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 December contract is currently trading at 1,238 after settling last Friday in New York at 1,228 up about $10 for the trading week hitting a three month high while still experiencing extremely low volatility. I have a bullish bias towards gold as I am also recommending a bullish position in silver as the U.S. stock market has fallen out of bed in recent weeks and is down nearly 500 more points in today's trading session as money flows are coming out of equities and into the precious metals. If you are long a futures contract, I would place the stop loss at the two week low as an exit strategy which stands at 1,221 as I do believe higher prices are ahead. I don't think the washout in the stock market is finished at this time. Gold prices are trading above their 20 and 100-day moving average as the trend is to the upside with the next major level of resistance at 1,250, and if that is broken, I think we can head up to 1,270. I do believe volatility will start to increase substantially to the upside as gold is used as a flight to quality and that could happen in next week's trade so if you are long stay long in my opinion.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Silver Futures

Silver futures in the December contract settled last Friday in New York at 14.65 while currently trading at 14.70 an ounce as the volatility has come to a crawl over the last several weeks as prices remain stagnant. I have been recommending a bullish position from the 14.50 level and if you took the trade place the stop loss under the two week low which now stands at 14.47 which is just an eyelash away because prices have gone nowhere. The next level of resistance is around the 15.00 level, and if that is broken, I will be looking at adding more contracts to the upside, but there is very little fresh fundamental news to dictate short-term price action in my opinion so stay long, and let's see what next weeks trade brings. Silver is trading above their 20-day but still below their 100-day moving average which stands at 15.26 as the trend is higher to mixed as gold prices are still near a two month high ending the week on a positive note helping support silver this afternoon. The U.S. stock market is experiencing extremely high volatility as money flows are exiting the equity market as investors are looking at other opportunities to place their money. I'm surprised silver hasn't reacted more bullish than it has as investors at this time are defensive.
TREND: HIGHER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Crude Oil Futures

Crude oil futures in the December contract is currently trading at 67.44 a barrel down about $2 for the trading week as I was recommending a bullish position from around the 71.55 level getting stopped out earlier in the week around the 67.00 level as prices have been following the stock market to the downside. Concerns about an economic slowdown are pushing oil prices lower over the last several weeks as prices hit a two month low now trading below their 20 and 100-day moving average as the trend certainly has changed to the downside. The chart structure is terrible, and I will be sitting on the sidelines waiting for another trend to develop. I do think the downside is limited especially with the Iranian sanctions almost upon us and I think that will tighten the supply situation. However, the U.S. stock market has been plunging in recent weeks as that is also putting pressure on oil. The next major level of support is around the $65 area, and if that is broken you could head down to the 62 area as the volatility certainly has increased and if you go to your local gas station you will see that prices have dropped rather dramatically as the API inventory reports continue to show build up in supplies.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

S&P 500 Futures

The S&P 500 in the December contract settled last Friday in Chicago at 2767 while currently trading at 2640 down over 125 points for the trading week experiencing extremely high volatility. I think that situation will continue until after the midterm elections which are on November 6th. I'm sitting on the sidelines looking at entering into a bullish position, but there might be a little more carnage to the downside. However, large corporations are allowed in November to buy back their stock, and you will see a tsunami of buybacks throughout the tech sector and the S&P 500 as I think this panic selloff is near an end. GDP growth in the 3rd quarter stated that we grew 3.5% and we grew 4.2% in the second quarter as the U.S. economy is doing excellent and I think this recent selloff is just due to panic and program selling. I still believe a rally will ensue as we enter the holiday season. The S&P 500 is trading far below its 20 and 100-day moving average as the trend is to the downside as there's the possibility we could retest the February 9th contract low of 2546 in my opinion, but the risk/reward is not your favor to take a position at this time as the risk is high so sit on the sideline.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH - VIOLENT

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.

Cotton Futures

Cotton futures in the December contract settled last Friday in New York at 77.92 while currently trading at 78.64 up about 70 points for the trading week experiencing high volatility with large price swings on a daily basis. I have been recommending a bullish position from around the 79.60 level, and if you took that trade continue to place the stop loss under the contract low which was touched on October 1st at 75.37 as an exit strategy. For the bullish momentum to continue, we have to break the October 22nd high of 80.14 in my opinion as severe crop damage due to the hurricane situation in Georgia and the Carolina's could push prices higher. However, we will have to wait for the next USDA crop report when they state production numbers. The U.S. dollar hit another yearly high today as that has been a fundamental bearish situation for many of the commodities as there's a flight to quality as the U.S. stock market is experiencing high volatility to the downside as money flows continue going into the dollar. Cotton prices are trading above their 20-day but still below their 100-day moving average as the trend is higher to mixed so stay long, and continue to place the proper stop loss.
TREND: HIGHER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Coffee Futures

Coffee futures in the December contract settled last Friday in New York at 122.10 while currently trading at 121.05 down about 100 points for the trading week topping out on October 19th at 125.50 as prices have stalled at these lofty levels in my opinion. If you are long a futures contract like I've talked about in previous blogs, I would be taking a profit as I think we are overextended as the sugar and coffee charts have almost identical patterns both experiencing significant rallies in October as I believe the easy money has been made. Coffee prices are trading above their 20 and 100-day moving average as the trend is higher. However, we are experiencing extremely overbought conditions which makes me nervous as the fundamental situation has not improved that significantly. The Brazilian Real has stabilized significantly against the U.S. dollar, and that has helped support prices coupled with the fact that Brazil elected a right-wing president who is promising to cut regulations which is bullish anything grown in Brazil. However, at this time it would not surprise me if prices back down to the 110 level in the coming weeks ahead as there is still a price gap at the 109.40 level and I still believe that will be filled.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Sugar Futures

Sugar futures in the December contract settled last Friday in New York at 13.89 a pound while currently trading at 13.87 unchanged for the week hitting a fresh contract high on October 24th at 14.24 as we have now rallied nearly 350 points over the last month which is remarkable in my opinion. If you are long a futures contract, I would place a very tight stop or take profits as I think prices are way overextended to the upside as we are in an extremely overbought situation at the current time. I would be surprised if there's not some in the coming weeks ahead. Sugar prices are trading far above their 20 and 100-day moving average as the trend is to the upside and I'm certainly not recommending any bearish position as that would be counter-trend trading. The fundamental situation for sugar has not changed as prices hit a 10-year low in September as overproduction remains as we still have large worldwide supplies as this rally began on massive profit-taking and short covering in my opinion. I have a bullish cotton position and a bearish orange juice position out of the soft commodity markets while keeping a close eye on the rest of this sector. I still believe in 2019 the commodity markets will enter into a bullish secular trend.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Chart Patterns

Descending triangles are a common chart pattern among traders because it clearly shows that the demand for an asset is weakening, and when the price breaks below the lower support, it is a clear cation that downside momentum is likely to continue or become stronger.

Descending triangles give technical traders the opportunity to make substantial profits over a brief period of time. Most traders look to initiate a short position following a high volume breakdown from lower trend line support in a descending triangle chart pattern.

In general, the price target for the chart pattern is equal to the entry price minus the vertical height between the two trend lines at the time of the breakdown.

The upper trend line resistance also serves as a stop loss level for traders to limit their potential losses. A descending triangle is the bearish counterpart of an ascending triangle which is one of the most reliable bullish chart patterns used by technical analysts.