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.
Grain Futures-- The grain futures this week saw extreme volatile trading action with November soybeans up nearly $.16 this Friday to settle around 12.20 a bushel trading right at its 20 day moving average but still below its 100 day moving average after settling last Friday at 12.10 a bushel gaining slightly as floods have entered the Midwest. Soybeans on the daily chart could have a possible double bottom in the November soybeans as prices traded as high as 12.40 in Wednesday’s trading session before retracing only the spring right back as weather conditions in many states are still receiving record snow. December corn futures are lower by 5 cents this Friday afternoon trading above its 20 day moving average but below its 100 day moving average which stands at 5.69 after settling last Friday at 5.24 up around $.35 for the week as massive floods are delaying planting. The Midwest has had the 2nd coldest spring in the history of the United States and has delayed planting significantly which is concerning after last year’s terrible crop. Wheat futures for the July contract have broken out above the 7.20 level which is now at a 4 week high trading above its 20 day moving average but below its 100 day moving average which stands at 7.48 and I do believe that there will be further buy stops which could propel prices even higher. Wheat futures settled last Friday at 6.92 up around $.30 for the week as Kansas has been hit hard by freezing temperatures hurting the wheat crop & also damaging the Kansas City wheat which is considered the hard red winter wheat which is hitting a 9 week high as many sections of the Midwest are under snow and as I write this article it is May 3rd which is astounding. In my opinion as I’ve been advising in previous blogs I telling traders to be long the July wheat when it broke out at 7.20 with a stop below the 10 day low which is at 6.88 but concerning corn and soybeans they still remain choppy and I’m still advising traders to sit on the sideline and wait for a true breakout with solid chart structure to enter. Here is the recent snow totals which occurred in the last 24 hours as record snow fell across several states again: TREND: HIGHER –CHART STRUCTURE: AWFUL
· 18.0" Hayward, WI
· 17.5" Goodhue, MN
· 16.0" Ellsworth, WI
· 15.0" Oak Center, MN
· 14.0" Rochester, MN
· 11.0" Forest City, IA
· These are incredible snow totals for the month of May which could delay planting even further which could start to hamper the corn and wheat crop.
Precious Metals -- The precious metals continued with extreme volatility this week as gold basically finished unchanged this Friday afternoon with a $30 trading range trading above its 20 day moving average but below its 100 day moving average after settling last Friday at 1,453 an ounce up around $15 for the week still in a very choppy and volatile market. I’m still advising traders to sit on the sidelines in the precious metals because of the fact that volatility is too high ,however if you are an option seller this market is exactly what you’re looking for because of the fact that you can sell way out of the money calls because the volatility is so high. Silver futures for the July contract are trading below their 20 and 100 day moving average settling last Friday at 23.79 basically settling up around $.10 at 23.98 near a 3 week high as many of the commodities may have bottomed. The real story in today’s action is the copper market which I have been bearish for a long period of time but had a huge up day today climbing up 20 points at 3.31 breaking out to a 2 week high after settling last Friday at 3.17 and actually hitting new lows on Wednesday, however the copper inventory stocks were much lower than expected plus the fact that the stock market hit new all-time highs which is lending support to many of the markets. Volatility is extremely high at this point and I’m avoiding many of these markets until chart structure comes about with less volatility while last year we bottomed in the month of June in many commodities while this year we may have bottomed in the 1st week of May due to the fact that printing money across the world with incredibly low interest rates and a stock market that screams to the upside every single day which is very supportive commodity prices in the long run. TREND: HIGHER –CHART STRUCTURE: AWFUL
Currency Futures--- The Dollar Index was slightly lower this Friday afternoon trading below its 20 day moving average but still above its 100 day moving average hitting an 8 week low after settling last Friday at 82.57 down 40 points for the week as the Federal Reserve stated a couple of days ago that it will do whatever it takes to spur the economy which means more money printing and that is why you seen weakness in the dollar and tremendous strength in the S&P 500. The Euro currency hit an 8 week high on Wednesday as Europe had another interest rate cut once again propelling their currency to the upside while the Mexican Peso which has been the story of the year is trading far above its 20 and 100 day moving average hitting another 1 ½ year high due to the fact that this is the only country in the world basically not printing money and in my opinion is headed much higher from these levels. The Japanese Yen is in a very tight 4 week channel after collapsing in the last several months due to the fact that the Japanese government is printing money like crazy with major support at 10080 down about 120 points this afternoon and it looks to me that prices are still headed lower. This is a very unique time in world history due to the fact that many countries are all printing money and they want higher stock prices and lower bond prices with higher commodity prices and if that’s what they want I suggest to join them on the upside but at this point in time it has been very choppy so wait for some chart structure to develop before entering and remember always place a stop in case the market does change therefore minimizing your risk. TREND: HIGHER –CHART STRUCTURE: AWFUL
Energy Futures-- The energy market saw extreme volatility every single day this week with crude oil rallying nearly $5 in the last 2 trading sessions above its 20 and 100 day moving average settling last Friday at $93 currently trading right around $96 with extreme price swings. Earlier in the week government reported that we have record inventories in the United States at 395 million barrels sending prices lower by $3 dollars, however in the last 2 days prices have swung back very quickly due to the fact that the stock market continues to support the oil market and in my opinion I’m advising traders to sit on the sidelines and wait for some chart structure to develop. Heating oil futures which I have been bearish for a long period of time hit a two-week high today and at this point I’m very neutral this market trading above its 20 day but still below its 100 day moving average settling last Friday 2.8660 a gallon and we probably will close out this Friday afternoon right around 2.89 with a possible bottom in place. Unleaded gasoline for the June contract which has been the weakest commodity in the energy sector trading above its 20 day but below its 100 day moving average right at a two-week high basically unchanged for the week as we had into the driving season which generally increases demand and pushes prices higher. As I write this article the price of gasoline in Chicago is right near $4.60 a gallon which is outrageous especially when we had a 50 cent sell off in the last month so if the futures market starts to rally prices could actually hit $5 a gallon which is pretty amazing. TREND: HIGHER –CHART STRUCTURE: AWFUL
Sugar Futures-- Sugar futures are one of the few commodities that is not rallying in recent weeks settling last Friday at 17.42 settling this Friday at 17.53 in a very nonvolatile slow grinding market to the downside as the ISO stated that a production surplus up to 8.5 million tons could happen this year as prices hit a 3 year low in yesterday’s trade at 17.18 a pound. I have been recommending short positions in sugar and I still think there is a chance sugar can head down to the 2010 lows; however I would place a stop above the 10 day high which is 17.83 which is only about $350 per contract risk . If you’re a contrarian and you think that the commodities are headed higher and you might have a good point due to the fact that corn and crude oil prices are moving sharply higher and that is definitely beneficial sugar prices though this point in time but I remain short with a very tight stop minimizing risk in case the trend does change. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Stock Futures--- The S&P 500 rallied sharply after the unemployment report showed that we added 165,000 new jobs which was considered very bullish climbing higher today for the 7th time in 8 trading sessions hitting all-time highs again continuing its bull market rising another 185 points trading at 1610 in the June contract trading far above its 20 & 100 day moving average . The yields in the treasuries are dropping helping propel equity prices once again in an extremely nonvolatile trading range over the last month or so which is concerning to some traders with the Vix hitting new lows which is the fear indicator telling traders that there’s not much to worry about at this point, but my opinion when the Vix gets down to 12 or 13 historically volatility starts to come back in the market but only time will tell. The NASDAQ futures hit a 12 ½ year high once again up another 40 points at 2942 continuing its bullish trend in the last month with terrific chart structure looking to grind higher and as I’ve stated in many previous blogs I have been very bullish the stock market and I do believe we are headed higher all due to the fact of the Obama administration continuing its easy monetary policies. The Dow Jones is trading 1,400 points above its 100 day moving average which tells me that this is a very strong trend and should continue for a while to come and now has rallied 2700 points since 11/16/12 and in my opinion I do believe the S&P 500 and the Dow Jones will continue to hit all-time highs in the next couple of months due to the fact of terrific earnings with low interest rates and a Federal Reserve that wants to prop up the market. The chart structure in all 3 indices is excellent at this point and in my opinion the further a market trades above the 20 and 100 day moving average that tells you that the trend is extremely strong and in this case this has been the best & strongest bull market we’ve seen in the last several months and I believe it will continue to the upside. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Cocoa Futures ---Cocoa futures have been one of the best bull markets in recent months continuing its bullish run trading far above its 20 and 100 day moving average after settling last Friday 2364 closing out today at 2418 hitting a 4 ½ month high trading higher for the 4th consecutive trading session. The bullishness in cocoa is due to the fact that the West African harvest is over which could mean a seasonal low and production could be sharply lower next year as traders are jumping on the bandwagon with an excellent grinding chart & outstanding chart structure allowing you place a tight stop loss in case the trend does change. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Coffee Futures-- Coffee futures are starting to become volatile which is what I have been stating in previous blogs waiting for the volatility to enter this market after settling at a new 2 ½ year low last Friday and now has rebounded about 800 points this week testing the upper end of the trading range at about 141 a pound still trading above its 20 day moving average but below its 100 day moving average which stands at 146 trading sharply higher for the 2nd consecutive trading session. If the markets continue to see a weak dollar with low interest rates & a strong stock market its going to be very difficult to continue to selloff commodity prices especially after the selloff we’ve had in recent months so at this point in time I’m my opinion the markets are biased to the upside in coffee with outstanding chart structure allowing you to place a stop below the contract low minimizing your risk and if you are right coffee can pay you off this is one of the largest contracts in the commodity markets. A large Brazilian harvest will take place in the next 4 to 6 weeks as we enter the frost season in Brazil but if there are any weather problems like we’ve seen in the grain market you will see volatility coming into this market very quickly to the upside. TREND: NEUTRAL –CHART STRUCTURE: EXCELLENT
Orange Juice Futures-- Orange juice futures are trading above their 20 and 100 day moving average after settling last Friday at 139 still stuck in a 1 month channel basically with very little fundamental news to dictate prices. Prices have been going up in recent weeks due to greening disease in Florida which was sending prices to recent highs, however it is stuck in the mud at this level waiting for some fresh fundamental news or a breakout to the upside and at this point in time I’m advising traders to sit on the sideline because there is no trend. TREND: NEUTRAL –CHART STRUCTURE: EXCELLENT
What do I mean when I talk about chart structure and why do I think it is so important when deciding to enter or exit a trade? I define chart structure as a slow and 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 and allowing you to place a stop loss with will be 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 but markets that continue to trend like the current soybean complex allowing for you to place close stops as it continues to fall dramatically. I always 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 loses.
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
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.
Michael Seery, President
Phone # (800) 615-7649