a lid on prices here in the short term. Historically speaking I believe that natural gas prices are cheap as we do have strong demand for this commodity as prices really have gone nowhere over the last 4 weeks trading in a 20 point trading range, however that will not last for much longer as the volatility will be to the upside not to the downside in my opinion. For the bullish momentum to continue, we have to break the 3.40 level as I'm looking at a possible counter trend trade as I think the downside is minimal at these prices.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Crude Oil Futures

Crude oil futures in the December contract finished lower for the 5th consecutive session down another $0.80 settling around the 62.90 level as this market has fallen off a cliff over the last four weeks dropping from the 76 level which was hit on October 3rd to today's price level. The API inventory reports continue to come out on a weekly basis showing that we have over supplies with the U.S. is now the number one exporter of oil in the world. OPEC members also are increasing production as it looks to me that prices will retest the contract low which was hit on June 18th at 62.32. However, I think the selloff is getting a little long in the tooth as prices will start to stabilize in the coming weeks ahead. Oil prices are trading far below their 20 and 100-day moving average as the trend is clearly to the downside and was the weakest sector out of all the commodities today as many were sharply higher. The U.S. dollar was down almost 90 points which generally would be a beneficial situation for oil, but that's just how bearish the sentiment is at this time. If you are short a futures contract, I would place a tight stop because the kickback could be vicious as well as we are experiencing extreme oversold conditions at this time.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

S&P 500 Futures

The S&P 500 in the December contract settled last Friday in Chicago at 2669 while currently at 2750 up about 80 points for the week hitting a two week high trading higher for the 4th consecutive session after creating a double bottom earlier in the week around the 2600 level. The monthly employment number was released this morning as the United States added 250,000 jobs which was well above expectations. The economy is doing exceptionally well as the unemployment rate stands at 3.7% sending stock prices higher coupled with the fact that there could be a possible agreement with China on trade as it looks to me that the October selloff has concluded. The S&P 500 is trading above their 20-day but still below their 100-day moving average as the trend is mixed as the volatility is extremely high. As I've talked about in previous blogs I was looking for some type of capitulation as I'm sitting on the sidelines; however, I have a bullish bias. I think the holiday season will be very strong and I think we will end the year with strong gains especially if the Republicans control the House of Representatives and the Senate as the midterm elections are next Tuesday.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Orange Juice Futures

Orange juice futures in the January contract settled last Friday in New York at 138.05 while currently trading at 139.25 experiencing very low volatility as prices are consolidating the recent downdraft that we've experienced over the last couple of months. I've been recommending three bearish positions over the previous several months, and if you took those trades, the stop loss now stands at 141.50 on a hard basis only as the chart structure is outstanding as we could be stopped out as we are just an eyelash away. Juice prices are trading below their 20 and 100-day moving average as the trend remains to the downside coupled with the fact that the downtrend line also remains intact as I still think the volatility will start to increase as it has come to a crawl lately. Fundamentally and technically speaking this market remains negative, but all trends come to an end eventually and if we are stopped out then move on and look at other markets that are beginning to trend as many of the commodity sectors have come to life to the upside except the energy market which continues to fall on a daily basis.
TREND: LOWER
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

Coffee futures in the December contract experienced high volatility this week with a trading range of about 1000 points as we settled last Friday in New York at 119.65 while currently trading at 120.15 up only 50 points for the trading week hitting a three week low in Wednesday's trade at 111.35 before rallying once again. There are some concerns about the Brazilian crop creating lower production in 2019 due to the weather phenomenon known as El Niño, and that has pushed prices higher along with the fact that the Brazilian Real has also stabilized against the U.S. dollar. The fundamental picture for coffee is starting to improve as I do think prices are overextended at this time. Coffee is trading above its 20 and 100-day moving average as the trend remains higher. However, prices gapped today as I don't like gaps as I think that will be filled. Yet, the 109.40 never has been filled as I still think that situation could still occur. I have several soft commodity recommendations including a bullish cocoa and cotton position coupled with a bearish orange juice trade as I do think the trends are coming about in this sector. Volatility in coffee will remain high going into 2019 which is a good thing to see as there's a high probability that the 95 level was the bottom.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Soybean Futures

Soybean futures in the January contract are trading higher for the 2nd consecutive session after settling last Friday in Chicago at 8.57 a bushel while currently trading at 8.84 up about $0.27 for the week and traded at the $9 level earlier on reports of a possible trade deal with China to be developing. Soybean prices are now trading above their 20 and 100-day moving average as the trend is higher, but it's mixed as prices have been stuck between 8.50/9.00 over the last two months as harvest is winding down in the Midwest. Fundamentally speaking soybeans still have huge supplies worldwide as we continue to produce record crop after record crop and South America is also expected to grow a record crop this year as we will have to await what the planting intentions are in 2019 as expectations are around 82 million acres which are approximately 8 million less than 2018. Volatility in soybeans has increased, however, if the possible trade agreement that does not come to fruition prices will probably retest the 8.50 level as I'm sitting on the sidelines as this market remains incredibly choppy.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Cocoa Futures

Cocoa futures are currently trading at 2289 in the December contract after settling last Friday in New York at 2262 up about 27 points for the trading week near a six week high. I've been recommending a bullish position from the 2232 level and if you took the trade continue to place the stop loss at 1982 as I will change that in next week's trade, therefore, the monetary risk will be significantly lowered. Many of the commodity markets have come to life in recent days except for the energy sector because the U.S. dollar has dropped about 100 points as that is spurring the markets higher as it certainly looks to me that cocoa prices have bottomed. The next major level of resistance is around the 2400 level which is still quite a distance away, but I think this commodity has some potential as we are in the strong demand season for chocolate as the holiday season is right around the bend. Originally I placed the stop loss at the contract low as I wanted to give this trade some room, however next week I will lower it to the 10-day low which currently stands around the 2122 level as I will wait to see what Monday's trade brings so stay long.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Wheat Futures

Wheat futures in the December contract is currently trading higher by 1 cent at 5.09 a bushel as the grain market across the board is higher as many of the commodity sectors except oil are witnessing strong gains as the U.S dollar is down nearly 80 points this week. I will be looking at a possible bullish position if prices break the four week high standing at 5.27 which is only about $0.18 away as volatility is starting to take place as we have been bottoming out around the 4.90 level but unable to continue the weakness in recent weeks. Wheat prices are still trading below their 20 and 100-day moving average as the trend remains to the downside as the downtrend line also remains intact, but that can change very quickly if we experience a rally in next week's trade. The chart structure is starting to improve on a daily basis; therefore, the risk/reward is beginning to improve. I will be patient and wait for the breakout to occur as I don't like to trade in choppy markets as they are tough to trade successfully in my opinion so be patient as we could be involved soon as I do think the downside is limited.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Sugar Futures

Sugar futures in the March contract settled up 25 points this Friday afternoon in New York experiencing a high volatility trade this week closing at 13.44 a pound as I remain bearish as I think that prices topped out on October 24th at 14.24 as prices look expensive. If you take a look at the daily chart, we rallied about 350 points over the last month or so as the 50% retracement level is all the way back down to the 12.50 level. I think we will head in that direction in the coming days or weeks ahead & if you take a look at crude oil, its fallen off a cliff in recent weeks as sugar is used as biodiesel. I'm certainly not recommending any bullish position. Sugar is trading under their 20-day moving average, but still above their 100-day as the trend is mixed and I think prices got ahead of themselves as the fundamental picture has not changed that dramatically. The commodity markets, except for the energy sector were sharply higher as the U.S. dollar was down around 90 points today and that has been the culprit to these depressed prices as we hit a yearly high this week. I do believe in 2019 demand will come back into all of these markets as the bullish secular trends will develop, but at this point, I still think there's further weakness in sugar prices.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

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.