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.
Crude Oil Futures
Crude oil futures in the December contract are down $1 at 81.00 a barrel trading far below their 20 and 100 day moving average settling last Friday at $82 down about $1.00 for the trading week hitting new multiyear lows as the oversupply situation continues to pressure prices to the downside. The chart structure in crude oil was terrible at the time of the breakout as I’ve been sitting on the sidelines, however I have not been recommending any type of bullish position in this market as I do think prices are headed lower and if you are short this market I would place my stop above the 10 day high which currently stands at 85.13 as the chart structure is improving dramatically on a daily basis as a strong U.S dollar and record U.S supplies continue to put pressure on prices here in the short term. The fact that prices don’t have the giant spike ups due to the fact of turmoil in the Mid-East is a great thing as the United States in my opinion does not rely on Mid East oil like we used to so continue to sell rallies while placing the proper stop loss at 85.13 which is around $4,000 or $4 from today’s price levels as there is a high possibility that prices will trade down to the $75 level or even lower especially if the supply situation increases over the next several months as we are entering the non-demand season of winter. Saudi Arabia last week announced that they will not cut production as they are trying to squeeze U.S refineries to slow down their production because of lower prices hurting margins, however it doesn’t seem to be working at the current time as the trend is your friend in the commodity markets so continue to short this market.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Gold Futures
Gold futures in the December contract are trading above their 20 day but still below their 100 day moving average telling you that the trend is mixed as I’m currently sitting on the sidelines in this market waiting for a better chart pattern to develop after prices settled in New York last week at 1,239 currently trading at 1,230 basically in a directionless trade as prices hit a new 5 week high on Wednesday trading at 1,255 before selling off as the stock market regained its footing once again. At the current time I’m telling investors to avoid this market as I’m a trend follower and currently the trend is sideways to neutral, however prices have broken their long-term downtrend line telling you that a possible bottom may have been formed at major support around 1,180 last month. Gold futures should be much higher in my opinion with all worldwide chaos going on so that just tells you how weak this market really is as prices are generally dictated based off the U.S dollar which has been heading higher in recent months so sit on the sidelines and wait for a real breakout to occur and find another market to trade at the current time.
TREND: SIDEWAYS
CHART STRUCTURE: IMPROVING
Silver Futures
Silver futures in the December contract settled last Friday at 17.31 while currently trading at 17.19 down about $.10 for the trading week as volatility has slowdown tremendously in the last several weeks forming a very tight channel & if you’re still short this market from the original breakout at 20.44 which was the 4 week low at the time make sure that you place your stop loss above the 10 day high which currently stands at 17.80 on a closing basis only as this market has gone 4 months without hitting a 2 week high which is absolutely remarkable in my opinion. With all of the worldwide problems and the Ebola scare in the last several weeks that should have propped up silver prices well into the $20 range but that did not occur, however it continues its bearish trend as worldwide problems are not propping up prices anymore, but if you’re not currently short this market I would sit on the sidelines and wait for another breakout to occur but the bearish trend certainly is intact in my opinion as prices are still trading far below their 20 and 100 day moving average telling you the trend is to the downside.
The stock market has rallied sharply over the last several days and that has put pressure on the precious metals but the main problem with silver prices at the current time is the U.S dollar is right near its recent high and that’s always bearish the precious metals as there is very little bullish fundamental news here in the short term, however the chart structure is outstanding at the current time which will allow you to place a tight stop loss minimizing your risk in case the trend does change.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Corn Futures
Corn futures in the December contract had a wild trading week finishing down nearly $.07 this Friday afternoon reversing earlier gains as prices traded at a 7 week high of 3.65 a bushel before selling off to settle around $3.52 as harvest delays have sent prices up for the last month as prices have now rallied $.47 from the contract low or around 14% as concerns about weather continue to prop up prices. As of last Monday around 33% of the crop was harvested which is way behind schedule & the state of Illinois is also way behind schedule as we’ve rained for about 4 straight days, however as I write this article this Friday afternoon there is plenty of sunshine today and for the next 5 to 7 days and I fully expect that farmers will be out in the fields harvesting as much as they can so I’m not a true believer on the upside.
This market still has around 10 billion bushels out in the fields that will come on the market as every market needs a rally at some time as prices have rallied from 3.18 with today hitting a 7 week high, however I do think there still will be a retest of the contract lows but I’m sitting on the sidelines in this market currently as the chart structure is excellent at the current time. If you’re looking to sell a futures contract and you believe that the market has topped out place a stop above today’s high of 3.65 risking around $.12 or $600 per contract as I still think with a carryover level of 2 billion bushels that will limit this rally especially if sunshine comes back into the Midwestern part of the United States. The fact is that harvest is way behind schedule which means that there could possibly be harvesting all the way until late November which could continue to put pressure on prices as harvest pressure has not taken any effect at all as prices have rallied on concerns of lower yields as traders await next month’s USDA crop report to see if 14.5 billion bushels is actually produced.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Cotton Futures
Cotton futures in the December contract are trading above their 20 but still below their 100 day moving average trading in a 3 month channel settling last Friday in New York at 63.00 currently trading at 64.80 up about 80 points for the trading week with a possible head and shoulders bottom starting to be created on the daily chart. There is major support in the December cotton at 61 and major resistance at 66 with large world supplies keeping a lid on prices also due to the fact of a strong U.S dollar as harvest activity will start to improve over the next several days in the southern part of the United States bringing in a near record crop as I’m still sitting on the sidelines in this market because the trend currently is mixed. Cotton prices have dropped over 2000 points from the summer highs and has now been consolidating for the last 3 months so continue to look for a breakout above 66 on the upside & below 61 on the downside but at the current time look at another market with a stronger trend as choppy markets are difficult to trade in my opinion.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Soybeans Futures
Soybean futures had a wild trading week in Chicago finishing up around $.25 for the week reversing earlier gains this Friday afternoon to finish down $.17 at 9.83 in the January contract trading as high as 10.09 hitting a 6 week high as harvest delays are propping up prices also due to the fact that massive demand is coming from China especially in soybean meal which has rallied about 20% from its contract low which has traders scratching their head. Soybean futures are trading above their 20 but still below their 100 day moving average as I’ve a hard time accepting this rally, however my exit strategy was at the 10 day high which was at 9.31 which looks pretty good at this point, but I do still believe that prices are headed lower as sunshine here in the Midwest this weekend should pressure prices on Monday in my opinion. Soybean meal has been incredibly strong & that’s what’s propped up prices in the recent weeks as there’s just an insatiable demand for high-quality protein despite the fact that we will have a record crop this year as that’s already baked into the cake as I still do believe you take advantage of rallies in this market as supplies are overwhelming and will become even more prevalent once harvest resumes.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
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
Lean Hog Futures
Lean hog futures in the February contract are trading far below their 20 and 100 day moving average settling last Friday in Chicago at 87.50 while currently trading at 88.70 slightly higher for the trading week consolidating last week’s sharply lower prices as major support is at 86 as I’ve been recommending a short position in hogs for several weeks and if you took the original recommendation make sure you place your stop above the 10 day high which currently stands at 92.00 as that stop will be lowered on a daily basis starting next week. The reason I was short the hog market is that I do believe that the virus that devastated hog production earlier in the year is behind us and the fact that profit margins are extremely high to produce at the current time due to the fact of low feed costs so I think a supply glut could actually hit this market come February but make sure you place the proper stop loss because the hogs are an extremely volatile market which can turn on a dime but the market still looks vulnerable in my opinion. Cattle futures continue to hover around all-time highs and I think if prices can break to the downside that will put even more pressure on hog futures so continue to sell rallies in this market while limiting your risk to 2% of your account balance as I think there’s a possibility of sharply lower prices in the weeks ahead.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Cocoa Futures
Cocoa futures in the December contract are trading barely below their 20 and 100 day moving average telling you the short term trend is lower after settling last Friday at 3118 going out in New York today at 3050 losing 70 points this Friday afternoon as I’m currently avoiding this market as the chart structure is awful at the current time so look for another market with a better trend. The cocoa market on the daily chart went straight up and then straight back down with major support around 3025 as West Africa could have a large crop harvested here in the next month or so keeping a lid on prices as Ebola fears continue to prop up prices as producers are worried that if the disease spreads it could affect the ability to bring in the crop. I do not like markets that go straight up and straight down as I don’t think Ebola will have an effect on cocoa, however the Ivory Coast is such an unstable area that anything could develop so wait for a true breakout to occur and sit on the sidelines at the current time.
TREND: MIXED
CHART STRUCTURE: AWFUL
Coffee Futures
Coffee futures in the December contract settled last Friday at 210.65 going out today in New York around 191.50 down around 1900 points for the week as rain is forecast in Brazil sending prices sharply lower after topping out at 225 as the chart structure is awful at the current time as I’m still sitting on the sidelines recommending that you avoid this market at the current time. The next level of support is at 180 as volatility is extremely high due to the fact that of major concerns of another drought developing down in Brazil which would send prices sharply higher, however rain has entered the picture as its very difficult historically speaking to have back to back droughts. Volatility in coffee is extremely high at the current time and I still talk to producers out of Brazil as they continue to think that the production will be cut this year, however only time will tell to see if they are right but I don’t like markets that go straight up and then straight down so look for a better market with solid chart structure allowing you to place a tight stop loss minimizing your risk of 2% of your account balance on any given trade.
TREND: MIXED
CHART STRUCTURE: AWFUL
Orange Juice Futures
Orange juice futures in the January contract are higher for the 4th consecutive day currently trading at 141 after settling last Friday at 137.40 up about 400 points for the trading week as I’ve been recommending a short position when prices broke 140 while placing your stop above the 10 day high which currently stands at 146 and that stop will be lowered on Mondays trade down to 142.40 as the chart structure has improved tremendously in the last couple of days. The commodity markets in general have been rallying in recent weeks especially the agricultural markets as there’s a possibility that a short term bottom is in place in orange juice at the current time, however I stick to my rules and my rule is exiting at the 10 day high hoping that that next week turns negative once again as production here in the United States could be one for the record books which could also send supplies or carryover levels relatively high historically speaking. Orange juice is trading above their 20 but still below the 100 day moving average telling you that the trend currently is mixed so continue to place a proper stop loss if you are short.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the March contract settled last Friday at 16.62 while currently trading in New York at 16.38 still trading below its 20 and 100 day moving average with a tight trading range in recent weeks with major support at the contract low of 15.50 – 16.00 as there is currently no trend in this market so I’m sitting on the sidelines waiting for a breakout to occur. The chart structure in sugar is improving tremendously which will allow you to place a tight stop loss, however the long-term trend line is still bearish and in my opinion prices look to retest the contract low once again, however I like to trade markets that have a strong trend so I’m sitting on the sidelines while waiting for a breakout to occur as production in Brazil is off to a good start as the fundamentals are still bearish with large worldwide supplies keeping a short term lid on prices.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Head and Shoulders Top or Bottom
LOOK AT THE DAILY COTTON CHART----This technical indicator consists of a left shoulder, a head, and a right shoulder and a line drawn as the neckline and occur in many different daily charts over the course of time. The left shoulder is formed at the end of an extensive move during which volume is noticeably high. This type of indicator takes time to develop usually a couple of months in my opinion. After the peak of the left shoulder is formed, there is a subsequent reaction and prices slide down to a certain extent which generally occurs on low volume. The prices rally up to form the head with normal or heavy volume and subsequent reaction downward is accompanied with lesser volume.
The right shoulder is formed when prices move up again but remain below the central peak called the Head and fall down nearly equal to the first valley between the left shoulder and the head or at least below the peak of the left shoulder. Volume is lesser in the right shoulder formation compared to the left shoulder and the head formation. A neckline is drawn across the bottoms of the left shoulder, the head and the right shoulder.
When prices break through this neckline and keep on falling after forming the right shoulder, it is the ultimate confirmation of the completion of the Head and Shoulders top formation. In my opinion I have used this technical indicator in the past and I think it is one of the more reliable indicators out there especially if you use it with some other indicators it can help improve your trading results. There are also head and shoulder bottoms that have the exact same characteristics just the opposite because a head and shoulders top is predicting a top while a head and shoulders bottom is telling you that the lows might be in just like the copper chart back in August when it had a head and shoulders bottom.
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
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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
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