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 in the August contract is up $10 an ounce, and I am now recommending a bearish position. As I stated in yesterday's blog from around the 1,228 level if you took the trade, continue to place the stop loss at the 10-day high standing at 1,243. However, in Tuesday's trade that could be lowered to today's high around 1,233 as the chart structure is outstanding therefore the risk/reward is highly in your favor in my opinion. Gold prices rebounded sharply earlier this morning due to an abysmal retail sales report which was the 2nd consecutive report that was negative. However, the U.S. stock market is hitting all-time highs once again today as they were not considering this valuable information so stay short & place the proper stop loss risking 2% of your account balance on any given trade. Gold prices are still trading under their 20 and 100-day moving average as prices settled last Friday in New York at 1,209 while currently trading at 1,226 up to about $17 for the trading week. I think this is just a kick back due to oversold conditions as the major support still lies around the 1,200 level & if that is broken this bearish trend could get ugly to the downside in my opinion so stay short.
CHART STRUCTURE: EXCELLENT
Silver futures in the September contract settled last Friday in New York at 15.52 an ounce while currently trading at 15.98 up $0.30 Friday afternoon & nearly $0.50 for the trading week. This is all based on a weak retail sales report that was released this morning which has now been negative for the last two months sending the U.S dollar to a fresh ten month low pushing up the precious metals. Silver prices are still trading below their 20 and 100-day moving average telling you that the trend is to the downside. If you are short a futures contract, you should place your stop at 16.64 as an exit strategy and in Tuesday's trade that could be lowered down to 16.19 as the chart structure will start to improve tremendously over the next couple of days. Silver prices bottomed out in Monday's trade at 15.14, and I think this rally is based on oversold conditions as the precious metal still look weak in my opinion. The U.S stock market is hitting another all-time high in today's trade as that's where all the interest remains, but it looks like short covering has pushed this market up in the short-term.
CHART STRUCTURE: SOLID -IMPROVING
Crude Oil Futures
Crude oil futures are currently trading at 46.36 a barrel after settling last Friday in New York at 44.23 up over $2 for the trading week and looking to retest the five week high at 47.32. If you are short, that's where I would place the stop loss as your exit strategy. Prices are rallying because the U.S. dollar has continued its bearish trend this week pushing up many different sectors. Oil prices are still trading under their 20 and 100-day moving average as this trend is lower to mixed in my opinion. I remain bearish as the fundamentals remain extremely weak with Goldman Sachs stating this week that they think that prices will crack the $40 level coupled with the fact that OPEC said that production is too high for current demand levels as prices have reversed in this week's trade. At the current time, I do not have any trade recommendations in the energies as they have been choppy over the last several weeks with relatively low volatility. This week's API report showed another draw down pushing prices higher as the chart structure is outstanding therefore the monetary risk is low at this time so if you're looking to enter into a new short position the stop loss is tight.
TREND: LOWER - MIXED
CHART STRUCTURE: EXCELLENT
Lean Hog Futures
Lean hog futures in the October contract settled last Friday in Chicago at 70.97 while currently trading at 68.10 down nearly 300 points right hitting a two week low. I've written about in previous blogs keep a close eye on this market for a possible short position, I do think hog prices topped out on July 2nd around the 72.25 level. Prices are still trading above their 20-day, but right at their 100-day moving average as we are at critical support levels. I would like to see a couple more days off the calendar, therefore, improving the chart structure and therefore improving the monetary risk which is a little high at this time so keep a close eye to the downside. I think over production will eventually be the demise of this bullish trend which has lasted all of 2017. Cattle prices remain extremely mixed over the last several weeks, and I'm also keeping a close eye on a short position there, but I am not involved in that market at present as major support in the hog market is around the 67 level which could be tested once again next week and has been tested on multiple occasions only to rally every single time. However, I do think this market is overpriced.
CHART STRUCTURE: POOR - IMPROVING
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 in the December contract experienced a wild trading week with huge price swings on a daily basis. After settling last Friday in Chicago at 4.04 a bushel while currently trading at 3.90 down $0.14 this week after rallying $0.14 last week as heavy rains came across the Midwestern section of the United States pushing prices dramatically lower in Wednesday and Thursday's trade. At present, I am not involved in this market as corn has been extremely choppy over the last six months and has gone nowhere. However, as I have stated in previous blogs, I do think the downside is limited as it is still a long growing season as estimates are still around 14.2 billion bushels which would be an outstanding crop as in the state of Illinois, the crop is looking very solid at this time. Corn prices are now trading below their 20 and 100-day moving average telling you that the short-term trend is lower. However, this market keeps flip-flopping above and below those averages so avoid this market and look at other commodities with higher potential for profit as this market has been stuck in the mud forever. Corn prices have had two false breakouts to the upside & one false break out to the downside over the last month making this market trying to trade successfully, so look at other markets that have a better risk/reward scenario such as coffee & gold at this time.
CHART STRUCTURE: SOLID
Soybean futures in the November contract settled last Friday in Chicago at 10.15 a bushel while currently trading at 10.03 and traded as high as 10.47 earlier in the week as this commodity experienced an extremely volatile trading week all due to dry conditions & then suddenly becoming extremely wet pushing prices lower in recent days. Prices filled the gap that was created this Monday and there's another price gap at 9.60 which makes me nervous. Traders are keeping a very close eye on weather conditions over the next 7-10 day weather forecast with assessments of this year's production still around 4.2 billion bushels which are still excellent, but we have a wide variance of crops throughout the Midwestern part of the United States at this time. Expect the volatility to remain extremely high over the next six weeks as the western part of the United States still is extremely dry. However, the Midwestern part of the United States is very wet as we await the next USDA crop report which will be released in several weeks. That report will give us a little more certainty on this crop. Soybean prices are still trading above their 20 and 100-day moving average telling you that this market remains bullish. However, I'm avoiding this commodity as the risk/reward is not in favor as the chart structure also is terrible therefore the monetary risk is very high.
CHART STRUCTURE: POOR
Wheat futures in the September contract settled last Friday in Chicago at 5.35 a bushel experiencing a very volatile trading week while currently trading at 5.16 down about 20 cents for the week and filling the price gap which I talked about in previous blogs around 5.25. I don't like gaps as they are generally filled & that is exactly what has occurred in this market. Wheat futures are still trading above their 20 and 100-day moving average, and if you are long a futures contract, I would place the stop loss under the 10-day low which in Monday's trade will be 5.09. We have received beneficial rains in key wheat growing regions as the grain market is on pins and needles on a daily basis due to weather forecasts. Minneapolis spring wheat was also lower this week as that has been the leader in this market as conditions remain extremely dry in the Dakotas and the state of Montana as out West doesn't look to see any relief anytime soon. However, in the Midwestern part of the United States, we had significant rain, and that is the reason why the grain market sold off in Wednesday and Thursday's trade. The chart structure has improved, but I'm not involved in this market I've seen many weather markets, and I can't stress enough to place the stop at the 10-day low because if the rain continues the prices will head lower in my opinion and a lot of the bullish news has already been reflected in the price.
CHART STRUCTURE: EXCELLENT
Sugar futures in the October contract settled last Friday in New York at 14.15 a pound while currently trading at 13.97 in a relatively quiet trading week and still stuck in a sideways trend. The breakout does not occur until the four week high is established which stands at 14.39 with the chart structure improving on a daily basis so keep a close eye on this market to the upside. The U.S dollar is hitting a new ten month low in today's trade, and that is helping support many of the commodity markets due to weak retail sales. Sugar prices are now trading above their 20-day, but still below their 100-day moving average which stands at 15.70 which is quite a distance away as ideal growing conditions in key sugar growing regions continue to keep a lid on prices here in the short term. At present my only recommendation in the soft commodities is a bullish coffee position which has broken out to new highs in today's trade with sugar having a difficult time above the 14 level. Commodities, in general, look like they are in a bottoming pattern especially the agricultural sectors as sugar prices bottomed out on June 28th at the 12.74 level and now the tide might be turning.
CHART STRUCTURE: SOLID
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.
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.