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 April contract settled last Friday in New York at 1,330 an ounce while currently trading at 1,326 down about $4 for the trading week. However, its currently trading up $18 as money flows are coming out of the equity market and into the precious metals as a flight to quality. I'm not involved in gold as this market remains reasonably choppy in my opinion as we did hit a two month low in yesterday's trade as the chart structure is very poor which tells you that the monetary risk is too high to enter into a bullish or bearish position. Gold prices are still trading under their 20 and 100-day moving average as the short-term trend is the downside with a possible double top created around the 1,365 level. I still see choppiness ahead so avoid this market at the current time and look at other stronger trends that are developing. The U.S. stock market has dropped about 1200 points over the last four days as that's what is finally starting to support prices. The U.S. dollar hit a six week high in yesterday's trade, and that is also keeping a lid on prices here in the short-term. I will wait for a better chart pattern to develop before entering into a position. If you take a look at the daily chart there is major support around the 1,300 level as in yesterday's trade we traded as low as 1,303, and I suspect that will be strong support in the weeks ahead.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: SOLID

Silver Futures

Silver futures in the May contract is currently trading at 16.52 an ounce after settling last Friday in New York at 16.48 ending the week on a positive note trading higher by 25 cents as a flight to quality is taking place in my opinion. The stock market is having its 4th consecutive sharply lower trading day as money is coming out of equities and into the precious metals. The U.S. dollar hit a six week high which puts pressure on silver. However, historically speaking I think silver prices look very cheap as prices hit a two month low at one point in yesterday's trade before rallying. Silver prices are still trading below their 20 and 100-day moving average as the trend is mixed to lower as I am currently not involved in any of the precious metals as these markets remain choppy. However, if your a longer-term investor I still think silver looks attractive down at these levels. Volatility in this commodity remains relatively low as silver can have huge price swings with tremendous risk, but that has not occurred over the last several months. I think that will come back down the road as I still am bullish many commodity sectors as we have started to rally in 2018. Global growth and demand is coming back in many sectors, and I think that will start to appear in silver as I will not take a short position.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the April contract settled last Friday in New York at 63.55 a barrel while currently trading at 60.77 down nearly $3 for the trading week following the stock market lower. Volatility has reemerged in both sectors as crude oil has been mirroring the equity market over the last month. Oil prices have now hit a two week low and are now trading under their 20-day moving average but still above its 100-day as the trend is mixed. I am not currently involved in this market as my only energy recommendation is in natural gas. The United States later this year will become the largest producer of oil in the world surpassing Russia and Saudi Arabia as the fracking industry has caught fire due to reduced regulations by the Trump administration and that trend should continue for several more years. The chart structure at the current times is poor, and I'm advising clients to avoid this market as I have a feeling that if the stocks continue to move lower then, crude oil prices could retest recent lows around the $58 level. But there is still strong worldwide demand for this product as prices would be very interesting down at that level as I don't see a much further decline if that does occur. The U.S. dollar has hit a six week high which also has put some pressure on oil here in the short term. However, if you take a longer view, the dollar is still right near a three year low.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: SOLID

Natural Gas Futures

Natural gas futures in the May contract is currently trading at 2.71 after settling last Friday in New York at 2.65 up about 6 points from the trading week right at a three week high. Volatility in natural gas is extremely low as I have been recommending a bullish position from the 2.66 level and if you took the trade, the stop has now has been raised to 2.58 as the winter months are behind us. Therefore, the volatility comes to a crawl generally speaking. Gas prices are trading above their 20-day but still below their 100-day moving average stands at 2.80 which also acts as major resistance & if that level is broken I think we could retest the 3.00 level in the weeks ahead as the Northeastern part of the United States is getting hammered by bad weather. However, the Midwest is receiving mild temperatures. The chart structure in natural gas is outstanding due to the low volatility as the rest of the energy sector was hammered this week following the coattails of the stock market which also had a dismal trading performance. But, natural gas is a different commodity & can go in opposite directions so stay long & continue to place the proper stop loss and see what next week's trade brings as the risk/reward are still in your favor.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

10-Year Note Futures

The 10-year notes in the June contract settled last Friday in Chicago at 120/05 while currently trading at 120/12 hitting a two week high. I have been recommending a bearish position initially in the March contract over the last several months getting stopped out at the 120/11 level, and now I will sit on the sidelines and wait for another trend to develop. The Trump administration announced tariffs on steel and aluminum yesterday which is creating shock waves in the stock market which is sharply lower once again today putting money back into the bond market. I think this is a temporary situation as I remain extremely bearish bonds. However, if you're a longer-term investor, I still see no reason not to be short, yet as a trader, you must have an exit strategy as prices met my criteria to exit. The 10-year note is still trading below its 20 and 100-day moving average as the volatility is starting to increase a little bit as the 3% level has now been tested on several different occasions as we are currently yielding about 2.80%. So I will wait for the chart structure to improve as we will be involved in another short position in the coming weeks ahead as I still think yields will be around the 3.50% level as this is just a kickback in a bearish trend.
TREND: MIXED
CHART STRUCTURE: SOLID
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.

Coffee Futures

Coffee futures in the May contract settled higher by 150 points for the trading week at 122.20 a pound as it looks to me that prices bottomed out around the 118.50 level in last weeks trade. At the current time my only soft commodity recommendation is in cocoa which continues to move higher on a daily basis, and if you have been following any of my previous blogs, you understand that I think coffee prices are incredibly cheap. I will be looking at a bullish position if prices break the 126.50 level on a closing basis which could happen in tomorrow's trade. Coffee is trading above their 20-day but still below their 100-day moving average which also stands at critical resistance at the 127.10 level as I think all of the bad fundamental such as a huge crop coming out of Brazil has already been reflected into the price. The volatility in coffee remains extremely low and I don't think that's going to last much more for this sleeping giant because when the volatility finally does come to fruition lookout to the upside as I will not take a short position as the path of least resistance will be higher in my opinion.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Cocoa Futures

Cocoa futures in the May contract are trading higher for the 2nd consecutive session after settling last Friday at 2194 while currently trading at 2275 up about 80 points for the trading week and hitting a 13 month high continuing its strong bullish trend. I have been recommending a bullish position over the last couple of months from around the 1990 level and if you took that trade, the stop loss has now been raised to 2116 as that will also improve on a daily basis starting next week, therefore, lowering the monetary risk as the chart structure is improving. Cocoa prices are trading far above their 20 and 100-day moving average as this trend is to the upside and the strongest soft commodity of them all as the next major level of resistance is all the way around the 2400/2500 level. There is a lot of room to run in my opinion so stay long & continue to place the proper stop loss as I see no reason to sell this market. There are concerns about the crop in West Africa as hot & dry temperatures could affect quality, but we will have to see if that comes to fruition, but who knows how high prices can go as I do not see the topping pattern developing at this point. I will be looking at recommending another bullish position once the chart structure improves or on some price retracement which could happen just based on profit-taking alone so keep a close eye on this market.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: SOLID

Lean Hog Futures

Lean hog futures in the April contract settled lower by 400 points for the trading week hitting a five month low continuing its bearish trend. It looks to me that we will retest the August 30th contract low of 65.02 possibly in tomorrow's trade or early next week. I think hog prices are getting relatively cheap historically speaking despite the fact that prices are still trading below their 20 and 100-day moving average as clearly the trend is to the downside. However, I will not go short as I think we are limited at these relatively low prices as I will keep an eye on this market for a bullish position to develop. The chart structure in hogs is terrible as we were just trading at the 72 level just four days ago as volatility has increased over the last several weeks as we start to enter the spring and summer months of high demand for this product as I think we will start the bottom out soon.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Soybean Futures

oybean futures in the May contract continue their bullish momentum trading higher for the 4th consecutive session after settling last Friday in Chicago at 10.47 a bushel while currently trading at 10.75 up nearly $0.30 for the trading week. This is all due to the drought in Argentina that is accelerating as there are major concerns about the soybean crop at this time. I am not involved in soybeans as my only recommendation currently is in the corn market which continues to move higher. However, I'm certainly not recommending any short position and if Argentina does not get rain over the next 7/10 days, soybean prices could move sharply higher. The next major level of resistance is at the $11 level as prices have now hit one-year high trading far above their 20 and 100-day moving average as clearly this market is strong to the upside. If you take a look at soybean meal it's now crossed the $400 a ton level as that has been the leader in this sector as Argentina's is the 3rd largest exporter of that commodity as that is a major concern at this time and that is why you see sharply higher prices in the short-term. Traders are keeping a close eye on the next USDA crop report which will be released on March 8th as we are starting to enter spring planting as the volatility should even increase from today's relatively elevated levels & if you long stay long in my opinion.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: SOLID

Trading Theory

What do traders mean when they talk about seasonality and its effects on commodity prices? The definition of seasonality states that a characteristic of a certain time when the data experiences regular and predictable changes which occur every calendar year and in a time series that reoccurs or repeats over one year can be said to be seasonal.

An example of seasonality is the grain market where prices head higher in spring and early summer on concerns of a drought or a weak crop, it also happens in the energy sector in the summer months when demand for unleaded gasoline is at its peak and then generally declines going into winter. Seasonality also affects the grains in October when historically prices decline during that period because the harvest is occurring which puts pressure on prices due to the crop being harvested.

Traders try to use seasonality to predict or take advantage of prices in a certain month or season with many of the agricultural commodities.