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 April contract is currently up $13 an ounce at 1,298 after settling last Friday at 1,299 unchanged even though prices settled right at session highs today. Gold prices are trading above their 20-day but still below their 100-day moving average, and if you look at the daily chart, it basically mirrors exactly what silver has been doing as prices also topped out on February 20th at 1,349 as prices have now hit a two month low this week. The volatility in gold is starting to expand as I'm currently sitting on the sidelines waiting for better chart structure to develop, but I do think the downside is limited as there is a lot of uncertainty worldwide as Europe is also lowering its growth forecasts as that could send money flows back into the gold. The U.S. dollar hit a 2-year high this week, and that is why you witnessed around a $60 sell off or 4% from recent highs as I think gold prices have held up relatively well despite that fact so look to play this to the upside in my opinion.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Silver Futures

Silver futures in the May contract is trading sharply higher this Friday afternoon up $0.32 at 15.36 an ounce after settling last Friday in New York at 15.25 bouncing off of major support. Silver prices topped out on February 20th at 16.29 while trading at 14.98 in yesterday's session as that's quite a drop off in just a matter of a couple of weeks as prices look cheap in my opinion. As I've talked about in many previous blogs historically speaking I think silver looks like a bargain at these depressed levels. However, the U.S. dollar hit a 2-year high this week, and that is why you saw about a $1.30 sell off as the entire precious metal sector has declined in recent weeks. Silver prices are now trading slightly below their 20 and 100-day moving average as the trend is lower, but it really is mixed. I will be looking at a possible bullish position once the chart structure and the risk/reward come into your favor. But I do think the downside is minimal as you are seeing bargain hunters come back into this market big time this afternoon.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Crude Oil Futures

Crude oil futures in the April contract settled last Friday in New York at 55.80 a barrel while currently trading at 54.65 down about 2% for the trading week hitting a 3-week low. Oil prices are now trading under their 20 and 100-day moving average as the trend has turned to the downside. I am currently not recommending any position, but it certainly looks to me that prices have finally topped out in the short term. If you are short a futures contract, I would place the stop loss above the March 3rd high of 57.88 as an exit strategy. The API inventory report was released showing that we had an increase of 7 million barrels which is putting pressure on prices here in the short term. We've had a significant rally in 2019, and it would not surprise me at all if crude oil traded at the $50 level once again. The stock market has run into some trouble this week selling off about 2.5%, and crude oil is mirroring the equity market once again just like it did in 2018 as the monthly unemployment number was construed as negative adding only 20,000 jobs as that could reflect weakening oil demand.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: LOW

Natural Gas Futures

Natural gas futures in the April contract settled last Friday at 2.85 while currently trading at 2.86 unchanged for the trading week still hovering right near a 7-week high. Natural gas prices are trading above their 20 and 100-day moving average as the trend has turned higher as we had a slightly bullish inventory report released yesterday helping support prices. The Midwestern part of the United States has experienced extreme cold as this has been the coldest first seven days of March since 1960 as we already have tight gas supplies as this market looks to crack the 3.00 level in my opinion as I do think the longer term bottom has occurred. Natural gas prices are trading above their 20 &100 day moving average as the trend has turned higher. However, spring is only a couple of weeks away as the warmer weather will start to come about as the volatility remains relatively low. If you are bullish natural gas, I would place the stop loss under the contract low which stands around the 2.57 level as an exit strategy.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY:

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.

Lean Hog Futures

Lean hogs in the June contract settled last Friday in Chicago at 75.52 while currently trading at 76.65 ending the week on a positive note. I have been talking about the hog market over the last couple of weeks as I do believe a spike bottom was created on February 20th at 72.20 as I'm looking at a possible bullish position in the coming weeks ahead. Fundamentally speaking we will start to enter the strong demand season as spring and summer are right around the bend which is a terrific thing to see so keep a close eye on this market as I do think the lows have been created. Hog prices are now trading above their 20-day, but still below their 100-day moving average which stands at the 80 level as this has been in a bearish trend over the last three months, however, it looks like it's finally turning the corner. The volatility is relatively high as we are having many 150 point up and down days so if you are involved make sure that you place the proper amount of contracts risking 2% of your account balance on any given trade.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Cotton Futures

Cotton futures in the May contract is currently trading at 73.27 in a very quiet trade this Friday afternoon in New York. I do not have any recommendation in this commodity as the breakout stands at the January 31st high of 76.14 in my opinion as that is the 10-week high as the chart structure is improving daily because prices have been stuck in a two-month consolidation pattern. Cotton is now trading above its 20-day but still below its 100-day moving average as the trend is mixed as the volatility will undoubtedly start to expand as spring planting is underway in the southern part of the United States. The main reason why cotton prices have been going sideways is that we have not come up with a Chinese trade agreement as of today. China is a large importer of U.S. cotton and if we can get some type of favorable situation cotton prices would move significantly higher in my opinion. Cotton bottomed out on February 12th at 71.01 as historically speaking prices look cheap especially if any weather problem develops in the United States in 2019 so keep a close eye on this market as we could be involved in a bullish trade soon.
TREND: LOWER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Corn Futures

Corn futures in the July contract Is trading lower for the 3rd consecutive session hitting a 5 1/2 month low. Corn prices are currently trading at 3.72 a bushel after settling last Friday in Chicago at 3.81 as the momentum continues to build to the downside on a weekly basis. If you have been following my previous blogs you understand that I am looking at a possible counter trend trade in corn, however I'm still sitting on the sidelines as I think in the short term we still have further weakness to go with the possibility of breaking the contract low of 3.70 which was hit on September 18th. The crop report was released this afternoon showing that we had slightly higher carryover than expectations as fundamentally speaking this market remains weak. Oversupply and weak demand continue to put pressure on prices. However, I do believe once an agreement between China and the United States comes about then I think the bottom in many of the agricultural markets including corn will happen so be patient.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Orange Juice Futures

Orange juice futures in the May contract is trading at 115.90 unchanged for the week as the volatility remains very low. Prices have been going sideways over the last seven weeks as the chart structure is outstanding. I will be looking at a possible bullish position if prices crack the February 1st high of 122.80 while then placing the stop loss under the contract low which was hit on February 15th at 114.90 as the risk would be around 800 points or $1,200 per contract plus slippage and commission. The frost season in the State of Florida is behind us as now we will focus on demand as the entire soft commodity sector remains bearish as many of the agricultural markets remain bearish as well as I'm hoping for some type of Chinese trade agreement in the coming weeks ahead. Orange juice prices are still trading below 20 and 100-day moving average as the trend is to the downside so be patient and let's see if a breakout does occur as the risk/reward would be in your favor in my opinion.
TREND: LOWER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Trading Theory

When Do You Enter A Trade? What are your rules to initiate a trade on the long or short side of the commodity market? I have been asked this question many times throughout my career, and my opinion is simply to buy on a 20-25 day high breakout in price on a closing basis only or sell on a 20-25 day low breakout to the downside also on a closing basis.

Many times the price will break the 25-day high and sell off later in the day only to have your trade be negative very quickly. I would rather buy the commodity at a higher price on the close because that gives me more confidence that the market has truly broken out.

However, there are more ways to skin a cat, and this is not the only answer because some other trading systems might rely on different breakout rules that have also been reliable.

Remember always keeping a 1%-2% risk loss on any given trade, therefore, minimizing risks because the entry system I use always goes with the trend because I have learned over time the trend is truly your friend in the long run.

I also look for tight chart structure meaning a tight trading range over a period of time with relatively low volatility. I try to stay away from a crazy market that hit a 25 day high in 2 trading sessions versus the 25 high that actually took 25 days to create.