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.

Silver Futures

The silver price for the March contract settled last Friday in New York at 16.13 an ounce while currently trading at 16.76 up about 60 cents for the trading week due to the weakness in the U.S. dollar also coupled with a higher than expected CPI inflation report sending silver prices near a two-week high. I'm not involved in silver & if you have read my previous blogs, you understand that longer-term I am bullish silver as I think its extraordinarily cheap and if you're not a trader but an investor I still think prices will head into the $20 level later this year. Silver prices are still slightly below their 20 & 100-day moving average as this market really has been choppy over the last six months with very little trend. I think that will change as I will not take a short position as I do think the downside is very limited. The U.S. dollar hit a three-year low this week as that is helping keep a floor under silver prices and many other sectors, but for the bullish momentum to continue prices have to crack the 17.50 level as the volatility is starting to increase and should become more violent down the road. Growth in the United States and worldwide is coming back as the tax cuts will certainly push the economy higher in my opinion coupled with the fact of the massive infrastructure plan which is going to help lift commodities. I do think almost all asset classes will continue to climb as the stagnant economy is behind us the 1st time in nearly a decade.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Gold Futures

Gold futures in the April contract settled last Friday in New York at 1,315 an ounce while currently trading at 1,355 up about $40 for the trading week exploding higher off the CPI number that showed higher than expected inflation rates sending prices right near a three-week high. I do not have any recommendations in the precious metals as the chart structure is poor for gold meaning that the monetary risk is too high to enter into a trade. Gold prices are trading above their 20 and 100-day moving average as the trend is higher, but it really is mixed in my opinion with the U.S. dollar hitting a new three-year low in this week's trade and that is also helping support the precious metals and many of the commodities across the board. The next major level of resistance is the January 25th high of 1,370 & if that is broken, you have to think that gold could trade up to the $1,400 level. I will wait for the risk/reward to become more in your favor which might take a couple more weeks down the road so be patient. As I've talked about in many previous, blogs, I still believe that the commodity markets look cheap compared to U.S. equities which are higher for the 6th consecutive session as the panic is behind us in that sector. I do think the downside in gold is limited and I still have a bullish sentiment towards silver prices longer-term.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the April contract are trading higher for the 3rd consecutive session currently trading at 61.40 a barrel after settling last Friday in New York at 58.99. It's up over $2 for the trading week after bottoming out around the $58 level last week due to the panic in the U.S. stock market. Prices are now trading below their 20-day but still above their 100-day moving average as the trend is mixed. I think this is a kickback in price as we dropped about $8 from the recent high as the U.S. is becoming the largest producer of oil in the world as the fracking industry is on fire. Currently, I'm not involved in crude oil as the chart structure is poor & the trend is mixed. I will be patient and see what develops over the next couple of weeks, but I am bullish longer-term as I think we could trade in the high 70's come year-end as demand for this product is stellar due to improving worldwide economies. However, the risk/reward is not in your favor so look at other markets. Rig counts in the United States continue to increase as it becomes more profitable with higher oil prices, but it's kind of a double-edged sword as it also puts more supply into the market. We do not rely on Middle Eastern oil as much as we used to and that's why the volatility has been lowered.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Natural Gas Futures

Natural gas futures in the April contract are currently trading at 2.60 after settling last Friday at 2.59 unchanged for the trading week consolidating over the last five trading days after falling out of bed over the last three weeks. I am currently not involved in this market, but I am looking at a possible bullish position in next week's trade. I think the downside is very limited with the slight possibility that we could retest the contract low which was touched on December 21st at 2.48 as prices topped out on multiple occasions around the 3.00 level so keep a close eye on this market because we could be involved soon. Natural gas prices are still trading under their 20 and 100-day moving average as the trend is to the downside as we are starting to exit the winter months as spring is right around the corner as historically speaking I think prices look cheap as we could have another leg higher to the upside soon. I don't have any recommendations in the energy sector as prices remain choppy and I will wait for the chart structure to improve therefore the monetary risk would be lowered coupled with the fact that the risk/reward would be in your favor as that could happen in next week's trade.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 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 unchanged at 3.68 a bushel in a very quiet trading session, and I thought the trade could not get much slower, but I'm wrong as this volatility is absolutely pathetic. There is very little fresh fundamental news to spur prices in either direction. I have been recommending two bullish positions with an average price from 3.58 and if you took those trades continue to place to stop loss under the 10-day low standing at 3.56. However, in two trading days that will be raised significantly, therefore, lowering the monetary risk. Spring planting is about two months away, and that's when you see the volatility kick up to the upside as we wait on what planting intentions will be for 2018 as corn right now is just riding the coattails of soybean meal which is also used as a feed ingredient which hit another contract high today. Corn futures are still trading above their 20 and 100-day moving average as the trend is higher. However, I do think prices are limited to the upside here in the short-term, so continue to place the proper stop loss.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: VERY LOW

Wheat Futures

Wheat futures in the March contract settled last Friday in Chicago at 4.49 a bushel while currently trading at 4.57 up about 8 cents for the trading week continuing its slow bullish grinding momentum to the upside. I recommended a bullish position from around the 4.40 level & if you took the trade continue to place the stop loss below the 10-day low standing at 4.38. However, the chart structure will start to improve in next week's trade, therefore, lowering the monetary risk. Wheat prices are still trading above their 20 and 100-day moving average as the trend is to the upside and the main focus is on the southern Great Plains part of the United States as that is where rain is needed and if we don't receive rain expect higher prices and if we do receive rain expect lower prices. At the current time, I also have bullish recommendations in oats and corn as it is a quiet Friday afternoon and I still think we can crack the $5 level, possibly in next week's trade especially if the drought continues. So continue to place the proper stop loss and stay long as the trend is still intact in my opinion. The next USDA crop report is still about a month away so weather conditions will remain the main focus over the next four weeks which should send high volatility back into this market.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Cocoa Futures

Cocoa futures in the May contract are breaking a three-day winning streak finishing the week on a sour note down 8 points currently trading at 2126 after settling last Friday in New York at 2060 still finishing up over 60 points for the trading week. I have been recommending a bullish position originally in the March contract from around the 1990 level and you took the trade continue to place the stop loss which now has been raised to 1991. However, the chart structure will not improve for another five trading sessions so you will have to accept the monetary risk at this time. Prices are trading above their 20 and 100-day moving average, and I will be looking at adding another contract to the upside once the chart structure improves as the major next level of resistance is the contract high which was hit on November 10th at 2235. I still think there's room to run to the upside in this commodity. At the present time, cocoa is my only soft commodity recommendation as the rest of the sector continues to head lower despite the fact that many other commodities have bottomed, but coffee, cotton, and sugar prices all remain on the defensive so continue to place the proper stop loss & stay long.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Live Cattle Futures

Live cattle futures in the April contract are trading higher for the 3rd consecutive session. I'm bullish this commodity, but I'm not involved presently, and I'm looking at entering into a trade possibly tomorrow on any price dip as I do think higher prices are ahead. At the current time, the 10-day low stands at 122.80 as the risk is around $1,400 per contract plus slippage & commission which I think is a little too high at this point as prices look to retest the February 5th high of 127.20 in my opinion. If you are long, I would stay long as the commodity markets look bullish across the board. Cattle prices are trading above their 20 and 100-day moving average telling you that the trend is to the upside as I just want to see a little better risk/reward scenario before entering and I will not take a short position as I still think cattle prices look cheap historically speaking. If the 127.20 level is broken, I think prices will retest the November 6th high of 130.10 in the days ahead as the volatility has come to a crawl here over the last month as prices basically have gone sideways. So be nimble and if prices are down 80/100 points in tomorrow's trade take a shot at the long side in my opinion. The U.S. dollar is continuing its bearish momentum trading lower for the week, and that is going to help exports for many commodities eventually. That is why you're starting to see some bullish momentum develop in 2018 as the trends are coming back to the upside as commodity prices across the board are still extremely cheap compared to U.S. equities.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Oat Futures

Oat futures in the May contract settled up 2 cents for the week at 2.70 a bushel as I rolled over from the March contract. I was recommending a bullish position originally around the 2.60 level as I remain bullish oats and the entire grain market as a whole. If you have rolled over into the new contract, the stop loss now remains at 2.63 as the chart structure is outstanding and we are just an eyelash away from getting stopped out. However, I do believe higher prices are ahead as the grain market continues to move higher on a daily basis as weather problems in Argentina and strong demand are pushing soybeans higher helping support oat prices. For the bullish momentum to continue, we have to break the high that was created on February 13th at 2.79, and I will be looking at adding more positions if that level is breached. Prices are still trading above their 20 and 100-day moving average as the trend is clearly to the upside as I am very excited about the entire commodity markets as I think there is so much more room to the upside. The U.S stock market has now traded higher for the 6th straight day closing up over 300 points in the Dow Jones Industrial Average as it looked like last week’s panic was just that panic so continue to stay long.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Trading Theory

What Does Risk Management Mean To You? I generally tell people that the reason people lose money in commodities is not that they are bad at predicting where prices are headed. However, they are also bad when it comes to losing trades and refusing to take a loss which results in heavy monetary losses that are difficult to come back from.

For example, if a customer has $100,000 account they 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 account could dwindle down to nothing very quickly. I’ve seen it many times throughout my career.

What many traders forget to realize is they might have 4 or 5 commodity positions at one time. If you have too many contracts going at the same time and all of those trades go against you, which is very possible, the losses can add up to be staggering. 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 come back from as your still in the game.