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

Silver futures in the May contract settled last Friday in New York at 17.16 an ounce while currently trading at 16.45 hitting a two week low finishing down about $0.70 for the trading week all due to the fact that the U.S. dollar hit a four-month high today putting pressure on the whole precious metal sector. I had been recommending a bullish position from the 16.85 level getting stopped out in yesterday's trade. That was disappointing as I truly thought silver prices had broken out, but the strength in the dollar really put the kibosh on this trade so I will sit on the sidelines and wait for another trend to develop. Silver prices are now trading below their 20 and 100-day average as the short-term trend is lower, however, it really is mixed as we continue to trade between 16/17 over the last several months as the volatility has picked up which is a good thing to see. I will not give up on this commodity as I still think we will be trading in the $20 range come year end, but at the current time, we are range bound. Presently I do not have any trade recommendations in the precious metals as they all remain on the defensive as they will bottom out soon in my opinion. Look at other markets that are beginning to trend as I hate to trade choppy markets as they are very difficult to trade successfully.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

10-Year Note Futures

The 10-year note in the June contract finished lower by about 5 ticks for the trading week at 119/15. I still remain very bearish and I will be looking at adding more positions to the downside if we rally once again next week. If you took the original trade which was recommended around the 120/18 level continue to place the stop loss at the two week high standing at 120/18 as that also will be lowered on a daily basis starting next week, therefore, the monetary risk will be lowered so look to be aggressive to the downside as today's action was based on profit-taking and oversold conditions. The 10-year note clearly is in a bearish trend as we are trading far below the 20 and 100-day moving average with the next level of support at yesterday's low of 118/31 and if that is broken I think we can head down to the 118/00 level rather quickly as the yield at the current time is 2.98%. I still think we go up to 3.5% in the coming months ahead so stay short as this trend is strong to the downside. The stock market received terrific news after the closing bell as Amazon, Microsoft, and Intel had outstanding earnings as that could put pressure on the bond market so let's keep a close eye on this as I am itching to sell more.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Natural Gas Futures

Natural gas futures in the June contract finished higher by 2 points this week closing around 2.78 as I have been recommending a bullish position from 2.83 while placing the stop loss under the 10-day low at 2.69 risking around $1,400 per contract plus slippage and commission or $700 on 2 mini contracts as the chart structure is very solid at the present time. Natural gas prices are right near a six week high breaking out of a tight consolidation pattern that we witnessed over the last month as we are now trading above the 20 and 100-day moving average as the trend is higher as the risk/reward are in your favor. At the present time, this is my only energy recommendation, but I am still bullish crude oil as I think prices will cross the $70 level in the coming weeks ahead as there is strong demand for all of the energy products at the current time so play this to the upside while risking 2% of your account balance on any given trade. Volatility in natural gas still remains very low and I think that will expand to the upside in the coming weeks ahead as prices held major support around the 2.70 level on multiple occasions while now breaking out to the upside with the next major level of resistance around the 2.90 level as there is room to run higher.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Coffee Futures

Coffee futures in the July contract settled last Friday in New York at 117.70 a pound while currently trading at 120.25 up about 250 points for the trading week and it looks to me that the bottom may have finally been formed. I will be recommending a bullish position if prices break 121.35 as that is just an eyelash away as the chart structure remains excellent due to extremely low volatility. We are also very close to finally breaking the downtrend line which has remained over the last three months as all of the bad fundamental news may have already been digested. Coffee prices are trading above their 20-day moving average but still below their 100-day which stands at 124.30 and that also acts as major resistance. I also think there could be major buy stops at that level pushing prices up near the 130 level. Volatility in coffee should expand as we enter the possible frost season in Brazil as this will become a weather market in the coming weeks ahead so keep a close eye on this market as we could possibly be involved in today's trade. The risk/reward are in your favor, however, remember coffee is an extremely large contract so make sure you place the proper amount of contracts while only risking 2% of your account balance on this trade.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

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 July contract is currently trading at 3.98 a bushel after settling last Friday in Chicago at 3.85 now looking to retest the contract high of 4.02 which was hit on March 13th as we are now testing the upper end of the recent trading range. Corn prices are trading above their 20 and 100-day moving average as the trend is higher but it is really mixed. I'm not involved, but I do have a bullish bias and I am recommending my clients who are farmers not to be selling. I think higher prices are ahead as we enter the very volatile summer months. Weather conditions have turned ideal in the Midwest as we are slightly behind the five year average of planting, however, warmer weather is ahead and I think that will not be a problem as we are going to focus on production numbers with estimates around 14 billion bushels in 2018. It is an incredibly long growing season as we have not really had a weather problem since 2012 when we had a terrible drought sending prices up to around $8.50 a bushel. I think we are due for some type of weather situation as the volatility certainly has picked up and will increase tremendously over the months ahead. I'm certainly not recommending any type of bearish position as the downside is very limited like I have talked about for many months. Ethanol demand is very strong and with crude oil prices just below $70 a barrel I think that will help support corn down the road so look to play this to the upside once the chart structure improves.
TREND: HIGHER - MIXED
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Rice Futures

Rice futures in the July contract settled last Friday in Chicago at 13.07 while currently trading at 12.95 down slightly for the trading week. I have been recommending a bullish position from around the 12.85 level and if you took the trade continue to place the stop loss at the two week low which stands at 12.80 on a closing basis. Rice prices are trading right at their 20-day but still above their 100-day moving average as the trend remains higher, however, this trade has basically gone nowhere experiencing high volatility. We were down about 25 points in yesterday's trade so keep the same stop as I don't like 2nd guessing. For the bullish momentum to continue we have to break Wednesday's high of 13.28 as the rest of the grain market remains choppy at this time as this is my only recommendation out of that sector. Historically speaking, rice can become an extremely volatile commodity with huge price swings on a daily basis. I think that will start to occur over the next several months ahead, but if we are stopped out we will move on and look at other markets that are beginning to trend.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: INCREASING

Sugar Futures

Sugar futures in the July contract are trading higher for the 2nd consecutive trading session after settling last Friday in New York at 11.87 a pound while currently trading at 11.42 down about 45 points for the trading week and continuing its remarkable bearish trend to the downside. At the current time, I'm not involved in this commodity, but I do believe we are getting very close to a bottom as we are looking at prices that we have not seen since August 2015 and if that level is broken you're looking at a nearly a ten year low. I think the downside is limited from these depressed price levels. Sugar is trading far below its 20 and 100-day moving average as the trend is clearly to the downside. In Wednesday's trade, we traded as low as 10.93 as the downtrend line remains intact as there is nothing bullish about sugar at the current time except for the notion that prices are very cheap in my opinion. The chart structure at the current time is very poor so I will not be involved in this market for quite some time and I will have to wait for that situation to improve which will take a couple more weeks, but if you look at the coffee chart they are very similar as they are both grown in Brazil. It looks to me that coffee has finally bottomed and I think there's a chance that Wednesday's low in sugar may have been the bottom as well, but we will have to see what next week's trade brings.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Soybean Futures

Soybean futures in the July contract settled last Friday in Chicago at 10.40 a bushel while currently trading at 10.34 down about 6 cents for the week trading right near a three-week low. At the present time, I am not involved in this market as this commodity remains extremely choppy and we are trading under the 20-day but still above the 100-day moving average. Planting will start in the next couple of weeks in the Midwest and volatility certainly will increase as we enter the summer months. The U.S. dollar hit a four-month high today and that could start to put pressure on soybeans and the grain market in general, but really, the weather will be the main focus on where prices go over the next several months. Estimates of this year's crop production are around 4.5 billion bushels which would be right near another record as we continue to over plant and in my opinion for us to really develop into a bullish trend we have to have some type of drought like we experienced in 2012 sending soybeans above the $16 level. I'm advising clients to avoid soybeans at the present time as I think we will remain choppy over the next several weeks probably until the 1st week of June as that's when the fireworks can occur as we are still only about 60' in Illinois as there is no drought possibility at this time so be patient as we could be involved in the weeks ahead.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Trading Theory

What Is A Triple Bottom Chart Pattern? A pattern used in technical analysis to predict the reversal of a prolonged downtrend. The pattern is identified when the price of commodity creates three sell-offs at nearly the same price level.

The third bounce off the support is an indication that buying interest (demand) is outweighing selling interest (supply) and that the trend is in the process of reversing. Once the first bottom is created, the price reaches a peak and retraces back toward the prior support.

This is when buyers enter again and push the price of the asset higher, creating bottom No.2. The price of the asset then creates another peak and heads lower for its final test of the support.

The final bounce off the support level creates bottom No.3 and traders will get ready to enter a long position once the price breaks above the previous resistance (illustrated by the black line on the chart). This pattern is considered to be a very reliable indication that the downtrend has reversed and that the new trend is in the upward direction.