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 December contract rallied sharply this Friday afternoon closing up $27 an ounce to finish at $1,170 after falling over 100 dollars in the last 2 weeks as massive profit taking sent prices to the upside as prices are still trading below their 20 & 100 day moving average settling last week at 1,170 finishing basically unchanged which is amazing in my opinion as Fridays come back was remarkable rallying over $40 from session lows. Gold prices are trading right near a 5 year low as major support is around 1,100 as the chart structure is awful at this time so I’m advising clients to stay away as the 10 day high is too far away with too much risk as the U.S dollar continues to move higher pressuring many commodities especially the precious metals but wait for the chart structure to improve reducing monetary risk.

I’m certainly not recommending any type of bullish position in gold as I believe the stock market will continue to grind higher for the rest of 2014 as money flows will continue to pour into equities and out of the precious metals so look for opportunities to sell while placing your stop above the 10 day high make sure that you only risk 2% of your account value on any given trade as volatility is extremely high as I think today’s action was just a kick back in price which was probably overdue.

If you really think about it what’s the reason to own gold at this time as equities continue to trade at all-time highs while paying dividends in many sectors were as gold is used as an inflation hedge and at this point in time deflation is a problem not inflation so avoid this market to the upside and take advantage of any rally to get short
TREND: LOWER
CHART STRUCTURE: AWFUL

Crude Oil Futures

Crude oil futures in the December contract rallied $.65 to finish around 78.60 a barrel after hitting multi-year lows this week at 76.00 and if you’re still short this market I would place my stop above the 10 day high which currently stands at 82.88 a barrel which is around $4 away or $4,000 risk per contract as chart structure is starting to improve on a daily basis. Crude oil futures are trading far below their 20 & 100 day moving averages as prices rose today on rumors of a Saudi Arabia explosion sending prices sharply higher at one point, however I think this is just a dead cat bounce so continue to play this to the downside making sure you place the proper stop loss risking 2% of your account balance on any given trade as the trend clearly is to the downside.

The U.S dollar was up again this week and continues to surge to the upside and I do believe that the foreign currencies continue to move lower while continuing to pressure crude oil and many of the other commodity prices such as gold, silver, and the grain market, however every market does need a kickback so take advantage of any rally in tomorrow’s trade as I still think oversupply and a strong dollar take this market sharply lower here in the short term.

As I’ve talked about in many previous blogs I have missed this trade to the downside but one of my theories was the fact that the United States government wants lower oil prices not only to help the U.S consumer but to punish Russia which has sanctions and their whole economy is based off of strong crude oil prices so this is the double whammy to Russia and I think this will continue for some time to come. On Tuesday the Republicans gained power in the Senate and have control in the House and that is rumored to be very bearish crude oil prices as the Keystone pipeline could now take affect which have been blocked by the Democrats and will make the United States even more oil independent and put pressure on prices in the short term as the fundamentals in this market are absolutely terrible. The volatility is very high in crude at the present time so make sure that you trade the proper amount of contracts risking only 2% of your account balance on any given trade because you need to have an exit strategy when you are wrong.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Orange Juice Futures

Orange juice futures in the January contract are trading far below their 20 and 100 day moving average trading lower for the 3rd consecutive session settling last Friday in New York at 138.85 while currently trading at 127.60 as I have been recommending a short position when prices broke to new lows around the 140 level and if you took that trade make sure you place your stop above the 10 day high which currently stands at 142.40.

The bearish trend continues in orange juice due to the fact of a strong U.S dollar and possible record production come this winter in Florida as weather in Brazil and Florida is currently very supportive to production as prices hit a 1 year low with the next level of support at 115 – 120 so continue to play this to the downside as orange juice is considered a luxury product and with many of the commodity markets going down due to the fact of deflation I think that is really going to hamper orange juice prices here in the short term especially if weather conditions remain ideal. The chart structure in orange juice at the current time is poor but it will improve on a daily basis as the 10 day high will start to be lowered in Monday’s trade as volatility has increased in the last several days.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Cotton Futures

Cotton futures in the December contract continue to trade in a very tight 3 month consolidation between 62 – 66 unable to breakout to the downside or the upside currently trading at 63.95 as harvest progress is strong at the current time in the southern part of the United States as large world supplies & a very strong U.S dollar which continue to keep a lid on cotton prices despite the fact that a grain rally that has occurred in the last several weeks but it’s not helped push cotton prices up at all. The longer the consolidation my theory states the stronger the breakout will become while the minimum consolidation has to be at least 8 weeks as prices are still trading below their 20 and 100 day moving average as I smell a breakout coming but I remain neutral on this market at the current time so sit on the sidelines and look for another market that is trending strong.

Cotton futures have fallen over 2000 points since the month of May but with large global supplies and the fact of rumors still persisting that China will unleash some of their massive reserves is killing volatility in this market as cotton generally is one of the most volatile markets around as traders are waiting this Monday’s USDA crop report and that should send big time volatility back into this market.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

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

Coffee Futures

Coffee futures in the December contract settled last Friday at 188 while currently trading around 182 and if you are short this market when prices hit a 4 week low place your stop above the 10 day high which currently stands at 193.85 and that stop will come down on a daily basis starting next week as rains in Brazil have certainly pressured prices here in the short term. The other very interesting story is the Brazilian currency which is called the REAL which now has turned sharply lower against the U.S currency which is also bearish prices, but as long as rains continue to come down in crucial growing areas this market remains bearish. Coffee futures are trading below their 20 and 100 day moving average telling you that the trend is to the downside as volatility has slow downed in the last couple weeks.

If you been following any my previous blogs you know that I like to trade markets with tight chart structure as this market had very poor chart structure when it went up to new highs at 225, however at this point it might be worth taking a shot to the downside making sure that you only risk 2% of your account balance on any given trade as coffee is a very large contract with high volatility. Last year’s drought sent coffee prices sharply higher earlier 2014 and it’s rare to have back to back droughts so I would suggest to play this to the downside making sure that you place your stop loss above the 10 day high as the commodity markets still remain pessimistic due to the fact of an extremely strong U.S dollar
TREND: LOWER
CHART STRUCTURE: IMPROVING

Coffee Futures

TREND: LOWER
CHART STRUCTURE: POOR

Rough Rice Futures

I don’t talk about rough rice very often since it’s a low-volume commodity, however as a technician I will trade any market that shows promise as I’ve been recommending a short position in the January contract when the breakout occurred at the 4 week low of $12.57 while currently down for the 2nd consecutive trading day in Chicago trading at $12.11 continuing its bearish trend. If you took my original recommendation place your stop on Monday at the 10 day high which is at 12.50 as prices hit a 4 year low and still has outstanding chart structure so take advantage of any rally while placing the proper stop loss.

Rough rice futures have been falling because of a strong U.S dollar as this commodity is the most consumed in the world and has had wild price swings over the last 10 years and can become extremely volatile as the risk/reward is highly in your favor at this time but even if you missed this trade I would still sell at today’s price while placing the stop at 12.50 risking $1,000 per contract.

The grain market in general over the last several weeks have skyrocketed to the upside especially in corn, soybeans, soybean meal; however, rough rice continues to make new lows as there are large worldwide supplies and you want to trade with the trend & the trend clearly is to the downside and when you’re trading the futures market you want to keep your trading strategy as simple as possible and be able to explain it to a 10-year-old child but if you can’t do that that means your system is too complicated as simplicity is the secret to success in my opinion.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Sugar Futures

Sugar futures in the March contract continue their bearish trend hitting a new contract low in yesterday’s trade as I’m recommending a short position at 15.60 placing your stop above the 10 day high which currently stands at 16.40 risking around 80 points or $900 per contract as the chart structure is outstanding at the current time and will improve on a daily basis as the risk reward is highly in your favor. Last Friday sugar prices settled at 16.04 down about 45 points for the week as the long-term trend line still remains intact to the downside as a strong U.S dollar & large world supplies with overproduction occurring in the last several years hampering prices to new contract lows so continue to play this to the downside.

Sugar prices are trading below their 20 and far below their 100 day moving average telling you that the trend is to the downside so make sure you place the proper stop loss risking 2% of your account balance on any given trade as I like taking trades that have excellent chart structure which can reduce monetary risk by allowing tighter stops.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Corn Futures

Corn futures in the December contract had a volatile trading week settling last Friday at $3.77 going out this Friday afternoon in Chicago around $3.67 selling off $.09 for the trading week & dropping off about $.04 this Friday afternoon heading into the extremely anticipated crop report which comes out at 11 AM CT from the USDA on Monday showing an approximation of 14.5 billion bushels with an average of around 175 bushels per acre as this market has rallied sharply off of harvest lows looking to continue its up trend. Corn futures are trading above their 20 and right at their 100 day moving average and if you are currently long this market when the breakout occurred at the 4 week high around 3.60 place your stop below the 10 day low which currently stands at 3.59 as the chart structure has improved tremendously here in the last several days and certainly that report will send high volatility back into this market on Monday.

The grain market as a whole has skyrocketed here especially in soy meal prices which are right near contract highs which is remarkable in my opinion due to the fact that we have a record crop but there is insatiable demand for these grains as corn has a carryover level over 2 billion with back-to-back 14 bushel + crops & the fact that we rallied is staggering in my opinion, however the trend is your friend however I’m neutral to bearish as I do believe eventually deflation will take place.

If you are a producer of corn I would definitely start to hedge up at these levels as I don’t think they are sustainable in the long-term especially with the giant crop in South America and another giant crop expected here in the United States come springtime but make sure you use the proper stop loss because you never know how high or low a market can actually go so it’s all about using the proper money management system.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Soybean Futures

Soybean futures in the January contract rose for the 3rd consecutive trading session continuing its bullish momentum finishing up almost $.09 at 10.39 a bushel finishing down about $.10 for the trading week but rallying almost $.45 from Wednesdays session lows as traders are anticipating a bullish report come Monday when the USDA states final production numbers and carryover levels as this market has been on fire in recent weeks due to the fact that soymeal continues its exponential rise because of problems with transportation and low supplies propping the market higher.

Soybean futures are trading above their 20 and right near their 100 day moving average as the crop estimate is around 3.95 billion bushels so it will be very interesting to see what actually develops as I’m still bearish this market but I’m currently telling people to be neutral as the trend clearly is to the upside despite the fact that the U.S dollar continues to move higher as it just seems to me that this market is very strong here in the short term with all the transportation problems that are hampering soymeal delivery.

South America currently is around 25% complete in soybean planting which is down from about 50% on the five-year average which is also lending support as harvest is basically complete here in the U.S Midwestern part of the United States so sit on the sidelines and see what Mondays report states and then we’ll go from there as the chart structure is outstanding at the current time which will allow you to place a tight stop helping minimize monetary losses.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

What Does Risk Management Mean To You?

I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from. For example if a customer has $100,000 account in my opinion on any given trade he or she should risk 2% – 3% of the account value meaning if you are wrong the worst-case scenario is still a $97,000 remaining balance, however what I always see is traders risking ridiculous amounts of money and instead of the 3% stop loss will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar account could dwindle down to nothing very quickly and I’ve seen it many times throughout my career. What many traders forget to realize is they might have 4 or 5 commodity positions on and if you have too many contracts on all at the same time and all of those trades go against you which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from and your still in the game.

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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