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 April contract finished down about $4 for the week at 1,318 an ounce reversing earlier losses finishing strong especially compared to the rest of the commodity sectors. The U.S stock market sold off about 200 points as that supported gold prices as there were concerns earlier in the day about lower inflation estimates in Europe coupled with the fact that the U.S dollar also hit a 2 week high. However, investors came back into the market as a flight to quality. I have been recommending a bullish trade from around the 1,252 level, and if you took that trade, the stop loss has now been raised to 1,302 as the chart structure is outstanding. Gold prices are still trading above their 20 and 100-day moving average as the trend remain strong, but for the bullish momentum to continue, we have to break the January 31st high of 1,331 in my opinion. Let's see what Monday's trade brings as I think they'll be a lot of volatility because many government reports will finally be released.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Silver Futures

Silver futures in the March contract settled last Friday in New York at 15.93 an ounce while currently trading at 15.83 down about $0.10 for the trading week still hovering near a 7 month high. I'm not involved in silver as I have bullish recommendations in gold and platinum as the precious metals still look bullish in my opinion as palladium prices are also right near an all-time high once again. Silver is still trading above its 20 and 100-day moving average as the trend is to the upside, and if you take a look at the monthly chart, the trendline remains intact as I still have a bullish bias towards this commodity as I am certainly not recommending a bearish position. Volatility remains exceptionally low for such a historically volatile commodity. However, I still do believe prices will retest the January 31st high of 16.20 and if that is broken the bullish trend would be underway once again. Silver was under pressure earlier in the week because European inflation is supposed to weaken even further, therefore, lowering demand, but time will tell if that comes to fruition.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Natural Gas Futures

Natural gas futures in the March contract finished down 15 points for the week at 2.58 hitting a 10 month low on concerns of oversupply issues at this time. If prices break the 2.50 level that would hit a fresh 2.5 year low and the scary thing about this commodity is that prices continue to go lower despite the fact that we were over 50 below zero with windshield in the city of Chicago last week as it has had no impact on prices as it continues its bearish trend. I'm sitting on the sidelines as this market looks to head a little lower in my opinion. I think the 2.40 level could be touched as you have to remember we are starting to exit the winter season which has only about 5 weeks left as I'm not willing to catch a falling knife at this time as I don't like the way this market is acting. Another bearish factor currently is the fact that a U.S. spokesperson stated that there is still quite a distance between the U.S. and China coming up with a trade agreement, but that situation could change quickly as the deadline is March 1st. I'm advising clients to sit on the sidelines at this time and wait for better chart structure to develop. The volatility is starting to slow down as it was extremely high in November when prices crossed the 4.50 level as I do think lower prices are ahead. However, they are limited to the downside as a bottom will be at hand soon in my opinion.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Platinum Futures

Platinum futures in the April contract is trading at 800 an ounce down $26 for the trading week as a stronger U.S dollar is putting pressure on prices in the short term. Platinum prices are now trading below their 20 and 100-day moving average as a possible double top around the 835 level may have occurred in last week's trade. I have been recommending a bullish position from around the 816 level and if you took that trade continue to place the stop loss under major support at 787 as an exit strategy as I remain bullish. I have several bullish commodity recommendations as I do think prices will rally in 2019, however many sectors have been very stagnant as there is still a lot of uncertainty out there due to the trade war between the United States and China. However, I think once that situation concludes you will see the bullish trends start to move to the upside. I also have a bullish recommendation in gold which is slightly lower, and if you did not take the original recommendation, I still like it at today's price level as the risk would be around $900 per contract plus slippage and commission.
TREND: LOWER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Coffee Futures

Coffee futures in the March contract is currently trading at 103.80 a pound after settling last Friday in New York at 103.70 unchanged for the week still experiencing extremely low volatility. If you take a look at the daily chart, the uptrend line remains intact. However, prices have not officially broken out to the upside as they are stuck in a trading range. Coffee prices are trading above their 20-day but still below their 100-day moving average which stands at 109 as that needs to be broken in my opinion to accelerate a bullish trend. The next major level of resistance is the January 25th high of 107.15 as traders are keeping a close eye on weather conditions in Brazil and Vietnam as there are still concerns about dry pockets in key coffee growing regions. I have been recommending a bullish position from around the 105.30 level and if you took the trade continue to place the stop loss under major support at 98.50 on a closing basis only. The chart structure is outstanding due to the fact of the ridiculously low volatility as we have been trading in a 600 point range over the last couple of months so stay long and continue to play this to the upside.
TREND: HIGHER - 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.

Cocoa Futures

Cocoa futures in the May contract settled last Friday in New York at 2209 while currently trading at 2269 up 60 points for the week as this market remains trendless. If you take a look at the monthly chart, the uptrend line remains intact as prices are trading right at their 20-day but slightly below their 100-day moving average as the trend is mixed as I will wait for better chart structure to develop before entering into a bullish position. The volatility in cocoa just like many other commodity sectors remains low with the next major level of support at 2200 and if that is broken we could retest the contract low which was hit on October 1st at 2023, however I do think the downside is limited we just need some bullish fundamental news to spark some an upward trend. I only have one soft commodity recommendation which is in the coffee market which also is trading in a sideways manner as there are very few trends at the current time. In my opinion, if the United States and China can come up with some a trade agreement by March 1st, you will see the lid come up with some of these commodities and then the bullish trends will come to life, but that is still 3 weeks away.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Lean Hog Futures

Lean hog futures in the April contract are down another 70 points at 58.90 negative for the 4th consecutive session continuing its bearish trend hitting a 6 month low. I'm not involved in this market, but I do believe lower prices are ahead as I would be surprised if prices don't test the July 11th low of 57.80 as an agreement between China & the U.S does not look to be in the cards anytime soon as that sent many of the agricultural markets sharply lower in today's trade. The hog market is trading far below its 20 and 100 day moving average as clearly this trend is very bearish as it's going in the opposite direction of live cattle which is right near a contract high as weak demand & oversupply issues continue to weigh on this market so if you are short stay short in my opinion. Volatility in hogs is pretty much average as prices topped out in late November around the 72.50 level. The trend is your friend in the commodity markets, and when a market hits a contract low, the theory states that further contract lows will be ahead. Also when a market hits a contract high, the theory says that further contract highs will be hit in the coming days ahead so don't catch a falling knife as this market looks very weak at this time.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Sugar Futures

Sugar Futures in the March contract settled last Friday in New York at 16.60 a pound while currently trading at 12.84 up about 24 points for the trading week still experiencing very low volatility. Sugar prices are trading above their 20 and 100-day moving average as the trend is slightly higher as I've been recommending a bullish position from around the 12.57 level and if you took the trade keep the stop at 11.69 as an exit strategy, however in next week's trade that will be raised therefor the monetary risk will be lowered. The next major level resistance is at the January 16th high of 13.27, and if that is broken, I think there is the possibility prices could touch the October 24th high of 14.24 as I still think there's room to run to the upside. Sugar prices have been riding the coattails of crude oil which has had a significant rally in 2019 as sugar is used as an ethanol product. Fundamentally speaking the world is still awash in sugar as India actually will become the number one producer of sugar in the world taking over Brazil, but technically speaking the market looks like it still wants to move higher so stay long and continue to place the proper stop loss.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Soybean Meal Futures

Soybean meal in the March contract settled last Friday in Chicago at 311 while currently trading at 306 down about 500 points for the week hitting a 5 month low. I had been recommending a bullish position over the last couple of months from around the 317 level getting stopped out in yesterday's trade around 306 as the grain market is just stuck in the mud at this time. Traders are awaiting the highly anticipated crop report which will be released at 11 AM as that should send some volatility into this market as we have not received any fundamental news in over a month due to the government shutdown. Soybean meal is trading below its 20 and 100-day moving average as the trend has turned to the downside looking to retest the September 18th contract low of 303 in my opinion. I do not have any grain recommendations as we will have to see what this report states and go from there. Volatility will start to expand as we enter spring which is right around the corner as we will have to see how many acres of soybeans will be planted in the United States as estimates are around 85 million which would be about 5 million less than last year as we should not produce a record crop in 2019.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

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 or from riches to rags in a brief amount of time. Many times I see traders abuse pyramiding or adding to positions with an utter lack of 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 substantial gains or loses like we experienced in the 2008 crash of stock and commodity prices, so you always have to use stops and not fall in love or marry a position. In my opinion, the answer to this question is to only add only once to the trade if that position has made you at least 2%-3% of your account balance while still having stop losses on all positions that equal 2% loss at maximum risk.

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