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 February contract settled last Friday in New York at 1,257 while currently trading at 1,272 an ounce up about $15 for the trading week right near a 3-week high. I'm currently not involved in this market as the trend remains mixed. Gold prices are trading above their 20-day moving average but still far below their 100-day as this market remains extremely choppy as all the interest lies in the S&P 500 and the equity markets which hit all-time highs once again this week. Interest also lies in the Bitcoin cyber currency phenomenon, however that currency was down $6,000 this week as trading began on Sunday night at the CME. The U.S. dollar has experienced extremely low volatility over the last several weeks lending very little influence on gold prices, and I'm advising clients to avoid this market as we will see what 2018 brings. I'm not sure where prices are headed at the current time. In my opinion, I still think the path of least resistance is to the downside as we might retest recent lows around 1,238 as political tensions with North Korea have eased over the last several months. This is basically a technical trade at this time so look at other markets with a better potential and a much stronger trend as this market keeps flip-flopping on a daily basis which is difficult to trade successfully.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY:LOW

Silver Futures

Silver futures in the March contract is currently trading at 16.27 after settling last Friday in New York at 16.06 up about $0.20 for the trading week in a lackluster manner this week as prices are hovering right near a 3-week high as this market has completely mirrored the gold chart as well. Silver prices are trading right at their 20-day but still below their 100-day moving average as this trend remains mixed as there is very little fresh fundamental news to dictate short-term price action as we are about to enter 2018. I'm advising clients to avoid this market as we have experienced a very choppy trade in 2017 and let's hope in 2018 stronger trends will develop. Historically speaking silver prices look cheap with improving worldwide economies and the tax cuts which are now official will start to increase demand in many commodity sectors including silver. I will not take a short position at this level as the downside is very limited in my opinion. The only bullish precious metal at the current time is copper as a strong housing market continues to support that commodity and the volatility in silver remains remarkably low especially for such a volatile historical commodity which can produce huge price swings on a daily basis. But that is just not the case in 2017 so move on & look at other trends that are beginning.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY:LOW

Crude Oil Futures

Crude oil futures in the February contract settled last Friday in New York at 57.33 a barrel while currently trading at 58.00 up about $0.70 for the trading week continuing its bullish momentum as it looks to me that prices will crack the contract high which was hit on November 24th at 58.99. I still believe higher prices are ahead despite the fact that I'm not involved in any of the energies at this point. Oil was trading above its 20 and 100-day moving average as the trend is clearly to the upside and volatility has certainly come to a crawl as we are about to exit 2017, but I think it will be a different situation soon. If you have read any of my previous blogs, you understand that I do believe that crude oil will trade in the $60/$70 range next year and I will be recommending a bullish position if prices break the contract high. Heating oil futures in the February contract are right near a contract high once again as that has been the leader in this complex as unleaded gasoline has been trading sideways over the last month or so as we're starting to enter the volatile winter season for heating oil futures. The Trump administration announced earlier in the week that we will start limited drilling in the section called Anwar in the state of Alaska which has huge oil deposits as the administration wants the United States to become energy independent as that decision has almost taken four decades to finally be approved.
TREND: HIGHER
CHART STRUCTURE:SOLID
VOLATILITY:INCREASING

10-Year Note Futures

The 10-year note in the March contract settled last Friday in Chicago at 124/13 while currently trading at 123/16. I have been recommending a bearish position from around the 123/24 level and if you took the trade continue to place the stop loss at the 125/00 level, and I will give this more room than the 2-week high. I still think there is a lot of room to run to the downside in this market. The United States has now experienced 3 straight quarters of 3% GDP growth which has not happened in over 10 years as we did not experience one 3% GDP number during the 8 years of the Obama administration as growth certainly is coming back to the United States. I think we can get as high as 4%/5% growth in 2018 which is a very bearish fundamental factor for bond prices. The 10-year note is currently yielding about 2.49%, and I still think we can trade as high as 3.50% in the next 12 months as the stock market continues to hit record highs on a daily basis. I see no reason for these extremely low-interest rates to stay at these levels for much longer so continue to play this to the downside and I will be looking at adding more contracts on any type of price rally. I will recommend lowering the stop loss after next week's trade as 2017 is almost complete with the next major level of support around the 122/15 level. I think volatility will remain extremely low in next week's trade, but come 2018 you will see volatility come back into this market in my opinion so stay short.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY:INCREASING

Lumber Futures

Lumber futures in the January contract traded higher this week hitting a 4-week high as I was recommending a short position over the last several weeks from the 426 level getting stopped out in yesterday's trade around the 440 level as the trend now has turned to the upside. Lumber prices are now trading above their 20 and 100-day moving average as the market looks to move higher in my opinion, but I will sit on the sidelines and look at other markets with a better risk/reward scenario. The next major level of resistance is all the way up at the 460 level which is also around the all-time high which was hit last month. At the current time, my only bullish recommendation is in the cotton market which hit another yearly high in yesterday's trade coupled with a short position in the 10-year note as there are very few trends at the current time. We are about to enter 2018, and I think you will see some great trends to the upside in my opinion due to economic growth in the United States.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY:LOW

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

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.

Corn Futures

Corn futures in the March contract are trading higher for the 4th straight session experiencing extremely low volatility after settling last Friday in Chicago at 3.47 while currently trading at 3.51 a bushel up about 4 cents for the trading week. Corn prices have been stuck in a $0.25 trading range since late August as prices are now trading right at their 20-day but far below their 100-day moving average as traders will start to focus on the 2018 crop. With estimations around 94 million acres planted which is 5 million more than what was planted in 2017 as we could produce another outstanding crop, therefore, pushing carryover levels even higher. At the present time, there is absolutely nothing bullish about this commodity as we continue to overplant in the United States as growing conditions in South America are also ideal as the large money managed funds are still heavily short this market as they still believe lower prices are ahead. At the present time, I'm advising clients to sit on the sidelines in corn as the potential is so limited to the up and downside as it's not worth your time trading, however, come springtime 2018 things could change but that is still several months away so look for another commodity with higher volatility. In my opinion, I do think the downside in corn is very limited as maybe you can trade down another $0.20 lower over the next several months, but I will not take a short position as prices look cheap in my opinion.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY:LOW

Cotton Futures

Cotton futures in the March contract settled last Friday in New York at 75.92 while currently trading at 77.82 up about 190 points for the trading week continuing its bullish momentum due to extremely strong export sales which continue to prop up prices over the last couple of months. I have been recommending a bullish position from the 70.50 level & if you took the trade, the stop loss remains at 72.76. However, in Wednesday's trade as we are closed on Monday due to Christmas will be raised to 73.90 and then will be raised again shortly afterward therefore lowering the monetary risk as the chart structure is improving on a daily basis. Cotton prices broke out of a 9-week consolidation in mid-November as the U.S. crop is not as good as we once thought. Frost in West Texas coupled with hurricanes causing flooding has produced a sub-par crop, and that is why we also see sharp moves to the upside so stay long & continue to place the proper stop loss. I still think prices could be trading in the low 80s possibly in next week's trade. Cotton prices are trading above their 20 and 100 day moving average as this trend is getting stronger on a weekly basis & by far is the strongest out of the agricultural sectors as most of them continue to see year-end selling as that just tells you how strong this market is to the upside.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY:INCREASING

Sugar Futures

Sugar futures in the March contract are trading lower by 9 points this Friday in New York currently at 14.69 a pound breaking a 3-day winning streak after settling last Friday at 13.66 up 100 points for the week right near a 2-week high. I'm not involved in sugar as prices traded right at major support before rallying sharply, and if you have been following any of my previous blogs, you understand that I'm not taking short positions at these depressed levels because this is exactly what can happen as a sharp rally occurred out of nowhere. I still think sugar prices historically are low, but I will wait for better chart structure as the risk/reward is not in your favor at the current time to take any position. Sugar prices are now trading above their 20, and 100-day moving average as this trend remains choppy as we have tested the 13.70 level on multiple occasions over the last 6 months as it has held every single time. I still think we are in a longer-term bottoming out pattern. I will be looking at a bullish position in 2018 as ethanol is experiencing strong demand. I see the downside in this commodity is very limited as it's very good to see volatility come back into this market. I think volatility in many commodity sectors next year will be much higher than what we experienced in 2017.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY:INCREASING

Cocoa Futures

Cocoa futures in the March contract settled last Friday at 1877 while currently trading at 1867 basically unchanged for the trading week experiencing some high volatility as prices are right near major support at the 1850 level which we have touched on multiple occasions over the last 5 months & have rallied every single time. At the present time, I don't have any recommendation in cocoa as I'm sitting on the sidelines as prices are stuck in a 3-week consolidation between 1850/1950. I think a break out to the upside could be coming in this market. However, it remains on the defensive as it will be interesting to see if we close under that 1850 critical level & if that does happen you have to think lower prices are ahead. Cocoa prices are still trading below their 20 and 100-day moving average as this trend is clearly to the downside as prices have dropped about 350 points since topping out on the November 10th high around the 2226 level as many of the agricultural markets have seen year-end selling including cocoa. I think cocoa prices could have a significant chance to rally in 2018 as well as many different sectors as we are winding down 2017 with only a couple more trading days left so avoid this market, but we could be involved in January as prices historically have become cheap in my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY:INCREASING

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.