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 August contract settled last Friday in New York at 1,231 an ounce while currently trading at 1,222 lower for the 2nd consecutive session continuing its bearish momentum as it looks to retest the July 19th contract low of 1,210 next week. If you are short a futures contract, continue to place the stop loss above the 10-day high. However, the chart structure will improve tremendously come next week; therefore, the monetary risk will also be lowered. I still see no reason to own gold at present. The GDP report was announced this morning as the U.S economy grew by 4.1% which is outstanding in my opinion coupled with the fact that the 10-year note is now yielding 2.97% as both of those fundamental indicators are bearish towards gold prices. The U.S. stock market continues to move higher on a monthly basis as the NASDAQ 100, and the Russell 2000 hit all-time highs as the money flows continue to go into the equity markets & out of the precious metals as I am currently recommending a bullish S&P 500 trade as that market is higher once again today. Gold is trading under their 20 and 100-day moving average as the short-term trend is to the downside as the volatility remains relatively low as I think we could crack the 1,200 level in next weeks trade so stay short as I'm certainly not recommending any bullish position as the trend is strong to the downside.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Silver Futures

Silver futures in the September contract is currently trading lower by 2 cents at 15.48 an ounce continuing its short-term bearish momentum reversing the gains that we witnessed over the last couple of trading sessions. Silver prices bottomed out on July 19th at 15.18 so for the bearish momentum to continue that level has to be broken as the chart structure starting to improve. If you are short a futures contract place the stop loss above the 2-week high which stands at 15.90 as that will be lowered in next week's trade; therefore, the monetary risk will be reduced as I don't think a bottom has been formed at this time. The U.S. dollar continues to hover around a 1-year high as the precious metals across the board still look weak in my opinion. Gold is also right near the contract low again in today's trade as there is just no interest in owning the precious metals as weak demand continues to be a primary culprit for these depressed prices in the short term. Silver prices are trading under their 20 and 100-day moving average as the volatility remains relatively low as we continually grind lower on a weekly basis, but historically speaking prices are getting very cheap. I think eventually this will start to turn into a bullish trend as the tariff situation with the EU might come out positively and if we can come up with some solution with China like I have talked about in many previous blogs the bullish trends across the board will begin in my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the September contract is currently trading lower by $0.35 at 69.68 a barrel after settling last Friday in New York at 68.26 up about $1.40 for the trading week continuing its slow grinding bullish momentum to the upside. If you have read any of my previous blogs, you understand that I have a bullish bias towards this commodity and I think prices will retest the July 10th high of 72.98 in the coming weeks ahead. The U.S. economy is on a roll as the GDP was announced this morning stating that the economy grew by 4.1% and that should also spur demand for oil. Oil prices are trading right at their 20-day moving average and still far above their 100-day as the longer-term trend line remains intact as volatility is average at the current time as this is one of the strongest commodities presently speaking. Traders are awaiting next week's API report which will send volatility back into this market as Wednesday's report was bullish showing another drawdown in supplies which shows you that significant demand for this commodity continues to support prices. You have remember that we are starting to enter hurricane season as that could throw another wrench in the closet if any major hurricane hits the Gulf of Mexico. I am certainly not recommending any bearish position at this time and if you are an options trader I would be looking at selling far out of the money puts as I think the downside is limited as the fundamental and technical picture remains bullish.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

10-Year Note Futures

The 10-year note in the September contract settled last Friday in Chicago at 119/31 while currently trading at 119/16 trading at a 6-week low. I am now recommending a bearish position while placing the stop loss at the 10-day high which stands at 120/13 as the risk is around $900 per contract plus slippage and commission. The GDP report was announced today showing that the U.S. economy grew by 4.1% which is a fundamental bearish indicator towards the bond market as the yield currently stands at 2.96%. I think we will retest the contract low which was touched on May 17th at 117/30 as that yield at that time was about 3.13% as there is a lot of room to run in my opinion. The U.S. stock market continues to move higher on a monthly basis, and I think that will also start to put pressure on the bonds; therefore, they will continually climb higher. These interest rates are still incredibly low for this type of economic growth, and I think future GDP announcements will also remain strong as this is not a one and done deal in my opinion. The chart structure in the 10-year note is excellent at the current time as the volatility is extremely low as the risk/reward are in your favor to go short in my opinion while making sure that you risk 2% of your account balance on any given trade as a proper money management strategy.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Coffee Futures

Coffee futures in the September contract is currently trading at 109.50 after settling last Friday in New York at 110.65 a pound continuing its bearish momentum while still experiencing very low volatility. I think coffee prices could retest the July 6th low around 106.90 as the short-term downtrend line remains intact as fundamentally speaking harvest is around 60% completed in Brazil which is the largest producer in the world. Estimates are approximately 60 million bags being produced which would be another outstanding crop as that is the main reason for these depressed prices. Coffee is still trading below its 20 and 100 day moving average as clearly the trend is to the downside as I think once the harvest is complete which will still take 3/4 more weeks then I think a seasonal bottom might be at hand, so keep a close eye on this market as we could be involved relatively soon. Historically speaking I believe these prices look cheap as the agricultural markets remain on the defensive, but I think the downside is limited with the possibility that we could trade as low as 100 in the next couple weeks. The chart structure is starting to improve therefore the risk/reward could be in our favor to enter into a bullish position soon. However, I'm advising clients to avoid coffee for now.
TREND: LOWER
CHART STRUCTURE: IMPROVING
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 December contract settled last Friday in Chicago at 3.69 a bushel while currently trading at 3.76 right near a 5-week high as prices bottomed out on July 12th around the 3.50 level and have rallied nearly $0.30 due to oversold conditions. If you take a look at the daily chart the 50% retracement level from the contract high to the contract low stands around the 3.90 area and I think prices could touch that level as I do believe the upside is limited as the growing season is winding down as we should produce an outstanding crop 2018. I am not involved in corn as I think wheat prices are headed higher, but I'm not convinced that the corn markets bearish trend is not over with just yet. I still think we could retest that contract low come harvest time as the crop is way ahead of schedule and the 5-year average as harvest should start in mid-September. Large money managed funds are still short this market as they still believe lower prices are ahead as traders are anticipating a NAFTA deal in the coming weeks ahead and that would be supportive towards prices in the short term as uncertainty is always a negative for commodity and stock prices. Corn prices are trading above their 20-day moving average, but still far below their 100-day as the volatility has slowed down over the last couple of weeks as I'm advising clients to sit on the sidelines at this time.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Orange Juice Futures

Orange juice futures in the September contract are currently trading at 164.00 after settling last Friday in New York at 170.95 as prices are near a 4-week low after creating a possible double top around the 172 level on the daily chart. I'm keeping a close eye on a possible bearish position in next week's trade as the chart structure is solid and coupled with the fact that the risk/reward could be in your favor. I do think the 172 level will hold as that was touched on multiple occasions only to fail every single time as weather conditions in the state of Florida have improved. Many of the agricultural markets especially the soft commodities are right near yearly lows, but orange juice has remained relatively strong as weather conditions in Brazil are still supporting prices here in the short term. However, technically speaking prices look to be topping out. Juice prices are trading below their 20-day but still above their 100-day moving average as the trend is mixed. I'm currently not involved, but that situation could change next week so keep a close eye on this commodity as I think prices are too expensive compared to many of the other agricultural sectors.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Wheat Futures

Wheat futures in the September contract settled last Friday in Chicago at 5.16 a bushel while currently trading at 5.35 up nearly $0.20 for the trading week on expectations that the USDA will cut the spring wheat yield due to adverse weather conditions. Couple that with the fact that lower production numbers are coming out of Russia and the EU sending wheat prices to a 7-week high. If you have been following any of my previous blogs you understand that I had a bullish bias towards this commodity and I still do as I think higher prices are ahead. If you are long a futures contract, continue to place the stop loss under the 2-week low standing at 4.86. However, the chart structure will start to improve in next week's trade; therefore, the monetary risk will be reduced. The next major level of resistance is between 5.45/5.60 as the volatility is high at the current time and should remain high for the rest of the summer months as I still think there is room to run to the upside. The grain market, in general, has stabilized as it looks like a deal between the United States and the EU on the tariff situation is turning out to be a positive solution as they agreed to buy U.S. soybeans which have been supportive for the whole sector. Wheat prices are trading above their 20 and 100-day moving average as the trend is to the upside as this is the strongest grain at the current time & remember wheat prices can go in opposite directions than corn or soybeans as I still think we could touch the $6 level especially if weather conditions worsen.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Trading Theory

There are different theories about how long does a meaningful consolidation have to last before you enter into a trade. In my opinion, I always want to see a consolidation that continues for at least 8 or more weeks before I would consider entering.

The reason that I want a lengthier consolidation is to try and avoid a bunch of false breakouts such as a 10 or 15-day consolidations which happen all the time, so I am trying to put the odds in my favor by trading the breakout of at least 8 weeks or more and the longer such as a 10 or 13-week consolidation, the better.