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 prices in the September contract is currently higher by $0.28 at 14.82 an ounce after settling last Friday in New York at 14.63 trading higher by nearly $0.20 which has been a rarity for this market as the precious metals rallied across the board due to the fact that the U.S. dollar was down about 60 points today helping support prices. The commodity markets rallied this afternoon, and I think it was a relief rally as these markets have been getting pounded on a weekly basis except for the stock market which is near an all-time high once again today. I'm still not bullish silver prices, but if you take a look there is the possibility that prices may have bottomed out between the 14.30/14.50 level, but time will tell to see if that comes to fruition. Silver prices are still trading under their 20 and 100 day moving average as the trend remains negative as the downtrend line remains intact as this market goes in opposite directions from the U.S dollar as there is weak demand for this commodity. Gold prices are up over $20 today as that is also helping support silver as we are also experiencing oversold conditions in silver which has dropped about $3 over the last 2-months and if you are short a futures contract continue to place the stop loss at the 2-week high as a proper exit strategy. Volatility has increased as silver historically speaking is one of the most volatile commodities, but we have witnessed the classic bearish trend over the last couple of months as we grind lower on a daily basis.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING

Crude Oil Futures

Crude oil futures in the October contract settled last Friday in New York at 65.21 a barrel while currently trading at 69.05 up nearly $4 for the trading week on concerns about Iranian production sending prices near a 6-week high. Oil prices are trading above their 20 and 100-day moving average telling you the trend is higher, but I think prices are mixed as the trend has been very choppy over the last four months as prices have gone nowhere. However, I do have a bullish bias towards this commodity as I'm certainly not recommending any bearish position as this is the strongest trend to the upside next to the S&P 500. The next major level of resistance which has been very stiff over the last several months is between the 70/72 level as I think we will need some fresh fundamental news to crack that critical level as the chart structure at the current time is poor. The 10-day low stands at 63.89 as the risk is about $5,300 per contract plus slippage and commission to take a bullish position as that is way too much risk at this time. However, I will keep a close eye on this market for a possible pullback in price while then looking at a bullish position. Extremely strong demand for crude oil and its products such as unleaded gasoline continue to support prices as the U.S. economy is firing on all cylinders; therefore, a lot of people are driving and spending money. I think that trend is going to continue for quite some time as the downside is limited even though the United States will be the largest exporter in the world in 2019 as the Trump administration wants the U.S. to be oil independent.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Mexican Peso Futures

Natural gas futures in the October contract have been stuck in a tight 3-week consolidation between 2.90/3.00 as it looks to me that a topping pattern is developing at this level as it's been touched on multiple occasions only to fail every single time. The inventory report was released Friday having minimal impact on prices as we settled in New York at 2.94 while currently trading at 2.92 unchanged for the trading week. I'm not involved as I am waiting for a bullish position to develop as I think historically speaking natural gas prices look very cheap especially going into the autumn and winter seasons. Natural gas prices bottomed out on July 19th at 2.68 and remains in a very nonvolatile trading manner as that will not last much longer as historically speaking the winter months can have natural gas experience tremendous price swings to the upside due to frigid weather. Keep a close eye on this market as we could be involved soon, but I think a pullback in price is imminent. If you are bearish natural gas, I will sell at today's price levels while placing the stop loss above the 2-week high which stands at 2.98 as the risk is 6 points or $150 per mini contract or $600 per large contract plus slippage and commission.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

S&P 500 Futures

The S&P 500 in the September contract settled last Friday in Chicago at 2852 while currently trading at 2873 continuing its bullish trend hitting a seven month high looking to break the all-time high which was touched on January 29th at 2889 in my opinion as this market has a lot of momentum at present. I have been recommending a bullish position from around the 2803 and if you took the trade continue to place the stop loss under the 2 week low standing at 2803, however in Tuesday's trade that will be raised to 2817 as that will be also raised on a daily basis as the chart structure is improving tremendously, therefore, lowering the risk. Outstanding earnings have really propelled this market near all-time highs as the Transports and the Russell 2000 have hit all-time highs in today's trade as the brick and mortar stores have come back to life as fears about Amazon taking over the entire world now seem to be overblown as the American consumer is back in a huge way. The S&P 500 is trading above its 20 and 100-day moving average as this trend is getting stronger on a weekly basis and is by far the strongest commodity at the present time to the upside. I still believe come year-end prices could trade between 3100/3200, as I still think the equity market looks cheap even though we are right near all-time highs so stay long & continue to place the proper stop loss as who knows how high prices can go.
TREND: HIGHER
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 continued their bearish trend trading lower by 15 cents this week at 3.63 a bushel & if you have read any of my previous blogs you understand that I am very bearish corn and soybeans as I think they will break the contract lows in the coming weeks ahead as harvest is right around the bend. Pro Farmers estimated that the state of Illinois corn crop could be around 192 bushels per acre as that's about a 7% increase from last year's growing conditions as I see nothing bullish about corn at this time. If you are short, a futures contract place the stop above the 10-day standing at 3.81 as I genuinely believe we will break the July 12th low of 3.50 possibly in next week's trade and then head down to the 3.00/3.25 level come harvest time as we are awash in corn currently. Corn prices are trading below their 20 and 100-day moving average as the trend is the downside as the downtrend line also remains intact. The recent rally that we had in July was just around the 50% retracement from the contract high to the contract low as now the bearish trend is gaining steam as I'm certainly not recommending any bullish position at this time. Soybean prices are down another $0.10 today as the fundamental picture in that commodity is exceptionally bearish in my opinion as I think there's a lot of room to run to the downside and if you are short stay short as there is another leg to the downside in my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Soybean Futures

Soybean futures in the November contract settled last Friday in Chicago at 8.92 a bushel while currently trading at 8.59 down over $0.30 for the trading week continuing its bearish momentum looking to retest the August 13th low of 8.51 in my opinion. Private estimates of the Iowa pod count are up 10.6% over last year as the crop in the Midwestern part of the United States should be a record of around 4.6 billion bushels as Illinois is also the Garden of Eden at present as we are awash in soybeans. I am bearish the entire grain market as lower prices should continue to come about throughout harvest which will take place in about another month as we are ahead of schedule as I still believe we will break the July 16th low of 8.26 as the 785 million carryover level is way too large as prices look expensive in my opinion. Soybean prices are trading below their 20 and 100-day moving average as the trend is strong to the downside as corn prices also are right near their contract low also putting pressure on bean prices as Argentina and Brazil will plant a record amount of acres once again. The real problem is that global production levels are way too high. Therefore the supply/demand tables are not in a bullish fundamental situation. Large money-management funds are short the soybean market, but not in excess amounts as they can still add more fuel to the fire to the downside as I think that situation will occur which will continue to push prices lower.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Coffee Futures

Coffee futures in the December contract is currently trading at 104.70 a pound after settling at 104.70 last Friday in New York unchanged for the trading week experiencing higher volatility as prices traded near a 13 year low at 99.35 before profit-taking ensued pushing prices higher. The harvest in Brazil is around 83% complete as we still have about three weeks remaining as I've talked about in many previous blogs I think a seasonal low is coming soon. Historically speaking, prices look very cheap in my opinion as there is major support at the 95 level as that's where the September contract touched earlier in the week. Most of the fundamental negative news, in my opinion, has already been reflected into the market as 60 million bags should be produced Brazil while 30 million bags will be produced and is a record for Vietnam as those two fundamental factors have hampered prices in 2018. Coffee experienced oversold conditions, and if you look at the stochastics and the RSI oscillator, they were both at extreme levels as I think this Friday's kickback of 360 points is due to profit-taking going into the weekend. Coffee prices are still trading under their 20 and 100-day moving average as the trend remains negative. I'm not convinced that a bottom is in place at this time. However, I do believe that we are getting very close as I will be looking at a bullish position in the coming weeks ahead as the risk/reward is starting to become in your favor.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY:INCREASING

Cocoa Futures

Cocoa futures in the December contract finished higher by 27 points to close at 2364 right near a 5-week high as the daily chart is starting to look very interesting as there is a possible bottom taking place. Cocoa prices have dropped significantly from their April 26th high of 2911 which is over 700 points from today's price level as we are starting to enter the demand season which could support prices going forward. Cocoa is now trading above their 20-day moving average, but far below their 100-day as the volatility is still relatively low therefore the risk/reward will be in your favor in the coming weeks ahead as I will be looking at a possible bullish position as the chart structure will start to improve on a daily basis. Cocoa is grown within 20 miles of the equator with many of the countries located in West Africa, and they can have huge political instability. As we have seen that happen in the past which causes higher prices, but at the current time everything is calm and copacetic, however, things could change very quickly, but trading is all about risk as this chart pattern is starting to look interesting. At present, I'm not bullish any commodity especially the soft commodities as I also have a short position in orange juice as coffee and sugar also hit decade year lows which is very alarming in my opinion, but everything comes to an end as it looks to me that cocoa prices may have bottomed.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Orange Juice Futures

Orange juice futures in the November contract are trading slightly higher for the 2nd consecutive session up 20 points at 156.50 as this commodity has tested the 155 level over the last week as that has acted like cement as prices have had a hard time breaking through. I have been recommending a bearish position from around the 163.20 level and if you took the trade place the stop in Monday's trade at 160.90 as I will also be recommending to add more contracts to the downside if we close below the 155 level as that could happen in today's trade. Excellent growing conditions in the state of Florida have put some pressure on prices here in the short term as we also developed a head and shoulders top last month which was one of the main reasons I took a short position as prices are still trading below their 20 and 100-day moving average as the trend is to the downside. The risk/reward will be in your favor if the 155 level is broken because the chart structure is improving tremendously on a daily basis, therefore, lowering the monetary risk. The soft commodities remain very vulnerable to another leg down in my opinion so continue to place the proper stop loss and stay short as I still believe the gap around the 147 level that occurred on April 23rd will be filled.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Trading Theory

What Does Adding To A Losing Trade Mean To You? My rule for adding to a losing trade differs from mainstream thinking. For example, if you buy soybeans and the trade goes against you adding to this trade would be adding to a loser, which is correct. However many traders won’t add to the soybean long position, but they will buy gold or some other commodity without getting out of soybeans first. My rule states that if you have a losing long position and want to get long another market, you must exit the soybeans before you enter a long position; otherwise, you are adding to a loser. Remember many commodities trend in the same direction so if you have a losing long gold position and now you’re buying silver you are basically doubling down which is a bad money management technique, and this also applies to adding to short positions as well. Remember, try and keep a balanced portfolio of longs and shorts, so you never get top heavy on one side of the market. If you would like to go over money management rules with Michael Seery, please call at 630-408-3325.