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 market was mixed this week as soybean prices in the November contract settled right near session lows finishing down $.12 at 12.73 and as I’ve written about in many previous blogs I am very bearish the grain sector & I think prices are way over priced with solid weather here in the United States which should produce a record crop along with a very pessimistic commodity market as interest rates are starting to move to the upside very quickly pushing commodity prices sharply lower as well as the S&P 500 which was in a terrific bull market for some quite time but prices are headed lower in my opinion. Corn futures bucked the trend this week settling last Friday at 5.33 up about $.22 trading above their 20 and 100 day moving average right near 4 month highs, however I have been wrong on this trade but I remain extremely bearish corn prices and I think one of these days to come in corn could go limit down across the board as a 2 billion carryover is only 3 months away in my opinion. Wheat futures continued a 14 week consolidation down $.03 with absolutely no trend in sight and I’m waiting for a break out just like what happened in the live cattle contract to the upside as long consolidations in my opinion could be a terrific buy or sell because the trend is generally very powerful after at least a 12 week breakout. The interest rate market has been really moving up sharply and that is putting tremendous pressure on commodity prices as well as a strong U.S dollar in the last couple of days with a record harvest coming in October I have to believe prices are headed lower & if you been listening to any of my blogs lately you’ve been doing pretty well because the trends are to the downside. Traders are awaiting the June 28th crop report which is next Friday & I still think soybean prices are headed into the possible $10 range with corn prices into the $3 range here in the next couple of months as people have very short memories because in 2010 corn prices broke $3 and I talk to several traders during the week & they think that there’s no chance to go back down to that level, however I disagree & if you’re a farmer I would definitely have some put protection as well as short futures because the bottom in my opinion is going to drop out soon. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Precious Metal Futures-- The precious metals were crushed this week with gold down nearly $100 dollars in yesterday’s trade bouncing slightly today to settle around 1,293 an ounce hitting a 3 year low and I do think prices are going to continue to head lower as the interest rate environment has changed the entire dynamic of the commodity and stock markets. Silver futures as I’ve stated in many previous blogs I thought could go to 18 – 19 settled this Friday afternoon at 20.00 an ounce down nearly $2 in yesterday’s trade also right near a 3 year low and I still believe prices are headed lower because of the fact that is very difficult for commodity prices to rally when you have higher interest rates on a daily basis. The one concept traders must think about is the fact that the Federal Reserve has spent $1 trillion a year for the last 3 year’s propping up asset prices and now they are starting to exit & that could be a very scary situation to the downside in everything in my opinion. Copper prices which I’ve been recommending a short position were up 400 points today at 3.10 a pound & I still do believe that prices are headed a lot lower especially with rising interest rates which could put a damper on the housing market therefore causing demand to slack here in the short term and I do think prices are going to head down to the 2.75 level here in the next couple of weeks as I remain extremely pessimistic all asset classes including commodities and stocks. All of the precious metals are trading far below their 20 and 100 day moving average been one of the best trends in recent months and I hope you been listening to some of my blogs because I’ve hit the nail on the head telling people to be short everything and I’m still recommending shorts across the board in the commodity market. TREND: LOWER –CHART STRUCTURE: WAS EXCELLENT ---NOW TERRIBLE
Cotton Futures-- Cotton futures were lower for the 5th consecutive trading session settling last Friday at 89.44 going out this Friday right around 84.90 down over 400 points after hitting a one year high last Friday on concerns of a drought in Texas also with the USDA stating that carryover levels were lower than expected pushing prices higher. Cotton prices have been extremely volatile in the last of couple of weeks and right now I’m advising traders to sit on the sideline as there is no trend in sight as cotton is now trading below its 20 and 100 day moving average and one of the most volatile commodity weeks I have seen in quite some time as the entire sector was crushed this week as well as the S&P 500 as higher interest rates are pushing commodity prices lower. The next report is June 28th which should show some short-term price direction, however as I’ve stated in many previous blogs I am bearish the entire commodity sector & I do think prices are headed lower due to the fact of higher interest rates and a stronger dollar as deflation in my opinion is in the air. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Orange Juice Futures-- Orange juice prices finished slightly lower this Friday settling at 141.80 hitting a 4 week low this week and I’m advising traders to be short orange juice futures with a stop loss at 153 which is the 10 day high risking around 1,500 per contract as orange juice is now trading below their 20 day moving average but still above the 100 day moving average at 138 and I believe prices will break that level next week as sell stops could be uncovered pushing prices possibly down to 130 very quickly in my opinion. Orange juice futures were one of the lower volatility markets this week as many of the commodities plummeted; however orange juice prices are grinding lower with excellent chart structure so I recommend taking a shot at the short side in orange juice because deflation is in the air & orange juice is considered a luxury item not a necessity. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Sugar Futures-- Sugar futures had a very volatile trading week and are now trading above their 20 day moving average but below the 100 day moving average up about 30 points this Friday afternoon after settling at 17.09 last Friday as a possible bottom may have been formed after hitting 3 year low last week. Many of the commodity markets were lower again this week especially crude oil which has been pressuring sugar prices in the last several days, however I am still pessimistic sugar with a huge harvest in Brazil and ample supplies presently I do believe prices are still headed down to the 2010 level of 14.50 a pound as the commodity markets in general look extremely weak at this point in time. Demand for sugar also has been decreasing, however Brazil is increasing the amount of sugar used in its ethanol blend to try to curtail some of the ample supply to push prices up but generally in my opinion when things like that are happening that means there is a serious supply problem in the market which will still lead to lower prices despite the efforts of the Brazilian government. 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. TREND: MIXED –CHART STRUCTURE: EXCELLENT
Coffee Futures-- Coffee futures hit a fresh 3 year low in yesterday’s trade as traders are still digesting the fact that prices still might be too high in a deflationary environment trading far below its 20 and 100 day moving average down around 400 points for the week and as I’ve stated in previous blogs I do believe prices are headed lower possibly down to the 100 – 110 as prices just seem too high for a rising interest rate market and rising U.S dollar causing many commodities to selloff. There are no weather problems down in Brazil as a record crop will start to come in pushing prices even lower in my opinion; however I do believe if prices get down to 100 and you’re a longer-term investor that could be a very attractive level to the upside. I’m still recommending traders be short the coffee market make sure low you do place a stop loss at the 10 day high and in coffee with excellent chart structure that will allow you to minimize your risk in case the trend does change. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cocoa Futures-- Cocoa futures plummeted this week and is finishing lower 7 out of the last 8 trading sessions with absolutely horrible chart structure and I’m still advising traders to sit on the sideline and wait for a better chart pattern to develop basically unchanged this Friday afternoon hitting a 10 week low after rallying sharply a couple of weeks back. Cocoa prices are considered a luxury item like orange juice & coffee and if deflation is in the air with higher interest rates you have to think that cocoa prices are way overvalued, however at this point in time the 10 day high is too far away which tells me there’s too much risk involved but if some chart structure does start to develop in the next week or so I would be advising traders to take a short position as I am bearish most commodities at this point in time. TREND: LOWER –CHART STRUCTURE: TERRIBLE
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