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 February contract settled last Friday in New York at 1,161 an ounce while currently trading at 1,135 down about $25 for the trading week retesting prices that we haven't seen since early February as this bearish trend is getting stronger to the outside on a weekly basis. I am currently sitting on the sidelines as the chart structure never met my criteria to enter into a short position as I was actually looking at a bullish position in silver but prices dropped dramatically, so I avoided the trade as I'm currently looking at a possible short position in the copper market. Gold prices settled last year at 1,065 still up about $75 or about 6% for the year & traded as high as 1,387 on July 6th as that is how far prices have fallen all due to a strong U.S dollar. The main reason for the weakness except for copper in the precious metals is the fact that interest rates in the United States are climbing rather quickly as the 10 year note is yielding 2.60% coupled with the fact that the U.S dollar is hitting a 14 year high as these are very bearish influences towards the precious metals and especially gold. At present I'm recommending a bullish position in the S&P 500 and that is also taking money out of the precious metals and into the equity markets and I still see that trend continuing for the rest of 2016.
TREND: LOWER
CHART STRUCTURE: POOR
Copper Futures
Copper futures in the March contract settled last Friday in New York at 2.6475 a pound while currently trading at 2.5725 down about 750 points for the trading week right near a 3 week low as I'm keeping a close eye on this market looking at entering a short position sometime next week. Copper prices are trading below their 20-day but still far above their 100-day moving average as this by far has been the best precious metal over the last several months responding violently to the upside off of a Trump administration promising massive stimulus programs, therefore, increasing demand for copper. I'm looking at a possible short position if prices hit a 4 week low which could happen next week as the chart structure is solid at present. However, it looks to me that copper is way too expensive compared to gold and silver prices as a strong U.S dollar continues to pressure on most of this sector. Copper is trading below its 20-day moving average for the first time in over 2 months, and that tells me that prices may have topped out around the 2.75 on November 28th.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Crude Oil Futures
Crude oil futures in the January contract settled last Friday in New York at 51.50 a barrel while currently trading at 51.85 up about $0.35 for the trading week, but traded as high as 54.51 in Monday's trade on bullish OPEC news about cutting production ,but prices were unable to hold those lofty levels. At the current time I am not involved in this market but if you are long a futures contract my recommendation would be to place a stop loss under the 10-day low which stands at 49.61 as the chart structure is relatively solid at this time as this market remains trendless as I will look at other markets that are beginning to trend. Oil futures are trading above their 20 and 100-day moving average telling you that the short-term trend is higher as many commodities look weak due to the fact of an extremely strong U.S dollar. However, the OPEC cuts have stymied any dollar strength as it certainly looks that crude oil is headed higher in 2017 in my opinion. We are definitely entering the volatile season for heating oil as extremely cold weather can push up prices rather dramatically, therefore, affecting crude oil, but wait for better chart structure to develop as this market has been choppy over the last 6 months.
TREND: HIGHER
CHART STRUCTURE: IMROVING
S&P 500 Futures
The S&P 500 in the March contract settled last Friday in Chicago at 2254 while currently trading at 2259 up only 5 points in a very nonvolatile trading week as the Federal Reserve announced that they will raise interest rates by another .25% as that was already reflected in prices in my opinion. I have been recommending a bullish position from around the 2194 level in the December contract now rolling over into the March contract so now place your new stop loss under the 10-day low which in Monday's trade is 2195 as the chart structure remains poor due to the fact that prices have moved up rapidly. The chart structure will start to improve on a daily basis. Therefore, the monetary risk will be lowered as that is always a good thing in my opinion as trading is all about risk as this market continues its bullish trend and I still think there's more room to run to the upside. Many of the commodity markets have been mixed as this clearly has strength to the upside as money is pouring out of the commodity markets and into the equity markets all based on future growth as GDP looks to move higher under the Trump administration as that is certainly bullish stock prices coupled with the fact of major tax revisions coming.
TREND: LOWER
CHART STRUCTURE: POOR
Live Cattle Futures
Live cattle futures in the February contract settled last Friday in Chicago at 110.52 while currently trading at 113.30 up about 280 points for the trading week hitting a 4 month high. At present, I'm sitting on the sidelines as the risk/reward is not in your favor as the 10-day low is too far away which currently stands at 108.35 risking about 500 points or $2,000 as that is too much for this commodity in my opinion. The trend in cattle clearly is to the upside as prices are trading far above their 20 and 100-day moving average as this market has rebounded substantially over the last several months turning a bearish trend into a bullish trend as extremely cold weather in the Midwestern part of the United States is supporting prices at this time. The chart structure in cattle will start to improve in the next couple of days so I will keep an eye on this market possibly to the upside as many of the commodities look bearish at present, as I only have 2 trade recommendations and that is a short sugar position along with a bullish S&P 500 trade as there are very few strong trends, but I think that will change in 2017 as volatility will be much greater.
TREND: HIGHER
CHART STRUCTURE: POOR
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.
Orange Juice Futures
Orange juice futures in the March contract settled last Friday in New York at 213.00 while currently trading at 195.00 down about 1800 points for the trading week as I was looking at selling if prices broke 205. However, I did not take the trade as the chart structure was poor and the monetary risk was too high. I am not giving up on this trade as I will wait for some type of rally and the chart structure to improve which will take several more days as I do believe prices are headed lower as prices are now trading below their 20 & 100-day moving average for the first time in months telling you that the trend clearly has broken down. The next major level of support is around 185 which was hit on October 18th and if that is broken prices could really drop as I'm hoping to be able to enter this market to the short side as the soft commodities still remains very weak in my opinion. The 10-day high currently stands at 222 which is way too far away risking around $4,000 per contract so be patient & let's see if we can get some type of rally back up to the 205 level to enter into a short position so be nimble.
TREND: LOWER
CHART STRUCTURE: POOR
Cotton Futures
Cotton futures in the March contract settled last Friday in New York at 70.80 while currently trading at 71.13 basically unchanged for the trading week still stuck in an extremely tight consolidation as I'm looking at a possible breakout to the upside above 72.75 and to the downside below 70.00 which I think could happen in next week's trade. The chart structure in cotton is outstanding at present. Therefore, the monetary risk is relatively low due to the fact that this is a very large contract with huge volatility at certain times of the year. Prices are still trading below their 20 but above their 100-day moving average telling you that the trend is mixed so be patient and wait for a break out in either direction to occur. This has been one of the most interesting charts that I can remember in quite some time as prices peaked out in July around the 78 level due to hot and dry conditions in the southern part of the United States sending prices to hit new contract highs only to fizzle quickly as we have now consolidated over the last 4 months as the breakout could be very powerful as I'm recommending this trade on either side.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the March contract settled last Friday in New York at 19.24 a pound while currently trading at 18.05 down about 120 points for the trading week continuing its bearish momentum touching a 6 month low. I have been recommending a short position from around the 21.67 level as we've been in this trade for the last 2 months and if you took this recommendation continue to place your stop loss above the 10 day high which stands at 19.86 as the chart structure is terrible due to the fact that prices continue to head south. Sugar prices are trading far below their 20 and 100-day moving average as the short-term trend is lower & as I've talked about in previous blogs I think we could head into the low 17's and if that is breached who knows how low prices could go, but continue to place a proper stop loss as picking a bottom is a dangerous way to trade. Many of the commodity markets are mixed this Friday afternoon as the U.S dollar hit a 14 year high this week and that is certainly putting pressure on sugar and the rest of the soft commodities as I think this trend has further legs.
TREND: HIGHER
CHART STRUCTURE: POOR
Soybean Futures
Soybean futures in the March contract settled last Friday in Chicago at 10.48 a bushel while currently trading at 10.44 down slightly for the trading week still consolidating over the last 3 weeks as I been sitting on the sidelines looking at other markets that are trending. At the present time the chart structure is just starting to improve as I'm looking at a possible bearish position in next week's trade as the 10-day high currently stands at 10.83 as I would like to see the chart structure improve therefore lowering monetary risk as the grain market is stuck in the mud and has gone nowhere for months as my only 2 recommendations are in sugar & the S&P 500 at present. Soybean futures are still trading above their 20 and 100-day moving average telling you that the short-term trend is higher as traders are keeping a close eye on South American weather as Brazil at the present times growing conditions are ideal as a strong U.S dollar is also keeping a lid on prices so keep a close eye in this market as we could be entering a short position relatively soon. The major breakdown in soybeans is below 10.25 as volatility is relatively low and should remain low until springtime planting which occurs here in the months of April/May. However, I'm a trend follower as I will wait for the breakout to occur.
TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
Trading Theory
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.
If you are looking for a futures broker feel free to contact Michael Seery at 312-224-8140 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: 312-224-8140
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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.
