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 February contract are currently trading at 1,322 an ounce after settling last Friday in New York at 1,309 up about $11 for the trading week continuing its remarkable bullish run over the last month as we have now traded higher for the last 11 consecutive sessions. Gold prices bottomed out on December 12th at 1,238 and have now rallied substantially right near a four-month high. I am not involved in this market as the chart structure is terrible due to the recent run-up in prices all because of the U.S. dollar has now hit a three-month low supporting gold and the precious metals across the board. At this point, I am very reluctant to buy gold as I think it is overextended and if you take a look at the RSI indicator, it's in overbought territory. It's remarkable in my opinion that gold has rallied this much despite the fact that the U.S. stock market has hit an all-time high every day this week & looks to move even higher in 2018 in my opinion. As I've talked about in many previous blogs, I do believe that commodities are extremely cheap at this point. If you're looking to buy gold, I would wait for some type of retracement around the 1,300 level as patience is the key to trading sometimes. However, the trend is to the upside as we are trading above the 20 and 100-day moving average, but I think prices are ahead of themselves.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Natural Gas Futures

Natural gas futures in the February contract settled last Friday in New York at 2.95 while currently trading at 2.78. I am now recommending a bullish position at this level while placing the stop loss at the contract low of 2.56 risking around 22 points or $1,100 on two mini contracts plus slippage and commission. I have been talking about natural gas for weeks looking at entering into a bullish position, and I think the recent pullback of about 30 points over the last three down days is sufficient. I think the risk/reward are now in your favor. The chart structure is solid despite high volatility as prices went straight down and then straight up and then straight down once again as the extremely cold weather in the Midwestern part of the United States have forced prices higher, but the weather forecast down the road has warmer temperatures sending prices lower over the last three days. Natural gas prices are still trading above their 20-day but below their 100-day moving average as this is a counter-trend trade which I don't recommend very often, however, I think it's worth a shot as its a long winter & the cold weather can arrive once again. If you take a look at the daily chart, we are about at the 50% retracement from the contract low to last Tuesday's high of around the 3.10 level as that is just a technical indicator on where to find support levels.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY:HIGH

S&P 500 Futures

As I have talked about in previous blogs I don't think there's anything that's going to stop the stock market from having a very bullish 2018. Prices settled last Friday in Chicago at 2676 while currently trading at 2732 up another 56 points in the S&P 500 trading higher the first four trading days of 2018 as there is way more room to run in my opinion. You have to remember, corporate tax rates were reduced tremendously, and now all of these large corporations are making billions of dollars more by doing absolutely nothing. This was a gift from the government, and that is why you see such tremendous gains to the upside, and I still don't think that the tax cuts have even been reflected in stock market prices fully at this time. I am recommending a short position in the 10-year note which goes in opposite directions of the stock market. I am extremely bearish the bond market as for why would anybody buy a 10-year note yielding 2.49% when the stock market went up 25% in 2017 and has that ability to do the same thing this year. If you're long a futures contract continue to keep the stop loss under the 10-day low standing at 2650 as this market has huge momentum to the upside as prices are trading far above their 20 and 100-day moving average. This trend is remarkably strong as I see absolutely no reason to sell any of the equities at this time as I still think they are underpriced.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

10-Year Note Futures

The 10-year note in the March contract settled last Friday in Chicago at 124/01 while currently trading at 123/16 looking to retest the contract low around 123/12 which was hit on December 21st. I have been recommending a bearish position from around the 123/24 level and if you took the trade continue to place the stop loss at the 125/00 area. I will be looking at adding more contracts at that critical level of 123/12 as I truly believe interest rates are way too low for such a booming economy as the stock market hits all-time highs on a daily basis as growth is upon us as there is no reason to have these low yields exist post-Obama. The 10-year note is trading below its 20, and 100-day moving average as the trend is to the downside as volatility still is very low before quantitative easing happened as the bond market was always extremely volatile as I think that will come back to fruition here in the coming months. Continue to take advantage of any price rally to sell as I still think we could trade as high as 3.50%/4.00% at this time next year as the Federal Reserve will have to start to sell their massive reserve of bond holdings which were accumulated over the last administration sending the market much lower over the course of time in my opinion.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Coffee Futures

Coffee futures in the March contract is currently trading at 128.25 a pound after settling last Friday in New York at 126.20 up about 200 points for the trading week right near a five-week high looking to breakout to the upside soon in my opinion. Coffee prices are now trading above their 20 but slightly below their 100-day moving average which stands at 130.25 which is acting as major resistance on the daily chart. I'm looking at a possible bullish position in next week's trade once the chart structure improves as its relatively poor and the risk/reward are not in your favor. Ideal weather conditions in the country of Brazil continue to keep a lid on prices. However, there are pockets of dryness in several key coffee growing regions which could spark a rally. I am bullish many commodity sectors as I do think that coffee had bottomed out around the 120 level in late December. Volatility in coffee still remains relatively low as we have entered the volatile season for this historically volatile commodity so keep a close eye on this market as this is a sleeping giant waiting to rally substantially in my opinion, but we just need some fresh fundamental news to push prices higher in my opinion.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: LOW

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

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 in the March contract settled last Friday in Chicago at 3.50 a bushel while currently trading at 3.50 unchanged for the week with incredibly low volatility still stuck in an eight-week tight consolidation. I will be looking at a bullish position if prices breakout above 3.55 while then placing the stop loss at the contract low around 3.46 risking around 9 cents or $450 per contract plus slippage and commission as the chart structure is outstanding. The longer, the consolidation lasts the stronger the breakout will occur in my opinion just like what happened in the cotton market. Large money managed funds still hold near record short positions in corn as they think prices are headed lower, and they might be right, but I think most of the bad news has already been reflected into the price unless some shock comes out of the USDA crop report which will be released next week. Corn prices are trading right at their 20-day but still below their 100-day moving average which stands at 3.60 as we need some fresh news to dictate short-term price action as strong ethanol demand has stopped corn from going lower over the last couple of months. Keep a close eye on this market as we could be involved in next week's trade for the 1st time in probably six months.
TREND: MIXED
CHART STRUCTURE: OUTSTANDING
VOLATILITY: LOW

Cotton Futures

Cotton futures in the March contract settled last Friday in New York at 78.63 while currently trading at 79.73 up over 100 points for the trading week higher for the 3rd consecutive session hitting another contract high as the bullish momentum is getting stronger on a weekly basis. I have been recommending a bullish position over the last several months from around the 70.50 level and if you took that trade the stop loss in Monday's trade will be 77.00. However, that will not improve for another seven trading sessions so you will have to accept the monetary risk at this time as the chart structure has improved tremendously. The U.S. dollar hit a three month low this week which is a fundamental bullish indicator towards cotton prices coupled with the fact that the stock market hit another all-time high this Friday afternoon as the U.S. economy is doing very well as demand has certainly come back into the cotton market over the last several months. Cotton prices are trading far above their 20, and 100-day moving average as this trend is strong to the upside as the hurricanes, and the frost in West Texas have hurt yields in the United States. This has helped propel prices higher so continue to keep the proper stop loss as who knows how high prices can go as I still think there's room to run to the upside.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: LOW

Soybean Futures

Soybean futures in the March contract settled last Friday in Chicago at 9.61 a bushel while now trading at 9.70 up about 9 cents for the trading week. It looks to me that prices are in a bottoming pattern as we have been stuck in a two-week consolidation after the fall off in prices in December. Soybean futures are trading under their 20, and 100-day moving average as the trend still is to the downside as I will not take a short position as I think the downside is limited as 2018 is upon us as the bullish trends seem to be developing once again. The weather situation in Brazil and Argentina are ideal at the current time as they should produce another record crop which seems to happen on a yearly basis as we continue to overplant this commodity. We will now start to focus on the 2018 crop year in the United States with estimates of around 4.5 billion bushels once again which is a staggering number, and you want to start to develop any type of bullish trend its difficult with those type of numbers. I do think demand will start to come back into the agricultural sector and I am currently recommending a bullish position in cotton which is right near a multi-year high. I think that will start to bleed into the grain market so be patient, as a bottoming pattern is at hand as growth in the United States is here for the 1st time in 10-years, and it's going to start to boost commodity prices. I think the bullish trends are going to come back with a vengeance this year.
TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

Wheat Futures

Wheat futures in the March contract are currently trading lower by 1 cent at 4.35 a bushel. I will be recommending a bullish trade if prices break the 4.37 level while then placing the stop loss below the 10-day low of 4.20 risking around $0.17 or $900 per contract plus slippage and commission as the chart structure is outstanding due to the extremely low volatility. We are right near a five-year low. Wheat prices are trading above their 20 but still below their 100-day moving average, and I just think the grain market is starting to look extremely cheap as 2018 is upon us now. I look for bullish trends to develop so play this to the outside as the chart structure is outstanding, therefore, lowering the monetary risk in my opinion. Extremely cold temperatures have entered the Great Plain part of the United States and much of the U.S. in general putting concern on the wheat crop at the current time. However, warmer temperatures are ahead as its a long growing season as volatility is certainly going higher in my opinion as it will expand to the upside. Risk 2% of your account balance on any given trade as I certainly think the risk/reward could be in your favor come tomorrow's trade. I am also looking for a bullish position in corn which I have not been involved in months as the chart structure is outstanding. It looks to me that prices have certainly bottomed out especially with strong ethanol demand and if you take a look at sugar and crude oil prices they continue to move higher with most of the commodity markets.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW

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.