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 December contract settled last Friday in New York at 1,196 an ounce while currently trading at 1,206 up about $10 for the trading week but still stuck in a tight 6-week consolidation pattern and looking to break out in my opinion. Gold prices are trading right at their 20-day but still below their 100-day moving average which stands at the 1,215 level as the volatility has come to a crawl so keep an eye on this market as a breakout is looming. If prices break the 6-week high which was created on August 28th at 1,215, I will be recommending a bullish position while at the current time I am also recommending a bullish position in copper and silver as it looks to me that the precious metals are starting to come to life. Gold prices have been in a bearish trend since their high on April 11th at 1,388 is a stronger U.S. dollar and higher interest rates continue to put pressure on this market, however that may have come to an end as we have now gone sideways for quite some time as a spike bottom may have occurred around the 1,167 level on August 16th. My consolidation rule states the longer the consolidation, the stronger the move. I like to see an 11-13 week consolidation as I am certainly not recommending a position at this time as there is no trend so be patient as a powerful trend could be coming in the weeks ahead.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Silver Futures

Silver futures in the December contract settled last Friday in New York at 14.71 an ounce while currently at 14.71 an ounce while currently at 14.70 unchanged for the trading week still hovering near a 4-week high. I have been recommending a bullish position from around the 14.50 level and if you took that trade continue to place the stop loss under the 10-day low which now stands at 14.19. But if you do want to give this more room place the stop loss under the contract low which stands at 13.96 as I remain bullish and I do think silver prices have bottomed. Silver is trading above its 20-day but still below its 100-day moving average as I believe a rounding bottom has taken place on the daily chart and that is a technical bullish indicator for higher prices ahead. For the bullish momentum to continue, we have to break the October 2nd high of 14.95 as the downtrend line has also been broken. Continue to play this to the upside in my opinion as I still think historically speaking prices look cheap especially compared where crude oil prices are trading as they are both considered inflationary commodities.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

S&P 500 Futures

The S&P 500 in the December contract is sharply lower this Friday afternoon in Chicago currently trading down 25 points at 2883 as I had been recommending a bullish position over the last several months from the 2803 level while getting stopped out in yesterdays trade at 2907 as it was time to move on and exit as prices have now hit a 2 week low. Higher interest rates are spooking the market today as the 10-year note is currently yielding 3.24% which is the highest rate in 7 years as that is a concern for stock prices as the market topped out around the 2950 level in late September. I am still extremely bullish the U.S equity market, but if you are long a futures contract and prices hit a 2-week low, it is time to exit as a proper money management technique. However, I'm certainly not recommending any bearish position as I think this is just a short-term setback. Traders are awaiting tomorrow's monthly employment number which will send volatility back into this market coupled with the fact that corporate earnings are right around the bend once again as they are perceived to be excellent as the fundamental and technical picture for this market remains bullish. However, interest rates have risen rather dramatically over the last couple of weeks which is pushing investors to take profits in my opinion.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: INCREASING

Natural Gas Futures

Natural gas futures in the November contract settled last Friday in New York at 3.00 while currently trading at 3.18 hitting a fresh contract high continuing its bullish momentum as the United States is starting to head into the winter months as natural gas stockpiles are at their lowest in at least a decade. If you have read any of my previous blogs, you understand that I have been bullish natural gas for quite some time, but I'm currently not involved. However, if you are long a futures contract place the stop loss under the 10-day low at 2.95. I am waiting for some price retracement before entering into a bullish position, and I do believe we can see some significant gains to the upside come December, January, and the month of February. Natural gas prices are trading far above their 20 and 100-day moving average as clearly the trend is to the upside as the entire energy sector continues to run due to extremely strong demand as I think we're just in the beginning, but at the current time prices are overbought in my opinion & look to have some type of retracement. Natural gas prices were trading between 2.75 and 3.05 over the last six months as we now have broken out of that tight consolidation pattern as I'm certainly not recommending any bearish position as the path of least resistance is higher.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Coffee Futures

Coffee futures in the December contract finished up 650 points for the trading week at 108.95 a pound as I was recommending a bullish position if prices closed above the 4 week high which occurred in Tuesday's trade at 104.15, however it actually closed at 107.65 as I did not initiate the recommendation as the risk was too high. If you did take the trade, continue to place the stop loss under the contract low at 95.10 as I'm still bullish, but I will wait for prices to head back down possibly to the 104 level for an entry point. The volatility in coffee certainly has expanded tremendously as yesterday prices traded above 110 before selling off as this rally was blamed on massive short covering in my opinion as the Brazilian presidential election is this Sunday as that is causing a lot of uncertainty. Coffee prices are trading above their 20-day, but still below their 100-day moving average which stands at 112.50 as I do think the bottom has occurred as I am bullish most of the commodity markets at this time. If you have read any of my previous blogs you understood that I kept waiting for the Brazilian harvest to be completed as prices generally drifted lower on a weekly basis, but that situation has finished as seasonably speaking prices then usually rally, and that's precisely what is happening at this time. If you're not involved in this trade, I would still be patient & try to buy prices around the 104 level as the risk/reward would be better in your favor as you have to remember this is a high-risk trade that should only be taken with larger trading accounts.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
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.

Orange Juice Futures

Orange juice futures in the November contract is trading lower for the 3rd consecutive trading session after settling last Friday in New York at 147.60 while currently at 143.85 hitting a fresh 5 1/2 month low. I have been bearish juice for quite some time adding the third recommendation in yesterday's trade around the 144.80 level as the original recommendation was to sell at the head and shoulders top around the 163 level then when major support was also broken around the 154 level. If you took all of these trades, continue to place the stop loss above the 10-day high on a hard basis only at 150.40 as the trend is getting stronger to the downside. Juice prices are the only one in the red today as all of the soft commodities are higher across the board as inventories continue to increase to levels we haven't seen in years coupled with the fact that there are no hurricanes in sight. Continue to place the proper stop loss as the chart structure will not improve until later next week so you will have to accept the monetary risk at this time. Juice prices are trading far below their 20 and 100-day moving average as clearly the trend is negative as this is the strongest bearish trend out of all of the commodities.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Soybean Futures

Soybean futures in the November contract settled last Friday in Chicago at 8.45 while currently trading at 8.62 a bushel as the short term trend is higher to mixed as prices are near a 6-week high. I do not have any grain recommendations as I am bullish most commodities, but I still have a bearish bias toward soybeans as we should harvest around 4.7 billion bushels as the combines are in full swing at this time as I think the large supply issue is going to keep a lid on prices. Soybeans are trading above their 20-day but still below their 100-day moving average which currently stands at 8.98 as I still think there's a possibility we could retest the September 18th contract low also the 10-year low at 8.12 as the fundamental picture for this commodity remains negative. Planting is ahead of schedule in Brazil and Argentina as they could produce record crops once again as it doesn't look like an agreement with China is coming anytime soon even though we have made deals with Canada and Mexico. However, China is the largest importer of U.S soybeans so until that situation is resolved I think this market is limited to the upside. If you take a look at the daily chart, the downtrend line remains intact and if you are short soybeans place the stop above Wednesday's high around 8.71 as an exit strategy.
TREND: MIXED - HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Trading Theory

When Do You Add To Your Winning Trade? This has always been a fascinating question because it can create a situation of going from rags to riches to riches to rags in a very short amount of time.

Many times I see traders abuse pyramiding or adding to positions with any money management system in place and letting it ride which usually ends up in a complete wipeout of capital and sometimes even worse.

Commodity prices can move very quickly with large gains or loses as we experienced in 2008 crash of stock and commodity prices, so you always have to use stops and not fall in love or marry a position. My answer to this question is to add only once to the trade if that position has made you at least 1%-2% of your account balance while still having stop losses on all positions that equal 2% loss at maximum risk.

Remember your stop loses will be different on both positions because you entered those trades at a different date and price.