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Strong

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 August contract finished down for the 5th straight trading session finishing lower by 45 dollars this week at 1,245 an ounce continuing its bearish trend trading below its 20 and 100 day moving average as I remain bearish gold prices as I think there’s a high probability of a retest of 1,200 and if that level is broken look at a re test near the contract low of 1,180 as prices look very bearish in my opinion. You have to ask yourself at this time would you rather own gold or stocks as investors are choosing to sell their gold and are buying stocks and it seems like on a daily basis. The problem with gold right now is everybody’s buying the S&P 500 which hit another all-time high today as there is a very little interest in purchasing gold at the current time especially with bond yields continuing to move lower as the money is going into bonds and stocks and out of gold. Gold futures are still higher by about $60 in the year 2014 but traded as high as 1,390 earlier in the year and has given back much of this year’s gains that it had and I do think the trend continues to the downside and if you took my original recommendation place your stop above the 10 day high minimizing risk in case the trend does change. Gold is famous for having large washout days meaning it will sell off $50 in one day and volatility will spike as I said in yesterday’s blog & I sense one of those days is coming as the trend seems to be getting stronger.
TREND: LOWER
CHART STRUCTURE: SOLID

S&P 500 Futures

The S&P 500 hit all-time highs once again along with the transports this week as the Vix or fear index is at a 7 year low as the S&P 500 traded up another 20 points this week at 1917 as Apple Computer was also up $20 this week currently trading at 635 a share which is propelling the rest of the equity markets higher as the trend seems to be getting stronger and stronger and I’m still recommending a long position in this market .The S&P 500 is trading far above its 20 and 100 day moving average telling you that the trend is higher and with the 10 year note trading at 2.45% which is also propelling stock prices higher as companies are able to borrow large amounts of money at practically nothing while increasing dividends while also buying back their shares decreasing their float therefore increasing earnings per share. I love this market to the upside for one reason because the market has very little volatility and continues to grind higher with solid chart structure to continue to play this to the upside.
TREND: HIGHER
CHART STRUCTURE: SOLID

Crude Oil Futures

Crude oil futures in the July contract finished the week down about $1.50 closing around 102.70 a barrel after hitting 1 year highs earlier in the week. The crude oil market is trading above its 20 & 100 day moving average continuing its bullish trend in recent months as economies around the world are improving as well as the U.S stock market hitting new all-time highs on a daily basis helping support crude oil prices. We have entered the strong demand season for unleaded gasoline as there will be a lot of drivers on the road increasing demand which could propel prices back up to last August highs of around 112 a barrel. If you are looking to take advantage of this recent dip in crude oil prices I would remain a buyer as long as prices stay above the 10 day low of 101 a barrel which is about $1.75 away or $900 risk per contract.

Orange Juice Futures

Orange juice futures are trading below their 20 day but above their 100 day moving average going out this Friday afternoon in New York at 157.25 after settling last Friday at 158.40 as there is currently no trend so I’m sitting on the sidelines in this market waiting for better chart structure to develop as prices have been going sideways to lower in recent weeks. All of the fundamental news has already been baked into the prices as investors realize that the U.S had a poor crop due to greening disease and the drought in central Brazil which also cut production but the market is looking for some fresh news to push prices in one direction or another, however in my opinion I still believe orange juice prices are headed higher, however as a trader I don’t want to trade markets that are choppy because they are very difficult to be successful in so look for another market that is trending.
TREND: SIDEWAYS
CHART STRUCTURE: SOLID

Coffee Futures

Coffee futures in New York are sharply lower this Friday afternoon trading down 445 points at 177.50 a pound trading down for the week continuing its short term down trend as prices spiked to a low of 170.80 on Tuesday as I have been recommending a long position in this market between 165 – 170 so currently I’m still sitting on the sidelines waiting for the opportunity to arrive. A large coffee exporter named Ipanema Coffee is suggesting that yields could drop by as much as 40% as there are small beans in the cherries which could spike up prices if they are correct on their assessment as the numbers will be coming in the next couple of weeks as in the beginning of the season we were expecting 53 million bags then down to 43 million bags due to the severe drought and anything lower than 43 million bags would be bullish this market and I do expect volatility to rise here in the next couple of weeks. Prices have been going sideways to lower in the last couple of weeks because of the fact that we have very little fresh fundamental news on crop size but that will change quickly so continue to look to be a buyer at 165 – 170 level as you will never pick a bottom in coffee but I do not think prices are headed back down 140 as this whole rally started at 125 as there was significant damage done as I talked to many producers down in Brazil and this was no joke as this was one of the worst droughts in history. Coffee prices are trading below their 20 day moving average in the right near their 100 day moving average which has not happened in more than 4 months telling you that the trend is mixed at the current time as I’m laying in the weeds waiting for an entry.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Soybean Futures

Soybean futures in the November contract are down $.09 currently trading at 12.32 a bushel and I’m bearish this market as I do think prices will catch up with corn prices to the downside and I was recommending to sell at any price around the 12.50 level while making sure that you place your stop loss above the most recent high of 12.80 risking around $.45 from today’s price level or $2,200. The weather continues to be excellent as we could produce a 3.6 billion crop which would be a record with carryover levels increasing dramatically but we are still very early as we are still in May but I remain bearish the entire grain sector. Soybeans have been in a bull market for several years as we had back-to-back poor crops due to hot dry conditions so in my opinion having 3 poor crops in a row is very difficult and has not happened since the Dust Bowls of the 1930s so I’m thinking that this year will be an excellent crop pushing prices lower and I’m staying short unless prices break above 12.80 bushel.
TREND: MIXED
CHART STRUCTURE: SOLID

Cotton Futures

Cotton futures in the July contract are trading below their 20 and 100 day moving average hitting a 4 month low this week as I’ve been recommending a short position when prices broke below 89.70 as the trend has gotten stronger to the downside currently trading at 85.70 unchanged for the trading week and if you took that recommendation continue to put your stop above the 10 day high which currently stands at 90.66 which is around 500 points away at $2,500 per contract. The chart structure in cotton at the current time is very poor however when the breakout occurred the chart structure was very tight allowing you place a tight stop, however prices have dropped pretty dramatically here in the last several days as I do think there’s a possibility that prices go down to 80 here in the next week or so as many the commodity markets have turned negative due to the strengthening U.S dollar. If you did not take that trade recommendation I would sit on the sidelines and wait for better chart structure to develop or wait for a possible kickback in price to reenter on the short side as the trend is lower as growing conditions in the South are excellent at the current time.
TREND: LOWER
CHART STRUCTURE: POOR

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

Corn Futures

Corn futures in the December contract finished lower 3 out of the last 4 trading days continuing its bearish trend hitting a 3 month low breaking support as excellent weather conditions in the Midwest are currently pressuring corn prices. Corn futures are trading below their 20 and 100 day moving average and if you took my recommendation when prices broke 4.87 I would continue to place my stop at the 10 day high which currently stands at 4.83 a bushel risking about $.25 or $1,250 per contract from today’s price levels. There is a lot of bearish news concerning corn prices because of the fact that we could have 14 billion back to back crops which has never been seen before plus extremely small cattle herds reducing demand for corn and I continue to think there’s a high possibility that corn prices will be under $4 a bushel come October if Mother Nature allows. Planting should be about 100% percent completed as of this weekend as traders keep a close eye on weather patterns but currently the 7 to 10 day forecast has mild temperatures with adequate rain but the real volatility in this market will start in June as that’s when the hot & dry temperatures start to arrive in the Midwest.
TREND: LOWER
CHART STRUCTURE: SOLID

Wheat Futures

If wheat could talk it would bark as that’s how much of a dog this market has become as prices have fallen dramatically in recent weeks due to improving weather in the Great Plains causing a sharp decline as prices still remain bearish in my opinion. Wheat futures are trading below their 20 and 100 day moving average finishing lower for the 8th consecutive trading session dropping a full dollar in 3 weeks as ample rain is forecast for key producing wheat regions sending prices to three-month lows. Wheat prices are right at support near 6.60 in the December contract and if that level is broken you could head all way back down to the 6.20 – 6.00 level as the grain market has certainly broken down in recent weeks except for the oat market which I was recommending a short position and has skyrocketed about $.50 in the last week hitting 2 month highs as that trade was stopped out while waiting for another trend to develop. Wheat futures traded as low as 5.80 a bushel in late 2013 as it was a big bear market and then turned on a dime starting the new year rallying all way up to 7.60 so we are right in the mid-range as we enter the volatile summer season but if weather conditions continue to be good look for lower wheat prices.
TREND: LOWER
CHART STRUCTURE: POOR

Lean Hog Futures

Lean hog futures in the July contract finished down around 400 points for the trading week to settle in Chicago at 120.25 a pound and I’ve been recommending a short position when prices broke to a 4 week low of 121.12 placing your stop loss above the 10 day high at 125.50 risking around 450 points or $1,800 per contract as the chart structure is starting to improve as I think a possible double top at the 129 level has been achieved. The next major level of support is down at the 116 level and the spike bottom at 112.70 and I do think there’s a possibility that we retest that level here in the next couple of weeks as the hog chart looks vulnerable as many of the commodities have started to selloff. Lean hog futures are trading below their 20 day but still above their 100 day moving average telling you that the trend currently is mixed but short term trend is lower.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Feeder Cattle Futures

Feeder cattle prices rallied around 450 points this week in Chicago hitting all-time high prices at 197.80 a pound in the August contract as the problem remains the same with the lowest herds in 60 years as cattle farmers are leaving the business and getting into grain farming which is a systemic problem which will be here for years to come in my opinion. This has been one of the strongest trends in the last several years as prices continue to move up and prices have not hit a 2 week low in 5 months and that tells you how strong this market continues to be and I still recommend a long position in this market as corn prices were down another $.04 hitting 11 week lows propelling prices even higher. If the corn market produces a 14 billion crop & continues to move towards the $4 level you would have to think that feeder cattle prices will continue to move higher as the next possible stop is 2.10 – 2.20 my opinion.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

TRADING RULES

1 — 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.

2 — Trade with the short term trend, as the saying goes in futures trading the trend is your friend. Sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade. If it was up to me I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side. I define a trend as a commodity hitting a 20 day high or low as a trendy market, if the market is in a consolidation stay away from it and find something that is trending up or down and go in that direction remembering the money management rules of 2% maximum loss if you are wrong.

3 — This rule is extremely important and I witness it being abused constantly creating tremendous loses that are sometimes difficult to come back from. Never add to a losing position because if the position continues to go against you and now you have added even more contracts which are all losing money your account will suffer loses much more than 2% and in some case adding positions and never getting out of a losing trade has wiped peoples trading accounts down to zero because of 1 or 2 bad trades. Remember always play for another day you will have losing trades and the good traders manage losses and move on to the next possible trade.

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

SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS

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.

Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: (800) 615-7649
mseery@seeryfutures.com

Comments

  1. Anonymole says:

    COT report - double up version:
    https://dl.dropboxusercontent.com/u/29771494/COTReport/COTReportDouble.html

    I ran my correlation utility on the futures and came up with some unexpected pairs. Try viewing the following futures sets in the linked page:

    Unexpected:
    KC vs RB (coffee vs gasoline)
    AD vs S ( aussie vs soybeans)

    Expected:
    C vs LN (corn vs lean hogs)
    BR vs SM (Brazilian real vs soybean meal)

    Mild negative correlation:
    LN vs HG (lean hogs vs copper)
    FC vs LB (feeder cattle vs lumber)

    Zero correlation:
    RF vs TY (russell vs 10 year treasury)

  2. Joe Duray-Bito says:

    The double bottom of six month duration -July January -usually followed by a six to twelve month uptrend. Silver will do better than gold and Hecla HL is my number one.

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