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 New York this week were slightly higher settling at 1,288 after rallying $20 in yesterday’s trade as renewed optimism about the Federal Reserve continuing its quantitative easing for years to come pushing prices sharply higher after hitting a 5 week low down at 1,260 earlier in the week still continuing its downtrend in my opinion. The next major support is at 1,251 and if that level is broken you would have to think that prices will go down & retest the June lows of 1,180 but this market has been resilient when it looks its worst it has a tremendous rally & when it looks really good it has a tremendous sell off so at this point I would advise sitting on the sidelines and wait for a breakout to occur below 1,251 before entering to the downside as demand has hit a 4 year low as investors continue to pour money into the stock market and continues to sell gold and the precious metals and that is why you see the divergence between the S&P 500 and gold prices. Gold is trading far below its 20 and 100 day moving average which tells you that the trend in the short term is lower but this market has been very choppy for quite some time so look at some other commodities like the S&P 500 because a trendy market is much easier to make money then a choppy market.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver Futures--- Silver futures are currently trading at 20.70 down around $.60 for the trading week right at major support at 20.50 & if that level is broken on a closing basis you have to think that prices will retrace possibly down to the $19 level as investors are losing interest in the precious metals. Silver futures are trading below their 20 and 100 day moving average having a false breakout at $23.03 a couple of weeks ago to the upside only to come back down and retest support. I still believe in the long term that silver prices are cheap and it prices do head back down to the $19 level I would have to be recommending to get in on the long side as economies are expanding around the world & demand is increasing for the actual physical product not the actual futures contract which is decreasing as everybody is interested in the NASDAQ the S&P 500 as that trend continues higher on a daily basis.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Copper Futures
Copper futures are trading below their 20 and 100 day moving average falling over 1000 points this week hitting a 3 ½ month low as the demand for this product is declining with large inventories as well pushing prices lower. In my opinion I do think prices will retest $3 a pound level here in the next several weeks as the precious metals as a whole look weak & if you’re looking to sell copper futures I would sell at today’s price of around 3.16 placing a stop above the 10 day high which is around 3.28 risking around $1500 per contract. Copper is a cyclical product and there are certain times where copper rallies and certain times that it will sell off and right now cyclically speaking its very weak.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Stock Futures
The S&P 500 and Nasdaq continue to push higher as optimism about the new Fed Chairman Janet Yellen who will replace Ben Bernanke continuing to print money for the foreseeable futures lifting the stock market to all-time highs again as the S&P 500 is up another 6 points currently trading at 1794 on light volume. The next major resistance is at 1800 which could be broken soon as we enter the holiday season which generally is supportive to stock prices while the Nasdaq is up 8 points after rallying 55 points in the last 2 days as investors can’t get enough of the technology stocks breaking 3400 in early trade as the cash index looks to break 4000 possibly this week. Volume has been light lately as I think investors are afraid to go short and some investors who have missed the move are afraid to buy at such lofty levels but in my opinion I think stocks are headed higher as they remain the only game in town as interest rates should remain low for years to come. Looking at today action we had a major engulfing bar with another strong day closing once again on contract highs yesterday and my short term view is I would still look to buy pullbacks down to the 1769-1772 area as I believe as long as we hold the new short term consolidation point we will see higher prices. With the market up at contract highs it’s hard to get a solid area of residence but looking at my figures I see 1795 as the first level of resistance with an upside target between 1802-1806
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Crude Oil Futures
Crude oil futures finished slightly lower for the trading week currently trading at 94.40 in the December contract still right near a 5 month low as supplies are huge at this point with waning demand and I still believe crude oil prices will continue to the downside over the course of time. An interesting statement came out this week stating that the United States in the year 2016 will be the largest exporter of crude oil in the world and that just shows you large supplies will be coming onto the market in the next couple of years as $95 in my opinion is still way overpriced with my target down to the low 80s in the next several months as deflation is in the year not inflation despite the fact of quantitative easing as many commodity prices continue to go down which shows real weakness in my opinion and when the quantitative easing does stop you could see a real bloodbath in some of these prices. If you’re looking to get short the crude oil market my advice would be to sell today’s price at 94.40 placing a stop above the 10 day high which is 95.38 risking around $500 in the mini contract or 1,000 if you’re trading the large contract. Despite the fact that there was not an agreement reached with Iran over the past weekend about their nuclear facilities which generally would propel prices higher, however with the supply problem overhanging at this time prices will continue to drop and retest that $90 level in my opinion and then retest summer lows around $85 relatively soon.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Corn Futures
The corn market continues to remain near contract lows currently trading at 4.22 a bushel finishing down around 5 cents for the trading week as the bearish trend still is intact but the volatility has slowed down dramatically in recent weeks and I think that will continue until springtime. Traders are still digesting last Friday crop report which stated a 14 billion production with a 1.87 billion bushel carryover which is historically large and in my opinion I think longer term corn prices will decline dramatically especially if we have another record crop next year so if you agree with my analysis look to sell the December contract of 2014 at today’s price levels. Farm land has increased for the last 12 years straight despite the recession due to high crop prices but I think the tide is turning slowly with crop land and crop prices heading lower as huge supplies down the road could flood the market.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Unleaded Gasoline Futures
Unleaded gasoline for the December contract was up 1000 points this week to close around 2.65 a gallon hitting 2 month highs with poor chart structure trading above its 20 but below its 100 day moving average and I do believe you take advantage of this recent rally and sell a futures contract using my risk management rule in case you are wrong because I think prices will head down to 2.30 a gallon in the next couple of weeks despite the recent pickup in demand . The decline in the futures price is starting to be reflected at the gas pumps where I just paid $3.11 a gallon in a Chicago suburb which has been the lowest price in sometime and I do think that $2.75 is on the horizon for a national average.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean Futures-- Soybean futures for the January contract tumbled sharply this Friday afternoon finishing down $.33 at 12.80 a bushel reversing much of the last week’s gains on a construed bullish report which really befuddled me because I did not think that last Fridays report was bullish it was neutral but soybean prices rallied $.70 since last Tuesday’s low and I still remain bearish the entire soybean complex. Soybeans are trading below their 20 and 100 day moving average and if you’re looking to get short this market my recommendation is to sell at today’s price in the January contract at 12.70 a bushel placing your stop above yesterday’s high at 13.21 risking around $1100 per contract as I think that was a false rally created by short covering as the grain market still looks pessimistic in my opinion with many of the other commodity sectors bearish as a huge harvest is about to be completed with the 3rd largest crop in world history. The soybean market has been choppy in recent months as we await next summer where the fireworks happen & all the fun begins because of a possible drought which can send prices up very quickly but I think prices are headed lower as global supplies are increasing especially if Brazil continues to have solid weather which will create another record crop.
TREND: LOWER
CHART STRUCTURE: POOR
Cotton Futures
Cotton futures for the December contract basically finished unchanged for the trading week closing around 77.20 consolidating the recent downturn in prices with the next major resistance at 76 which if broken I think you could head back down to the 70 level relatively quick as China’s threatening to get rid of some of their cotton supplies which they hold 50% of the world’s reserves which has been putting pressure on prices, plus excellent crops around the world including the United States are bringing ample supply on the market and the same old story continues especially in the soft commodities. There is very little demand for these products at this time and with huge supplies coming onto the market so you have to think that prices are going lower so if you’re interested in selling cotton my recommendation would be to sell a futures contract at today’s price 77.00 placing a stop above the 10 day high which is around 79.00 risking around $1,000 dollars per contract. In many of my previous blogs my original recommendation was to sell cotton at 82 which has been a very good trade this point and at the time of the breakout the daily chart had outstanding chart structure that’s why I was recommending the trade because the risk/reward was in your favor and if that situation develops I think you always have to take that trade.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee futures for the week were higher by around 200 points at 105.50 climbing this Friday afternoon consolidating the recent downturn in prices after hitting 5 year lows last week as huge supplies worldwide are pressuring prices and demand is just not solid at this point to consume all the supplies that are available. The harvest in Vietnam is going very well as crops across the world are receiving excellent weather conditions with the next possible stop at 90 .00 a pound & in my opinion as I think there is further to go down but at those levels I would have to start taking profits if you are short. If you’re looking at some longer-term positions to the upside prices at that level in my opinion are relatively cheap especially considering where the U.S dollar is trading. Coffee is still trading below its 20 and 100 day moving average which tells me that the trend is still negative and it seems like all of these rallies sell off the next day so we will see if this is truly a bottoming pattern and if you’re looking to pick a bottom my recommendation would be to buy coffee futures at today’s price at 105 placing a stop below the contract low of 101 risking around $1500 per contract
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures for the March contract continue their downtrend closing lower for the 5th consecutive day trading around 17.61 a pound down about 75 points this Friday afternoon while I was recommending a short position when prices broke below 18.50 and I still think prices are going back to retest contract lows around 16.75 as there very little demand for any of the soft commodities while this recent whole run-up lately in sugar was due to a warehouse fire that cut some of the supplies, however worldwide supplies are huge and that should keep a lid on prices here in the short term. Sugar futures are trading below their 20 and 100 day moving average with excellent chart structure & if you’re looking to get short this market sell a futures contract place a stop above the 10 day high which is 18.28 risking around 800 points which is around $900 per contract as I do believe the trend will continue to head lower. Sugar has been an excellent market this year with solid trends to the upside and downside and I caught several of those trends as I was long when prices skyrocketed past 20 recommending to get out of 19 and then to get short at 18.50 so continue to take my advice as the next level to be tested will be approximately 17 and there is a possible chance that we retest the 2010 lows around 15.50 in the coming months as the soft commodity markets remain extremely bearish.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Orange Juice Futures
Orange juice futures for the March contract were up 700 points this week finishing higher 4 out of the last 5 trading sessions this week in New York currently trading at 138.30 trading above its 20 & 100 day moving average with a possible bottom being formed at 120 hitting an 8 week high in today’s action as orange juice production was cut by the USDA report last week. I have been neutral orange juice prices but the trend broke out to the upside last Friday and if you believe prices are going higher my advice would be to buy futures contract at today’s price in place a stop below 124 which was most recent low risking around $1,800 dollars per contract but in my opinion the soft commodities are still headed lower and I think orange juice prices will join the group to the downside but the trend at this point is higher.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
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 the course of 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.
When Do You Exit A Trade? The biggest question that I have been asked is when do I exit a winning trade and when do I exit a losing trade? In my opinion the rule of thumb that I use is placing my stop loss at the 10 day high if I’m short or a 10 day low if I’m long. The other rule of thumb is to place your stop loss at the 2% maximum loss allowed in your account for any given trade.
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
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: (800) 615-7649
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