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 are right near 3 year lows going out this Friday afternoon at 1,212 an ounce finishing higher by around $12 this week despite the fact that the money flow continues into the S&P 500 and out of the precious metals as investors see no reason to be long the gold market at this time. Gold futures have dropped $700 from their highs and I do think there’s still a possibility that we could drop another $100 dollars maybe another $150 but eventually this market will bottom out as well as world problems will come back into play, but right now the trend is your friend and in the trend buying S&P and selling gold and I think that’s going to continue for the rest of the year as the stock market is hitting all-time highs once again in the S&P 500 and Dow Jones Industrial Average while gold futures finished up $8 today. Many of the commodity markets were higher today due to a relief rally because there is some clarity on what the Federal Reserve will do. Gold is trading below its 20 and 100 day moving average with the next major support at 1,180 and if that level is broken I think prices could to 1,100 gold but gold is very volatile and it has big kickbacks of $75 dollars so if you are short this market make sure you have tight stops.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures had a quiet trading week finishing up $.15 this Friday afternoon in New York to close around 20.05 an ounce basically trading in a $1.00 range for the entire month of December as the announcement of the Federal Reserve started its tapering of bond purchases sent silver down $.90 last week as investors continue to buy the S&P 500 and sell precious metals due to the fact that there are no worldwide problems creating the fear factor causing people to get into the precious metals and investors are putting money into the stock market and out of the bond and precious metal sectors. In my opinion I do believe silver prices could head lower possibly retesting the $18 level or if you’re longer-term investor and you believe economies around the world are improving eventually inflation will come back and I would start to accumulate small positions as I do think down the road silver prices will move higher. The problem with silver currently is that it’s attached to gold which continues to make new lows and that’s putting pressure on silver prices as nobody seems to be bullish gold at this time. Silver futures are trading above their 20 but below its 100 day moving average which tells you that the trend is mixed here in the short term and if you’re looking to pick a bottom in silver my recommendation would be to buy futures contract at today’s price of 20.00 and place your stop below the recent low of 18.97 risking around $.41 or $5,200 if the trend and continues to the downside
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean futures are trading below their 20 but above their 100 day moving average settling last Friday at 13.31 a bushel and going out this afternoon at 13.15 lower by .16 cents for the week still stuck in a sideways trend and by far has been the strongest complex in the grain market and if you’re looking to buy soybeans and think they are going higher my strategy would be to buy at today’s price of 13.15 placing a stop below the 10 day low at 12.99 risking around $800 per contract if you are wrong and soybeans reverse and break support. Weather in Brazil and South America is excellent and they should produce a very good crop, however there is just tremendous demand for soymeal and soybeans which should keep prices strong in the short term. November soybeans are considered the new crop and is trading around 11.50 a bushel so the price is much lower than the front month as traders are expecting another large crop and that is why you see the price differential as November will be the crop that will be planted this spring and if we produce a 3.5 billion crop in soybeans then there’s the possibility of sending grain prices sharply lower in my opinion unless the market develops a drought like it did 2012 and then everything can change quickly.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures settled last Friday at 4.28 a bushel and going out this Friday afternoon around 4.28 a bushel basically unchanged for the trading week stuck in a 7 week consolidation with very little volatility as prices have traded between 4.20 – 4.40 so expect this trend to continue for quite some time as the real volatility won’t start until springtime. The fact that we know the size of the crop and its Christmas time with slowing volume and volatility so prices will trade in a tight range but my main concern is if farmers here in the United States plant another 97 million acres and the crop turns into another record prices could really drop this time next year remembering the fact in 2010 prices traded as low as 2.90 a bushel so prices could head back down to those levels in my opinion but it will take time. Corn is trading right at its 20 day but below its 100 day moving average as I think this market should be avoided at this time and move on to something that is trending and wait for the corn to breakout below 4.20 or above 4.40 before acting.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures are trading below their 20 and 100 day moving average settling last Friday at 6.13 going out this afternoon at 6.08 a bushel hitting 1 ½ year lows and I’m still recommending a short position in wheat placing your stop above the 10 day high as this trend is strong to the downside and I do think prices will re-test major support at 5.75 in the next couple of weeks. Prices have dropped nearly $.75 in the last 3 weeks as huge supplies worldwide are really going to start affecting the price to the downside in my opinion as I do think there’s possibility wheat can trade as low as 4.50 come April or May as prices are just way too high in my opinion. We are experiencing excellent weather conditions in the Great Plains and should see another record crop so continue to play this to the short side as I have been recommending in previous blogs look at the March put options as they will limit your risk to what the premium costs.
TREND: LOWER
CHART STRUCTURE: OK
Cotton Futures
Cotton futures are trading above their 20 and 100 day moving average settling up 120 points in the March contract going out at 84.05 right near 10 week highs and if you are long this market I would place my stop at the 10 day low which currently stands at 81.42 which was hit on last Tuesday minimizing your risk while that stop will be moved up almost on a daily basis. Cotton had a nice rounding bottom and a sharp rally in recent weeks as the bulls clearly have a momentum at this time, however China does have huge supplies and they might sell those supplies onto the market so I do think cotton prices are limited to the upside at this time. The soft commodities have started to rally recently as the giant bear market may have ended in the short term but if cotton prices get up to 86.00 I would be looking at probably tightening up my stop or take my profits and move on.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Japanese Yen
How much lower can the Japanese Yen go against the U.S Dollar? I keep talking about the Yen on several different occasions and I remain very bearish while its trading far below its 20 and 100 day moving average down over 75 points this` week creating another 4 ½ year low and this Friday afternoon continuing the best down trend in the commodity markets in the last couple of months. The Yen is down for the 4th consecutive trading session trading at 95.24 in the March contract as massive money printing in Japan is helping continue its steep decline in recent weeks and months & in my opinion I believe the Yen is headed down to the 85 level in the next couple of months due to the fact that the Japanese government is forcing the Yen lower against the U.S dollar trying to spur their exports and improve their economy by lowering the value of their currency hitting a fresh yearly low once again today and I am still advising traders to be short the Japanese Yen. Remember when you trade commodities you will be wrong sometimes so you must put a stop loss and not marry your position because never getting out causes exaggerated monetary losses so always risk between 1-2% of your account balance on any given trade trying to minimize risk.
Sugar Futures
Sugar futures are trading below their 20 and 100 day moving average hitting a 10 day high today so if you are short this market my recommendation is to exit and sit on the sidelines as a short term bottom may have formed in sugar and many other commodities. Sugar has large supplies and now is starting to rally with many of the other soft commodities but if you think prices have bottomed my suggestion would be to buy a futures contract while placing your stop below the contract low of 15.86 risking around $700 per contract.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Corn Futures
orn futures settled last Friday at 4.28 a bushel and going out this Friday afternoon around 4.28 a bushel basically unchanged for the trading week stuck in a 7 week consolidation with very little volatility as prices have traded between 4.20 – 4.40 so expect this trend to continue for quite some time as the real volatility won’t start until springtime. The fact that we know the size of the crop and its Christmas time with slowing volume and volatility so prices will trade in a tight range but my main concern is if farmers here in the United States plant another 97 million acres and the crop turns into another record prices could really drop this time next year remembering the fact in 2010 prices traded as low as 2.90 a bushel so prices could head back down to those levels in my opinion but it will take time. Corn is trading right at its 20 day but below its 100 day moving average as I think this market should be avoided at this time and move on to something that is trending and wait for the corn to breakout below 4.20 or above 4.40 before acting.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
When Do You Enter A Trade? What are your rules to initiate a trade on the long or short side of the commodity market? I have been asked this question many times throughout my career and my opinion is simply to buy on a 20-25 day high breakout in price on a closing basis only or sell on a 20-25 day low breakout to the downside also on a closing basis. Many times the price will break the 25 day high and sell off later in the day only to have your trade be negative very quickly. I would rather buy the commodity at a higher price on the close because that gives me more confidence that the market has truly broken out. However there are more ways to skin a cat and this is not the only answer because some other trading systems might rely on different breakout rules that have also been reliable. Remember always keeping a 1%-2% risk loss on any given trade therefore minimizing risks because the entry system I use always goes with the trend because I have learned over the course of time the trend is truly your friend in the long run. I also look for tight chart structure meaning a tight trading range over a period of time with relatively low volatility. I try to stay away from a crazy market that hit a 25 day high in 2 trading sessions versus the 25 high that actually took 25 days to create.
When Do You Exit A Trade? The biggest question that I have been asked is when do I exit a winning trade and when do I exit a losing trade? In my opinion the rule of thumb that I use is placing my stop loss at the 10 day high if I’m short or a 10 day low if I’m long. The other rule of thumb is to place your stop loss at the 2% maximum loss allowed in your account for any given trade.
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
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.
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: (800) 615-7649
ms****@se**********.com
