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.
Cotton Futures
Cotton futures in the July contract dropped 250 points over the last 2 trading sessions currently at 59.35. I’ve been recommending a bullish futures position from around the 59.00 level and if you took that trade continue to place your stop loss below the 10 day low which currently stands at 58.23 as volatility certainly has picked up in this commodity. Prices settled last Friday at 59.56 while trading slightly lower week now just barely trading above its 20-day but still below its 100-day moving average as the recent plunge in prices was blamed on very weak export sales data coupled with the fact of profit-taking. Earlier in the week, the USDA lowered U.S ending stocks and world stocks sending cotton prices to an 8 week high so continue to place the proper stop loss and if we are stopped out I will move on and look at other markets that are beginning to trend. Cotton planting is underway in the southern part of the United States as the excellent weather this weekend should allow farmers to get into the fields as we start to enter the extremely volatile spring and summer season.
TREND: MIXED - HIGHER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee prices in the July contract is trading below its 20-day and right at its 100-day moving average as the short-term trend is currently is mixed as I’m sitting on the sidelines in this market waiting for better chart structure to develop. Coffee prices settled last Friday in New York at 122.55 a pound while currently trading at 124.25 up slightly for the week. I still think prices are bottoming as I think a double bottom was created around the 116 level, but wait for a true trend to develop as that could take several more weeks as patience is the key to trading. Many of the agricultural markets have come to life as coffee prices remain stagnant at the current time as I was recommending a bullish position getting stopped out in last week’s trade as there is very little fresh fundamental news to dictate short-term price action as the weather in Brazil’s key coffee growing regions have been beneficial. Volatility will definitely come back into this market it’s just a matter of time, but look at other markets that are beginning to trend with better risk/reward scenarios.
TREND: MIXED
CHART STRUCTURE: POOR
Sugar Futures
Sugar prices settled last Friday in New York at 14.88 a pound while currently trading at 15.20 up slightly for the week still holding major support as I’m also sitting on the sidelines in this market as the chart structure is terrible at the current time as prices went straight up and now straight down. Sugar prices are trading below their 20-day and above their 100-day moving average just like the coffee market which is relatively unusual in my opinion as this market remains mixed and should be avoided at present. There are higher production numbers coming out of Brazil with weaker demand which has been pushing prices lower. Volatility in sugar is relatively high over the last several weeks, and I think that trend will continue, but wait for better chart structure to develop therefore lowering monetary risk allowing you to place a tight stop loss which is not the case at the current time. Crude oil prices have been rallying recently, and generally, that can be supportive to sugar prices, but that has not been the case in this week’s trade, but I do think the downside in the commodity markets are limited as the tide has turned in my opinion as everything does come to an end eventually.
TREND: MIXED
CHART STRUCTURE: POOR
Corn Futures
Corn futures in the December contract which is considered the new crop and is currently being planted in the United States and will be harvested this October settled last Friday in Chicago at 3.75 a bushel while currently trading at 3.87 right near a 4 week high. I’m currently sitting on the sidelines waiting for better chart structure to develop as volatility certainly has come back into this market. Corn prices are trading above their 20-day moving average and right at their 100-day as prices look to have bottomed around the 3.65 level which was right after the USDA announced 93.5 million acres being planted with the possible production number around 14 billion bushels which is right near another record crop, but the market has turned on a dime as springtime has arrived. I’m writing this article in the suburbs of Chicago as the weather here in the state of Illinois and Iowa is outstanding as I talk to many farmers on a daily basis, and they tell me that planting will be in full swing this weekend. At the current time my only recommendations in the grain market are long soybeans and soybean meal, but keep a close eye on corn as I still think there could be a weather problem developing in 2016 as the commodity markets have bottomed in my opinion.
TREND: MIXED
CHART STRUCTURE: POOR
Cattle Futures
Cattle futures in the June contract settled last Friday in Chicago at 124.02 while currently trading at 121.90 as I’ve been recommending a short position from around the 123.50 level and if you took that trade continue to place your stop loss above the 10-day high which stands at 124.90 as the chart structure is solid at present. Cattle prices are trading below their 20 and 100-day moving average telling you that the short-term trend is to the downside as higher corn prices have put pressure on feeder cattle, therefore, pressuring the live cattle market here in the short term with the next major level of support around 118 and if that is broken who knows how low prices could go. At the current time, I’m also recommending a short position in the hogs as I think the livestock sector, in general, are still overpriced. However, the commodity markets certainly have rebounded in recent weeks, but cattle still remains bearish so play this to the downside. Volatility in cattle remains high as this market has had huge price swings over the last 6 months so make sure that you place the proper amount of contracts, therefore, risking 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: SOLID
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
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.
10-Year Note Futures
The 10-year note in the June contract settled last Friday in Chicago at 131.01 while currently trading at 130.21 slightly lower for the trading week. I’ve been recommending a bullish futures position from around 129.25, and if you took that trade, the chart structure has improved tremendously and now stands at 130.06 which is only 14 ticks away or $425 per contract plus slippage and commission. The 10-year note is still trading above its 20 and 100-day moving average telling you that the short-term trend is higher. However, volatility has really slowed down in this bond which is always a good thing in my opinion because it allows you to place a tight stop loss. As I’ve talked about in many previous blogs the 10-year note is yielding about 1.77% which is historically extremely low by U.S standards, but at the current time there are negative interest rates throughout the world, so the 10-year looks expensive in my opinion. So continue to play this to the upside and if you have not taken the trade I’m still recommending it even at today’s price level as the risk/reward is in your favor.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Lean Hog Futures
Lean hog futures in the June contract settled last Friday in Chicago at 80.87 while currently trading at 77.15 down about 350 points for the trading week settling lower 4 out of the last 5 trading sessions. I’ve been recommending a short position from around the 79.50 level and if you took that trade place your stop loss above the 10-day high which currently stands 81.00. Hog prices are trading below their 20 and 100-day moving average telling you that the short-term trend is lower as prices are now at a 3 month low with major support between the 75/76 level, and if that is broken I think prices can retest the 71 level which was the contract low hit last November. The grain market has caught fire to the upside which seems to have put pressure on the livestock sector here in the short-term as the trend is your friend in the commodity markets and the trend clearly in my opinion in the hogs is to the downside. However, if you have missed this trade you also missed the boat so look at other markets that are beginning to trend with a better risk/reward situation. At the current time, I’m also recommending a short position in live cattle futures as they both have had bullish trends over the last 6 months except for the last several weeks as I see expansion continuing to put pressure throughout the spring so remain short.
TREND: LOWER
CHART STRUCTURE: POOR
Soybean Futures
Soybean futures in the November contract settled last Friday in Chicago at 9.30 a bushel while currently trading at 9.66 up over $.35 for the trading week continuing its bullish momentum hitting a 10 month high. I’ve been recommending a bullish position from around the 9.11 level and if you took that trade place your stop at the 10 day low which stands at 9.16 as the chart structure is terrible due to the fact that prices have rallied substantially over the last week. The main reason why prices have gone straight up over the last 5 days is due to excessive rains in the country of Argentina possibly wiping out 5%/7% of their soybean crop coupled with the fact of massive short covering pushing prices to a multi-month high. I still think prices are going higher as the commodity markets, in general, look very bullish. Soybean prices have rallied 5 out of the last 6 trading days trading far above its 20 and 100-day moving average as trading with the path of least resistance is the way to go as I stress that in many different blogs as who knows how high prices go. At the current time I’m also recommending a bullish position in soybean meal which has absolutely taken off to the upside, but remember if you are happy with the profits that have been made decide for yourself if you want to move on as everybody’s monetary situation is different and must be treated differently.
TREND: HIGHER
CHART STRUCTURE: POOR
Silver Futures
Silver futures in the July contract settled last Friday in New York at 15.42 an ounce while currently trading at 16.35 up around $.90 for the trading week hitting a 6 month high continuing its bullish momentum. However, I have been sitting on the sidelines in this market as the chart structure is very poor meaning as the risk is too high at present to enter into a bullish position. Silver prices are trading above their 20 and 100-day moving average telling you that the short-term trend remains strong as a weak U.S dollar continues to push commodity prices higher. If you been following any of my previous blogs, you understand that I have many bullish commodity recommendations at present as I do think the tide has turned to the upside. As I have talked about in the previous blogs, I’m looking at entering this market around the 15.75 level as the chart structure will start to improve later next week so be patient and keep an eye on this market. I’m certainly not recommending any type of short position at present as the trend is your friend and the trend is higher in silver as who knows when this sleeping giant wakes up again as silver prices can rock ‘n roll. If you have never traded silver in the past historically speaking this is one of the most volatile commodities with huge risk so make sure you respect this market and under trade as silver prices can move dramatically and quickly.
TREND: HIGHER
CHART STRUCTURE: POOR
Soymeal Futures
Soymeal futures in the July contract settled last Friday in Chicago at 276 a ton while currently trading at 298 hitting a 6 month high continuing its remarkable bullish run to the upside over the last week. I have been recommending a bullish position from around the 277 level and if you took that trade continue to place your stop loss below the 10 day low which stands at 268 ,however if you have multiple contracts on I am now recommending to take off 1 position as the chart structure is extremely dangerous at the current time as prices have gone exponentially higher and then stick to the rules on all the other contracts. Soymeal prices are trading above their 20 and 100-day moving average telling you that the short-term trend continues to move higher as this market is based on large volume as well as Argentina is having massive rains which is causing a real concern about potential yields; as the trend is your friend, and that’s why you must not countertrend as moves like this will kill you especially if you add more contracts to the loser which is what you should never do. Remember on special occasions like this it depends on the monetary size of your trading account so decide if you want to take profits as everybody’s account is different and must be treated in a special manner.
TREND: HIGHER
CHART STRUCTURE: POOR
Trading Theory
This rule will never apply to you if you are not over trading and risking more than 2% on any given trade. Never answer a margin call because you are probably overtrading, and most likely the position is going against you and probably have lost much more than 2% on that trade. Never allow this to happen to you because you always want to have sufficient margin in your trading account just in case the exchange raises margin and that will not force you out of the position. A great rule is to keep 50% of your total portfolio in cash and the other 50% in trades that way if something crazy happens and it sometimes does, it helps in managing risk in a huge way.
If you are looking for a futures broker feel free to contact Michael Seery at 312-224-8140 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: 312-224-8140
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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.
