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.

10-Year Note Futures

The 10-year note in the June contract was basically unchanged for the trading week at 121/02 and has been going sideways over the last couple of months as traders are looking for some fresh fundamental news. I have been recommending a bearish position from the 120/18 level and if you took the trade continue to keep the stop loss at 121/18 as the original risk was around $1,000 per contract plus slippage & commission as the yield on the 10-year note is at 2.82%, and volatility remains very low. The U.S. stock market has experienced incredible volatility this week, and when the stocks are sharply lower the notes rally and vice versa as yesterday, we had a 700 point reversal in the Dow Jones. I'm still negative the entire bond sector as I think the yields are way too low as the United States experienced a 2.9% GDP number last quarter which is very solid. The 10-year note is trading right at its 20-day but still below its 100-day moving average as the trend is mixed. I still think prices will crack the 3% level in the weeks ahead so stay short & continue to place the proper stop loss as I still believe the risk/reward are in your favor as the longer-term downtrend line remains intact.
TREND: MIXED - LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Silver Futures

Silver futures settled last Friday in New York at 16.26 an ounce while currently trading at 16.36 up about $0.10 for the trading week reacting neutral off of the monthly unemployment number which was released this morning stating that we added 103,000 jobs which were very disappointing sending gold prices higher, however having very little impact on silver. Silver prices are still trading under their 20 and 100 day moving average as the trend remains mixed as were stuck in a tight consolidation as I will be looking at a bullish position if we break 16.81 as I will not go short as I think the downside is very limited at these depressed levels. The chart structure at the current time is outstanding as we are still experiencing low volatility. We continue to get major support around the 16.20 level as we have bounced off that area every single time and I think we are in the longer term bottoming out pattern. We still could be involved in a bullish position next week if the volatility ever comes back to play. Gold prices have also been flip-flopping on a daily basis with no trend in sight as there is so much uncertainty due to the possibility of a trade war with China. We won't find out how that situation develops for a couple more months as I can't see this volatility staying this low for such a historically volatile commodity so continue to look to play this to the upside in my opinion.
TREND: LOWER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Mexican Peso Futures

The Mexican Peso in the June contract is trading at 5397 as following the coattails of the U.S. stock market today which was down by 600 points. I have been recommending a bullish position from the 5370 level & if you took the trade, the stop loss has been raised to 5282 as the chart structure will also start to improve on a daily basis starting next week, therefore, lowering the monetary risk. I still see higher prices ahead. Volatility in the Peso remains relatively low as we continually grind higher on a weekly basis as this historically speaking can become very volatile so continue to place the proper stop loss. I'm looking at adding more contracts to this position on some type of price retracement as the risk/reward are still in your favor in my opinion. The Peso is the strongest currency at present as we are still trading above the 20 and 100-day moving average as the U.S. dollar is up 45 points as the European currencies are selling off. However, the Peso can move in opposite directions so stay long.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Orange Juice Futures

Orange juice futures in the May contract are currently trading higher by 55 points at 138.30 as orange juice prices have remained somewhat stable over the last month despite the Chinese tariffs that were announced yesterday. I am currently not involved as I'm looking at a possible bullish position in next week’s trade. Volatility in juice is relatively low as we are right near major support around the 135 level. I will be recommending a bullish position if prices break the 142 level while then placing the stop loss at 135 risking 700 points or $1,100 per contract plus slippage & commission as the risk/reward would be in your favor if that situation occurs. Juice prices have been in a bearish trend over the last six months topping out around the 165 level as ideal growing conditions in the state of Florida continue to push prices lower. However, I do think the downside is limited from these depressed prices as the soft commodities remain weak. Orange juice is trading right at their 20-day moving average, but still below their 100-day as the chart structure remains solid therefore the monetary risk is relatively low for such a historically volatile commodity so look to play this to the upside.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Live Cattle Futures

Live cattle futures in the June contract settled last Friday in Chicago at 102.57 while currently trading at 103.55 down about 100 points for the week after experiencing a wild and volatile trading session on April 4th hitting a new contract low at 97.07 before rallying sharply as a possible spike bottom may have occurred on the monthly chart. If you take a look at the daily chart, there is a price gap between 102.62/102.82, and I think that will be filled. I am not currently involved in this market, but I do think the worst is over for prices here in the short term. Cattle prices are trading below their 20 and 100-day moving average as the trend is negative as we have dropped about 2000 points since late February. The livestock sector has sold out tremendously due to the Trump tariffs and a possible trade war coming with China, but I think all that bad news has already been reflected in the price as I will be looking at a bullish position in the weeks ahead. The chart structure is terrible as the risk/reward is not your favor to enter a trade in either direction so be patient & wait for that gap to be filled as a possible retest of the 100 level could be in the cards as I think the downside is limited from these depressed levels. Improving economies worldwide will start to support cattle prices in my opinion as the commodity markets remain weak despite the fact that the U.S dollar is trading near a three year low.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

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 May contract were unchanged for the trading week reversing some of the sharp losses we witnessed earlier in the week as the Chinese tariffs sent corn prices at one time lower by $0.16 only to rally towards the closing bell. Volatility certainly has arrived and will remain high for the next several months. I'm not involved in corn, but I do believe prices are headed higher as we have major support around the 3.73 level, but for the bullish momentum to continue, we have to break the 3.95 area. Spring planting has started in the southern part of the United States will begin soon in the Midwestern region as we are expected to plant around 88 million acres producing approximately 14 billion bushels based on ideal weather conditions. Prices are still trading slightly above their 20 and 100-day moving average as the trend is higher, but it is mixed. We have been at the same price for over a month, but it's terrific to see the volatility finally kick in & with any hot and dry weather or excessive rain you will see prices crack the $4 level quickly. The chart structure is poor as we have gone straight up and then straight down so be patient as I will be looking for a bullish position in the weeks ahead. I'm certainly not recommending any bearish position as the downside is limited.
TREND: MIXED - HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Wheat Futures

Wheat futures in the May contract are higher for the 2nd consecutive session up about 6 cents at 4.71 a bushel after settling last Friday in Chicago at 4.51 up nearly $0.20 for the trading week on concerns that the drought is escalating in the Great Plains. I think that if it weren't for the trade war brewing with China wheat prices would even be higher. I'm not involved, but I do think corn and wheat prices are headed higher as we are right near a three week high now trading above the 20-day moving average, but still below their 100-day. The next major level of resistance is at 4.80 which could be breached in next week's trade and I think prices have finally bottomed out. The Great Plains and the Midwestern part of the United States have experienced extremely cold temperatures during the early spring as that is causing some concerns on crop yields as I do think wheat prices could test the $5 level possibly in next week’s trade. I'm certainly not recommending any short position at this time as the trend has turned and we are entering the extremely volatile summer months. Remember last year the spring wheat exploded to the upside due to a massive drought and that situation is always in the back of traders’ minds so look to play this to the upside. In my opinion, all of this speculation of a massive trade war will end soon, and that will be very bullish all commodity sectors.
TREND: MIXED - HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Coffee Futures

Coffee futures in the May contract are trading slightly lower for the week trading at 117.45, and a possible bottom may have been formed. I am currently not involved in coffee, but I will be looking at a bullish position if we crack the five week high which now stands at 122.15 which is just an eyelash away. Volatility has been relentlessly low over the last several months as we are right near yearly support at the 115 level and I would be surprised if that area were breached. Most of the commodity markets have rebounded today as the Chinese tariffs may not be as bad as once thought. However, we don't know how that situation is going to end as it will take time. I will not take a short position in coffee as the downside is limited as we are squeezing blood out of a turnip. Coffee prices are still trading under their 20 and 100-day moving average as the trend is lower and the downtrend line remains intact as that will not be broken until the five week high is broken so keep a close eye on this market as we could be involved in next week's trade. I do not have any trade recommendations in the soft commodities as we were stopped out of the cocoa trade yesterday as prices hit a two week low. However, I do think sugar & coffee prices look interesting down at these depressed levels.
TREND: MIXED - LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Cocoa Futures

Cocoa futures in the May contract settled last Friday in New York at 2556 while currently trading at 2467 down about 90 points for the trading week as we are right near a four week low as prices may have topped out in the short term. I had been recommending a bullish position for several months around the 1990 level getting stopped out earlier in the trading week around 2474 as prices hit a two week low as that is also my exit strategy. I'm sitting on the sidelines waiting for another trend to develop as the chart structure remains solid because we still have low volatility. Cocoa prices are now trading below their 20-day but still far above their 100-day moving average as the trend is mixed as prices topped out on April 2nd around 2647 as the hot and dry weather conditions still do persist in West Africa, but the commodity markets, in general, are drifting lower due to the fact of the possible trade war with China. Cocoa has been the strongest commodity in 2018 as we rallied about 25% from the low as prices may have gotten ahead of themselves, but I will keep a close eye on this market. I think once the commodities stabilize and we have more clearance on this possible situation with China prices will resume their bullish momentum, but at this time I'm advising clients to sit on the sidelines & look at other markets that are beginning to trend as many commodity sectors remain choppy due to uncertainty.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

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.