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 June contract basically traded unchanged for the trading week with very little volatility as this market has gone sideways over the last 7 weeks and is looking to breakout soon in my opinion. If you look at the daily chart we are starting to form a tight wedge and I do think if prices break the critical level of 1,265 the bear market will continue however if prices break out above 1,310 a bottom might be in place and time will only tell so at this point I’m sitting on the sidelines as there is no trend in this market, however this is starting to become an interesting chart, so keep a close eye on those 2 price levels as the longer we consolidate the more powerful the breakout becomes. Gold futures are trading just an eyelash below their 20 and 100 day moving average as volatility is extremely low at the current time so if you’re bullish this market I would look at bull call option spreads because the premiums are relatively cheap and if you’re bearish this market I would look at bear put spreads limiting your risk to what the premium costs as gold certainly will become extremely volatile once again it’s just a matter of time.
TREND: SIDEWAYS
CHART STRUCTURE: EXCELLENT

Silver Futures

Silver futures in the July contract settled around 19.42 an ounce finishing higher by about $.10 for the trading week with very little volatility in recent months as traders are losing interest in the precious metals due to the fact that the price swings are very small while silver historically is an extremely volatile market so one day this sleeping giant will wake up. I’ve been recommending a long position in silver for many months and I do think prices are cheap at the current level as that was a spike bottom created at 18.65 on April 30th but the true breakout levels are $20 and 20.40 as the market looks to go higher but needs some fresh fundamental news to dictate short-term price action. If you have deep pockets continue to buy silver in my opinion but you must be a longer-term investor as prices could still head lower in the short term but I think if you have a 2/3 year horizon prices will be higher down the road. Remember the fact that silver prices hit $50 an ounce just 3 years ago while currently trading at 19.42 so that’s how much this market as sold off in the last several years so take advantage of cheap prices in my opinion.
TREND: MIXED
CHART STRUCTURE: EXCELLENT

S&P 500 Futures

The S&P 500 is higher for the 3rd consecutive trading session in Chicago while this Friday afternoon trading up another 7 points currently trading at 1898 hitting another all-time high and with low interest rates looking like to here to stay for several years to come it’s going to be very difficult to selloff the stock market as companies are record cash outstanding balance sheets and the fact that the Obama administration and the Federal Reserve are trying to prop up equity prices for several more years to come so I continue to remain bullish equity prices. The fact that the S&P 500 rose 32% which is an amazing feat to accomplish while all that’s happening this year is we’re consolidating the giant move in 2013 but look for higher prices to come and if you want to get in to a futures contract I would buy at today’s price while placing my stop at the 10 day low which is around 1860 risking about 28 points or $1,400 per contract if you trading the S&P mini. The one thing that is for certain is the S&P 500 certainly likes low interest rates and with bond yields collapsing in recent weeks that will spur the stock market even higher so continue to buy on dips making sure that you use a proper money management technique. The fact that the interest rate at banks currently stands at about 0% so that is forcing investors to enter into the stock market as many S&P 500 companies pay dividends that are higher than the 10 year note so the equity market has turned into a demand market especially with all the stock buyback programs and Apple Computer which is propelling the market higher.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Crude Oil Futures

Crude oil futures in the July contract rallied another $.70 this Friday afternoon trading at 104.45 a barrel hitting new 1 year highs as the trend continues to move to the upside at least here in the short term. The true breakout was when prices broke above 103 in Wednesday’s trade as I would place my stop loss at the 10 day low which is around 98 risking $5 or $5,000 per contract as the chart structure will improve over the next several days as there is strong demand going into the Memorial Day weekend for energy products. Crude oil futures rose almost $3 this week as prices look to head up to the next resistance level of 106 and if that level is broken I think we can retest the 110 level which was hit last August when we had the Syrian conflict and then prices dropped very quickly however this market is quite different as prices are rising due to demand and improving economies around the world as the U.S stock market hit all-time highs once again today and with extremely low interest rates looking to stay for many years to come that recipe is very bullish crude oil and all other commodity and equity assets. If you look at this market on a seasonality basis prices generally tend to rise in the months of June, July and August as drivers are hitting the road and it looks like that same trend is already beginning so continue to play this market to the upside and if you currently have missed the recent rally look for a dip to enter.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

Orange Juice Futures

Orange juice futures are trading right at their 20 day but above their 100 day moving average going out this Friday afternoon in New York at 158.40 after settling last Friday at 155 as there is currently no trend so I’m sitting on the sidelines in this market waiting for better chart structure to develop as prices have been going sideways to lower in recent weeks. All of the fundamental news has already been baked into the prices as investors realize that the U.S had a poor crop due to greening disease and the drought in central Brazil which also cut production but the market is looking for some fresh news to push prices in one direction or another, however in my opinion I still believe orange juice prices are headed higher, however as a trader I don’t want to trade markets that are choppy because they are very difficult to be successful in so look for another market that is trending.
TREND: SIDEWAYS
CHART STRUCTURE: SOLID

Coffee Futures

Coffee futures in the July contract are up 55 points this afternoon in New York currently trading at 182 a pound still trading below its 20 day but above its 100 day moving average settling last Friday at 185 as prices are still near 5 week lows. I’m recommending buying the coffee market if you’re lucky enough to get in at the 170 – 175 level as I do think crop estimates which should be coming out in the next couple weeks will show a worse production than anticipated sending prices higher and volatility higher as coffee can have tremendous price swings. The drought in central Brazil was very severe and I don’t think prices can head back down to the 140 level so if your trading a large enough account keep a very close eye on this market because the risk reward is always in your favor if you use a proper money management technique so look to be a buyer if prices should tumble into the low 170s.
TREND: SIDEWAYS
CHART STRUCTURE: IMPROVING

Sugar Futures

Sugar futures are trading below their 20 day but still above their 100 day moving average trading lower for the 6th consecutive trading session after settling last Friday at 17.91 and I’ve been recommending a long position in this market when prices broke above the 4 week high of 18.03 while placing my stop at 17.07 risking around $1,100 per contract as prices are currently trading at 17.37 and if you took that recommendation make sure you keep your stop at that level minimizing your risk. The commodity markets have had many false breakouts in the last 3 weeks and I have been caught in several of them on the wrong side as I am a trend follower and when the trends are strong my trading system can do very well, but when markets get choppy my trading system does very poorly but the one thing I do realize is the trends always come back in the commodity markets it’s just a matter of time so you have to make sure you play it right minimizing your risk as markets can remain choppy for months so you have to stay in the game which allows you to participate when the strong trends develop again. If you did not take my trade recommendation at 18.03 I would sit on the sidelines in this market and look for a better trade.
TREND: SIDEWAYS
CHART STRUCTURE: EXCELLENT

Soybean Futures

Soybean futures in the November contract closed up 40 cents this week closing at 12.66 a bushel hitting a 1 year high as prices continue to move higher despite excellent growing conditions in the Mid-west currently trading above their 20 and 100 day moving average as I had been recommending a short position getting stopped out around the 12.50 level as I am currently sitting on the sidelines as I have a hard time buying soybeans at these levels. Soybean prices are going higher for one reason the fact that the July contract which is considered the old crop rallied to new contract highs once again which is pushing up the November contract despite the fact that November is considered the new crop which is being grown currently also contributing to sharply higher prices is the insatiable demand for soybean meal which continues to hit contract highs on a daily basis as there is high demand for quality protein. Currently I am sitting on the sidelines and will wait for a better chart pattern to develop as wheat, corn, oats, look bearish in my opinion while the soybeans chopped me up in the month of May & as a trader that’s the way it goes so get back on the horse and continue to trade your system believing in the long run that it will be successful.
TREND: HIGHER
CHART STRUCTURE: POOR

Cotton Futures

Cotton futures in the July contract are sharply lower this Friday afternoon trading below their 20 and 100 day moving average trading lower by 140 points currently trading at 86.36 hitting a 3 month low and if you took my recommendation last week when prices broke out below 89.71 placing your stop above the 10 day high which was at 94.08 risking around $2,200 per contract as the trend has definitely turned negative in the short term. The 10 day high will start to be lowered here next week as the chart structure will tighten up as cotton is looking at the next support levels of 84 – 86 as this market has turned very quickly after being in a bullish trend for around the last 6 months. Traders are awaiting next month’s USDA crop report for short-term price direction while also keeping an eye on weather conditions as currently growing conditions are good as I talked about in last week’s blog I was telling traders to look at the option market as the volatility in cotton going into the summer months is low currently as I do think we will start to see big price swings like we are seeing this Friday afternoon so if you’re bearish this market look at some bear put option spreads and if you’re bullish this market look at bull call option spreads for the month of October limiting your risk to what the premium costs.
TREND: LOWER
CHART STRUCTURE: SOLID

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

Corn Futures

Corn futures in the December contract settled right near 10 week lows finishing basically unchanged at 4.75 a bushel finishing lower by 6 cents for the trading week as we’re off to an excellent start to the growing season as planting is near 100% planted come next week as mild temperatures across the Midwest with scattered isolated showers and I do believe corn prices could be in trouble to the downside with a possible 14 billion crop produced come October as supplies will just become too large. If you took my recommendation selling the futures contract when prices broke 4.87 I would continue to place my stop at the 10 day high which currently stands at 4.97 risking around $.22 from today’s price level or $1,100 per contract as the trend certainly is to the downside despite the fact of strong soybean prices. Either 2 things have to happen in my opinion because you have November soybeans continuing to move higher and while December corn continues to move lower so 2 things are going to happen either corn rallies and catches up to soybeans or November soybeans catch up by selling off next week so let’s keep an eye on Tuesday remembering the fact that were closed on Monday because of the Memorial Day holiday as volatility will be very high Tuesday.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Cocoa Futures

Cocoa futures in New York are up for the 7th consecutive trading session climbing higher by another 21 points currently trading at 30.22 after bottoming out at 2850 this market has been on an absolute tear trading above its 20 and 100 day moving average as I’ve been recommending a short position at 2900 as this has been a terrible trade as I have my stop at 3050 hanging on by the skin of my teeth currently. The reason I had been bearish the cocoa market was that it had a 13 week consolidation breakout and as a trader I think that is a special situation, however this trade has not worked like I said the choppiness in the market has been here for several weeks and if you took that recommendation just make sure you keep your stop at 3050 as it looks like a false breakout has occurred. I still recommend investors to keep strong eye on consolidations because if a consolidation is over 10 weeks and breaks out my trading rules always tell me to take that trade and I will continue to do that despite the last 2 which were in silver & cocoa as both were false breakouts which tells me that the next 13 week consolidation has a high probability of success.
TREND: SIDEWAYS
CHART STRUCTURE: POOR

Oat Futures

The oat market closed at 3.46 a bushel in the July contract and I have been recommending a short position when prices broke 3.40 while placing my stop loss above the 10 day high at 3.60 risking $.20 or $1,000 dollars per contract as I still believe the risk reward situation is in your favor as prices have gone sideways in recent days but continue to hold this position as next week will be critical going into the month of June as the chart structure remains excellent allowing you to place a close stop loss minimizing your risk in case the trend does change. Oat futures are trading below their 20 and 100 day moving average telling you that the trend is lower so continue to play this to the downside making sure that you place your stop above the 2 week high.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

TRADING RULES

1 — 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.

2 — Trade with the short term trend, as the saying goes in futures trading the trend is your friend. Sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade. If it was up to me I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side. I define a trend as a commodity hitting a 20 day high or low as a trendy market, if the market is in a consolidation stay away from it and find something that is trending up or down and go in that direction remembering the money management rules of 2% maximum loss if you are wrong.

3 — This rule is extremely important and I witness it being abused constantly creating tremendous loses that are sometimes difficult to come back from. Never add to a losing position because if the position continues to go against you and now you have added even more contracts which are all losing money your account will suffer loses much more than 2% and in some case adding positions and never getting out of a losing trade has wiped peoples trading accounts down to zero because of 1 or 2 bad trades. Remember always play for another day you will have losing trades and the good traders manage losses and move on to the next possible trade.