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 settled last Friday in New York at 1,141 while currently trading at 1,087 an ounce down $17 this Friday afternoon all due to a very strong U.S dollar which is up over 100 points today on a positive monthly unemployment number which added 271,000 jobs sending many commodities lower. Gold prices are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as prices hit a three week low; however the chart structure is terrible as prices have collapsed over the last couple weeks as I’m sitting on the sidelines waiting for the risk/reward to improve. The next major level of support is at 1,080 which is the contract low as you have to think that gold prices are headed lower as I’m currently bullish the stock market and I do believe that will continue to move higher taking money out of the precious metals therefore continuing to put pressure on prices as I see no reason to own gold. The unemployment rate is 5% as investors are now thinking that the Federal Reserve will raise interest rates which are another negative influence towards gold and commodity prices.
TREND: LOWER
CHART STRUCTURE: POOR

Silver Futures

Silver futures are trading below their 20 and 100 day moving average settling last Friday at 15.56 while currently trading at 14.77 an ounce hitting a 4 week low as the trend in silver is to the downside, however it also has poor chart structure so I’m sitting on the sidelines at the current time. The next level of support in silver is 14/14.50 as I do think prices are headed lower due to a strong U.S dollar which should continue to move higher for the rest of 2015 in my opinion as the commodity markets look to head lower. At the current time I’m recommending a short position in copper as I think silver and gold will continue to put pressure on copper as I see no reason to own the precious metals. Silver prices have been very choppy over the last several months with many false breakouts so be patient as the risk/reward is not in your favor presently, but I’m definitely not recommending any type of bullish position as the path of least resistance is to the downside.
TREND: LOWER
CHART STRUCTURE: POOR

Copper Futures

Copper futures in the December contract settled last Friday in New York at 231.75 a pound while currently trading at 224.40 down about 700 points for the trading week as I have been recommending a short position from around 231 and if you took that trade continue to place your stop loss above the 10 day high which currently stands at 2.38 as the chart structure will tighten up in next week’s trade. Copper futures are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside hitting a five week low with the next major level of resistance at 2.20/2.22 and if that level is broken I think prices could test 2.00 in the next several weeks as the U.S dollar continues to put pressure on many commodity prices including copper. The precious metals continued their bearish momentum with gold and silver sharply lower this week keeping a lid on copper prices. I think this trend is just beginning so take advantage of any price rally as I think lower prices are ahead as we could possibly be adding to this position as the risk/reward is in your favor in my opinion as copper is a very large contract which can experience huge volatility with high risk which is what we look for as a trader as long as you risk 2% of your account balance on any given trade. Copper has traded lower for the last 3 trading sessions as volatility is relatively high as the long-term trend line is still intact so continue to play this to the downside.
TREND: LOWER
CHART STRUCTURE: SOLID

Natural Gas Futures

Natural gas futures in the December contract settled last Friday at 2.32 while currently trading at 2.38 as I’ve been recommending a short position over the last several months and if you took that trade continue to place your stop loss above the 10 day high which has been lowered to 2.42 as the trend may have bottomed out in the short-term. If you take a look at the daily chart there is a price gap at 2.46 as it looks to me that prices want to fill that gap as weather in the Midwest has put pressure on prices in the short term as we are way above normal average temperatures therefore lowering demand and therefore putting pressure on prices. Natural gas prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is lower as many of the commodity markets were lower once again today due to a strong U.S dollar but natural gas is a domestic product which is not influenced by the dollar but by weather conditions as we are starting to enter the winter months, but continue to place your stop at the proper level and if we are stopped out look at other markets that are beginning to trend as this trade worked very well.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

Rough Rice Futures

Rough rice futures in the January contract settled last Friday in Chicago at 11.89 a bushel while currently trading at 12.40 as I have been recommending a short position from this price level while placing your stop loss above the 10 day high which stands at 12.48 risking $160 plus commission and slippage as the chart structure is outstanding at the current time. Rice prices hit a 12 week low in last week’s trade as the main reason I’m taking this trade is that the risk/reward is highly in your favor in my opinion as the agricultural markets continue to remain defensive due to the fact that the U.S dollar is hitting a multi month high as I think that will continue throughout 2015. As a trader my main concern is always about risk as this risk is only around $200 as rice is a very volatile contract so I will take that shot and play this to the downside as we are hanging in there by the skin of our teeth.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING

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

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.

Cotton Futures

Cotton futures in the December contract settled last Friday in New York at 63.32 while currently trading at 62.00 as I’m now recommending a short position while placing your stop loss above the 10 day high which currently stands at 63.85 risking about 200 points or $1,000 per contract plus slippage and commission. Prices are trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as excellent weather in the southern part of the United States is increasing harvest activity bringing in ample supplies coupled with weak demand continuing to hamper prices. The U.S dollar is up sharply this afternoon continuing its bullish momentum which is a negative towards commodity and cotton prices as the agricultural markets look very weak presently so continue to play this to the downside while taking advantage of any rallies as the risk/reward is highly your favor as excellent chart structure is allowing you to lower monetary risk. The next major level of support is between 60/61 and if that is broken look out to the downside in my opinion as I tried shorting cotton several times over the last several months and have been unsuccessful so maybe the third time is the charm.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Soybean Futures

Soybean futures in the January contract settled last Friday in Chicago at 8.86 a bushel while currently trading at 8.65 down about $.20 for the trading week as I’ve been recommending a short position from around the 8.70 level and if you took that trade continue to place your stop loss above the 10 day high which was lowered to 8.94 and will continue to be lowered in next week’s trade. The chart structure in soybeans at the current time is outstanding as traders are awaiting the USDA crop report next week anticipating higher production numbers than previously thought as excellent weather conditions have improved the crop slightly as harvest comes to a completion. Soybean prices are trading below their 20 and 100 day moving average telling you that the trend is to the downside as prices continue to retest 8.60 but unable to break it on a closing basis, but I think that next week prices will break that level. The U.S dollar continues its bullish momentum therefore putting pressure on grain prices as I think this will continue throughout 2015 so take advantage of any price rally as the risk/reward is in your favor. South America is off to another terrific start to their growing season and could produce 100MMT’s flooding the world with more soybeans as carryover levels are very ample at the present time.
TREND: LOWER
CHART STRUCTURE: EXCELLENT

Corn Futures

Corn futures in the December contract settled last Friday in Chicago at 3.82 a bushel while currently trading at 3.72 down $.10 for the trading week as I’ve been recommending a short position from around 3.79 if you took the original trade continue to place your stop loss above the 10 day high which stands at 3.88 as the chart structure will start to improve in next week’s trade. Corn prices are trading below their 20 and 100 day moving average telling you that the trend is to the downside with the next major level of support at the contract low of 3.60 which could be tested next week off of the USDA crop report which should send high volatility back into this market. Volatility in corn at the current time is relatively low as I expect that to continue until next spring as there is very little fundamental news to put high volatility into the market, but I do think the trend will continue to the downside as expectations are of higher production numbers in the upcoming report and extremely high carryover numbers which should keep a lid on prices. Corn prices hit an 8 week low as the one reason I took this trade was the fact of excellent chart structure at the time of the recommendation with the original risk of 8 cents or $400 as I still see lower prices ahead due to a very strong U.S dollar which is up sharply this Friday afternoon.
TREND: LOWER
CHART STRUCTURE: SOLID

Wheat Futures

Wheat prices are one of the few commodities that actually have somewhat of a bullish trend as they are trading above their 20 and 100 day moving average settling last Friday in Chicago at 5.22 while currently trading at 5.22 unchanged for the trading week looking to breakout above 5.30 as I’m currently sitting on the sidelines waiting for a trend to develop. Many of the commodity markets continue to move lower due to the fact of a very strong U.S dollar which continues to pressure commodity prices. Traders are keeping an eye on next week’s USDA crop report and weather conditions in the Great Plains which should continue to keep prices rather volatile over the next several months as this market has remained very choppy recently. Currently I am recommending many short positions as the trends are getting stronger to the downside on a weekly basis, but I do not like to trade choppy markets so be patient and wait for the breakout to occur.
TREND: MIXED
CHART STRUCTURE: SOLID

Trading Theory

Where Should You Place Your Stops? Identifying where stops exist in the market is an important lesson to learn because placing a correct stop loss that will improve your trading tremendously over the course of time. Nobody knows for sure where stops are located, however I have learned a couple of things over my 20 year career and I have a general idea where stops are placed and why. Buy stops are generally placed above the 10 day high as well as above contract highs as the bulls generally are buying more and the short selling are getting stopped out. Sell stops are usually placed at the 10 day low as well as below contract lows which means the shorts are adding to their position and the longs are getting stopped out as they figure they are wrong. The other common places to have stops are at certain moving averages such as the 20 or 100 day moving average where traders think either the trend is turning bullish or the market is starting to break down. Placing stops to close or not at important price levels can get very frustrating because the market can stop you out and then go the direction that you thought leaving you behind and out of the market. Placing stops is one of the most important aspects of trading in my opinion.