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 is currently trading at 1,304 after settling last Friday in New York at 1,299 up about $5 for the trading week bouncing off of major support. The precious metals continue in a longer-term bullish trend as I do think gold prices will break the February 20th high of 1,349 in the coming weeks ahead as there is strong demand. Gold is currently trading slightly below its 20-day moving average, but still above its 100-day as the trend is mixed to higher and the chart structure is starting to improve as the volatility remains low. The U.S dollar has put pressure on gold prices over the last month as that currency is right near a two year high. However, gold prices have held up relatively well and if you ever get some type of sell-off in the dollar that could propel prices higher. If you take a look at the daily chart, the trendline remains intact as palladium prices are right near an all-time high once again as that that is the leader to the upside. If you are bullish gold prices and you are long a futures contract, I would place the stop loss under major support at 1,280 as an exit strategy as that would be a three month low. I would see no reason to be long if that situation occurs.
TREND: MIXED - HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: LOW
S&P 500 Futures
The S&P 500 settled last Friday in Chicago at 2752 while currently trading at 2817 up about 65 points for the trading week hitting a four-month high as this market is getting stronger every week. The S&P 500 is now trading above its 20 and 100-day moving average as the trend clearly is to the upside as prices are right at major resistance and if we can break the November 7th high of 2833 I think then we will test the all-time high which was hit on October 3rd at 2960 as I see no reason to be bearish this market. The 10-year note is currently yielding 2.60% which is incredibly low historically speaking, and that is also helping push stock prices higher so if you are long a futures contract stay long as there is more room to run in my opinion. Corporate earnings continue to be very solid as the United States economy is outstanding as money flows continue to come into U.S equities as the rest of the world is in envy. If an agreement comes out to be a favorable situation that could ignite equity prices substantially higher as it certainly looks like that panic sell-off in December was a terrific buying opportunity.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING
Natural Gas Futures
Natural gas futures in the May contract settled last Friday at 2.87 while currently trading at 2.82 in a relatively little trading week still hovering near major resistance at the 2.90/3.00 level. I'm sitting on the sidelines as this market is stuck in a trading range between 2.60 / 2.90 looking to break out to the upside in my opinion. I believe prices will be stuck in the mud until some type of trade agreement involving China as they have suggested that they will buy large quantities of natural gas from the United States as that would push prices higher if that situation does occur. Gas prices are trading right at their 20-day but still above their 100-day moving average as the trend is slightly higher as we have experienced frigid weather in March. However, spring is right around the corner as warmer temperatures are ahead. In my opinion, I do believe the 2.60 level will hold as prices still look cheap in my opinion as I think demand will increase substantially in the coming months ahead.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
VOLATILITY: LOW
Mexican Peso Futures
Orange juice in the May contract settled last Friday in New York at 116.15 while currently trading at 125.35 up over 900 points for the week hitting a 2/1/2 year high. The break out occurred around the 122 .60 level & if you are long a futures contract, I would continue to place the stop loss under the contract low which was 114 .90 as an exit strategy as I am waiting for some type price pullback around the 122 level before entering. Juice prices are now trading above their 20-day but still below their 100-day moving average as it certainly looks to me that a longer-term bottom is in place at this time. The USDA stated in the last crop report that production was around 77 million boxes as fundamentally speaking there are still several bearish factors including weak demand and larger supplies, but I do believe all of that news has already been factored into the price. The commodity markets, in general, remain weak as we still need an agreement with China on trade and once that develops I think we will witness many secular bullish trends as the uncertainty will finally be lifted.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING
Coffee Futures
Coffee futures in the May contract is currently trading at 97.80 after settling last Friday in New York at 98.50 unchanged for the week after hitting a fresh 14 year low on Tuesday at 94.65 before rallying slightly. Coffee prices have been trading in a tight three-week consolidation as there is very little fresh fundamental news to push prices in either direction at this time. Growing conditions in Brazil remain ideal as carryover levels remain at a four and half year high with estimates of this year's crop production number around 55.4 million bags. However, much of this news has already been factored into these depressed prices. As I have written about in many previous blogs, I think there is a chance we can hit the 90 level, but I don't see much further downside pressure as historically speaking prices look cheap in my opinion. Coffee is still trading below its 20, and 100-day moving average as the trend is to the downside as I do think the downside is limited as I will not take a short position.
TREND: MIXED - LOWER
CHART STRUCTURE: SOLID
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 are trading higher for the 4th consecutive session up another $0.02 at 3.81 a bushel on weather concerns as heavy rains have entered the Midwestern part of the United States causing sporadic flooding. I am currently sitting on the sidelines in corn, and as I've written about in many previous blogs, I am looking at a counter-trend bullish trade as spring planting will start in the next four weeks, and that's generally when prices begin to rally due to weather concerns. Corn prices are still trading under their 20 and 100-day moving average as the trend is lower as the wheat market also has had a nice rally over the last several days as seasonably speaking I think the lows in the grain market are looming. Estimates of this year's planted acres by a private firm were released today stating 91.5 million acres. That is over 2 million more than last year as we could produce a near-record crop once again if we have ideal weather conditions, but it is a long growing season so keep a close eye on this market for a possible bullish position.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING
Live Cattle Futures
Live cattle futures in the June contract is trading higher for the 3rd consecutive session up another 120 points at 121.55 after settling last Friday in Chicago at 120.95 up slightly for the trading week. However, prices have hit a fresh contract high. If you are long a futures contract, I would place the stop loss under Tuesday's low of 117.90 as an exit strategy as treacherous weather in the Midwestern part of the United States is pushing up all livestock prices. The next major level of resistance is around the 123 / 124 level as I still think there's room to run to the upside as I'm certainly not recommending any type of short position as that would be counter-trend trading which is very dangerous over time. Cattle prices are trading above their 20 and 100-day moving average as the volatility is increasing due to the weather situation as this has been in a slow grinding bullish trend over the last four months. Hog prices are limit up in today's action helping support cattle prices as well so if you are long, stay long in my opinion.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Lean Hog Futures
Lean hog futures in the June contract is trading up 300 points this Friday afternoon in Chicago currently at 86.50 after settling last Friday at 78.17 up over 800 points for the trading week hitting another contract high. I have been talking about the hogs in recent weeks as I thought a spike bottom had been created on February 20th at 72.20 as horrendous weather is the main culprit for this tremendous rise in price as massive rains coupled with severe winter storms are causing major concern about supplies. Hogs are trading far above their 20 and 100-day moving average as the trend is higher & if you did by the breakout which occurred around the 78.15 level the chart structure is terrible at the current time as I would raise the stop loss significantly therefor protecting profits. In my opinion, I still think higher prices are ahead. However, this weather situation will improve, and that's when you will see prices decline. If you stay long in my opinion, especially when you see a limit up trading session, that generally means the next trading day will open sharply higher again.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Wheat Futures
On March 8, the USDA increased the world wheat carryout to near 270.5 million tonnes versus 279.6 last year. Of the total, China is 140.0 million tonnes. The USDA estimates world domestic wheat use to be near 742.1 million tonnes. The trade is estimated near 178.9 million tonnes. Russia is the number one world exporter at 37.0 versus 41.4 last year. Managed funds are now net short near 86,000 Chicago wheat futures contracts. Some feel that they have sold the market on concerns about the global economy and talk that world 2019 wheat supply will be higher than last year, especially in Europe and Russia. For most of the first three months of the 2019 season, traders were hoping that a new trade deal between the U.S. and China could increase demand for U.S. wheat. So far, the U.S. winter has been wet and cold. The 2019 Kansas winter wheat crop is rated 51% good to excellent. Early estimates of the U.S. 2019 wheat crop are near 1,930 million bushels versus 1,884 last year, and initial estimates of the 2019 world wheat crop are near 770.0 million tonnes versus 733.0 last year.
Wheat Futures
On March 8, the USDA increased the world soybean carryout to near 107.2 million tonnes versus 98.5 last year. The USDA estimates world domestic soybean use to be near a record 348.5 million tonnes. The export trade is estimated to be near a record 154.2 million tonnes versus 153.0 last year. The USDA expects the Brazil soybean crop to be near 116.5 million tonnes versus 120.8 last year. Brazil soybean exports are estimated to be near a record 79.5. The USDA expects the Argentina soybean crop to rebound to near 55.0 million tonnes versus 37.8 last year. The USDA left China’s soybean imports at 88.0 million tonnes versus 94.1 last year. Some feel the spread of African swine fever in China could reduce hog production and consumer demand for pork. This could reduce final China soybean imports from the USDA estimate. Managed funds are now net short 89,000 futures contracts. Some feel that they have sold the market on concerns about the global economy and talk that world 2019 soybean supply will be higher than demand. China is back buying U.S soybeans. But some fear this is just dropping because Brazil exports to China and that other buyers may turn to cheaper Brazil soybeans versus the U.S. for needs, which could eventually lower U.S. final exports and raise the carryout.
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.
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
Michael Seery, President
Seery Futures
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Phone #: 630-408-3325
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There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.
