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 are trading lower by $3 today breaking a 5-day winning streak hitting a 7 month high yesterday continuing its bullish momentum. Gold reacted positively earlier in the week off the Federal Reserve comments stating that basically, they will not raise interest rates until probably later this year sending stock prices & many commodities higher across the board. I have been recommending a bullish position originally in the February contract from around the 1,252 level as you had a roll over into the April contract due to expiration as prices are currently trading at 1,327 an ounce. As an exit strategy, I would place the stop loss under the 10-day low which was hit on January 24th at 1,281 as the chart structure will not improve for another three trading sessions so you will have to accept the monetary risk at this time. Gold prices are trading far above their 20 and 100-day moving average as clearly the trend is higher as we've taken out major resistance as well as I still think prices could trade up to the 1,400 level as demand has come back into this commodity.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Natural Gas Futures

Natural gas futures in the March contract settled last Friday in New York at 3.07 while currently trading at 2.76 down over 30 points for the trading week even though we had record cold temperatures throughout much of the United States, but prices did not react positively. I have not been involved in this commodity for quite some time as the volatility was too high as we had tremendous price swings on a daily basis as the risk/reward was not in your favor. However, prices look very attractive as I think the downside is limited. If you take a look at the weekly chart, there is major support over the last 3 years around the 2.55 level which is just an eyelash away as I would be surprised if prices break that critical juncture. Natural gas prices are now trading under their 20 and 100 day moving average as the trend is to the downside, however we still have about 6 weeks of winter left as cold temperatures could come back, but for the time being sit on the sidelines and wait for the chart structure to improve before entering into a bullish position.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Platinum Futures

Platinum futures in the April contract are trading higher for the 4th consecutive session currently trading at 831 after settling last Friday in New York at 818 continuing its bullish momentum. Platinum prices are right near a 3 week high as we are now trading above the 20 and 100-day moving average which tells you that this trend has turned to the upside. The next major level of resistance is at the January 7th high of 836, and if that is broken, I think there is significant room to run to the upside. I have been recommending a bullish position from around the 816 level and if you took that trade continue to place the stop loss under major support which still stands at 787 as an exit strategy. I also have a bullish gold recommendation, and I do think silver prices are also headed higher as the precious metals are the strongest commodity sector at this time so continue to play this to the upside. Volatility in platinum, as well as many other commodity sectors, remains exceptionally low as the commodity markets historically speaking are volatile, but that has not been the case over the last several months.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Coffee Futures

Coffee futures in the March contract settled last Friday in New York at 106.80 a pound while currently trading at 105.30 down slightly for the trading week. There are some concerns about the Vietnamese crop as hot and dry temperatures are starting to affect the coffee crop and that is why prices have been going sideways to slightly higher over the last couple of months. Coupled with the fact that the Brazilian coffee crop estimate for this year is only around 51 million bags as we produced 61.7 million last year, so the fundamental picture is changing quickly. On the bearish side of the fundamentals, inventories are right near a 4 ½ year high, and that is due to the record crop that was produced. I have been recommending a bullish position from around the 105.30 level and if you took that trade continue to place the stop loss at 98.55 as an exit strategy. The volatility in coffee is starting to come back very slowly, but historically speaking remains low. There are still concerns about certain pockets in Brazil that are experiencing hot & dry weather conditions and if this does persist all you have to do is look at the 2014 chart when the last drought occurred as prices spiked tremendously in just a matter of weeks.
TREND: HIGHER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Cocoa Futures

Cocoa futures in March finished unchanged to close at 2168 right near session lows hitting a 6 week low continuing its bearish momentum. I do not have any trade recommendation for this commodity as we have been trading between 2,000 / 2400 over the last 6 months as the longer this consolidation lasts, the stronger than the breakout will occur in my opinion, but at this point in time just keep a close eye on this market as a strong trend is looming. Cocoa prices are now trading below their 20 and 100-day moving average as the trend has turned negative, but in my opinion, it is mixed as I'm advising clients to avoid this commodity and wait for the real breakout. However I do think the downside is very limited, but there is still the possibility prices could retest the 2000/ 2100 level. I have several recommendations out of the soft commodities including bullish situations in sugar and coffee as I'm also looking at a possible cotton position as I think the commodity markets are going to start to move higher.
TREND: LOWER - MIXED
CHART STRUCTURE: SOLID
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 July contract finished down nearly $0.02 for the week closing around 3.93 a bushel as we have been stuck in a 10 cent trading range over the last 8 weeks as a breakout, in my opinion, is looming to the upside. I am not involved; however, I'm looking at buying corn on weakness as I do think a longer term bottoming pattern is forming at this time as I will take a counter trend trade on weakness. If the July contract trades down to the 3.85 level, I will be recommending a bullish position as you have to remember spring planting is only about 2 months away as the volatility certainly will kick to up to the upside in my opinion. Corn prices are still trading right at their 20 and 100-day moving average as the trend is mixed as the volatility is extremely low and I think that will continue for the rest of February. Look to be a buyer, and if you are a farmer, I certainly would not be selling any of your cash crop at this time.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Soybean Oil Futures

Soybean oil in the March contract settled last Friday in Chicago at 30.03 while currently trading at 29.90 unchanged for the trading week after hitting a fresh contract high earlier today session before profit-taking took place. I have written about soybean oil on multiple occasions as I am looking at a bullish position if prices can get back down to the 29.50 level while then placing the stop loss under the contract low which was touched on November 27th at 27.40 as the risk would be around $1,300 per contract plus slippage and commission. Soybean oil is trading above its 20 and 100-day moving average telling you that the trend is higher as I thought a double bottom had occurred in last month's trade and it certainly looks like that situation did come true so look the play this to the upside in my opinion. The chart structure at the current time is relatively poor as prices have rallied about 200 points over the last 2 weeks so be patient and wait for some type of pullback to develop as it looks to me that today could have been the short-term top.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Sugar Futures

Sugar futures in the March contract settled last Friday in New York at 12.44 a pound while currently trading at 12.73 up about 29 points for the trading week following crude oil prices higher. I have been recommending a bullish position from around the 12.57 level and if you took that trade keep the stop loss below the January 3rd low of 11.69 as an exit strategy. Sugar prices are trading slightly above their 20 and 100-day moving average as the trend is higher to mixed, but I do think the risk/reward is in your favor as the fundamental picture for sugar has also changed and is starting to mirror coffee as lower production numbers this year could begin a bullish trend. The volatility in sugar remains extremely low and has stayed that way for several months, however for the bullish momentum to continue we have to break the January 16th high of 13.27 as I will be looking at adding more contracts to the upside possibly in next week's trade.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Wheat Futures

Wheat futures in the March contract is currently trading at 5.17 a bushel after settling last Friday in Chicago at 5.20 down slightly for the trading week still experiencing extremely low volatility. I'm sitting on the sidelines as my only grain recommendation is a bullish trade in soybean meal. However, I will be recommending a trade if prices close above the January 24th high of 5.29 while then placing the stop loss under the contract low which was touched on January 2nd at 5.01. The risk on that trade would be about $0.28 or $1,400 per contract plus slippage & commission as I cannot imagine that this low volatility is going to stay around for much longer. Wheat prices are trading slightly below their 20 and 100-day moving average as the trend is lower to mixed with major support around 5.00 / 5.05 as that has held on multiple occasions. The government shutdown has ended as we will now start to receive fundamental news on wheat as that will send volatility back into this market so look to play this to the upside in my opinion as I do believe the risk/reward could be in your favor if the 5.29 level is broken.
TREND: MIXED - LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Soybean Meal Futures

Soybean meal futures settled last Friday in Chicago at 313 while currently trading at 313 unchanged for the trading week ending on a positive note on speculation that the U.S and China will come up with some type of trade agreement as they already suggested that they will purchase large amounts of U.S soybeans. I have been recommending a bullish position from around the 317 level as prices have gone nowhere over the last month and if you're still involved continue to place the stop loss at 308 on a closing basis only as the chart structure is outstanding. The volatility in soybean meal currently is extremely low, but that should start to pick up tremendously as we enter the spring planting months which is just a couple months away. Soybean meal is trading right at its 20 and 100-day moving average as the trend is mixed as we have been stuck in a very tight consolidation over the last several months. For the bullish momentum to continue we have to break the January 9th high of 323 as now the government reports will now start to be released as the shutdown has finally ended so there will be some fundamental news to dictate short-term price action.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Trading Theory

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 excellent chart structure with many low percentage daily moves over the course of at least 4 weeks thus allowing you to enter a market and allowing you to place a stop loss relatively close due to small movements thus reducing risk.

Those that have violent up and down swings are not considered to have solid chart structure. I like to place my stops at 10-day high 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. If the chart has big swings, your stop will be further away allowing the possibility of larger monetary loss.