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.
Precious Metal Futures--- The precious metals have continued their bullish run this week with gold trading above their 20 day moving average but below their 100 day which stands at 1,382 going out this Friday at 1,371 after settling last Friday at 1,312 having one of its best weeks in quite some time and finishing higher 7 out of the last 8 trading sessions. Gold has been rallying due to the fact that the stock market finally looks vulnerable at these levels & a rotation out of stocks into gold is exactly what is happening with major resistance at $1,400. As I’ve been stating in previous blogs I do believe gold is going higher and I still recommend a long position either with a futures contract or possible bull call spreads because if the stock markets continues to head lower then gold will turn higher. Silver futures which I’ve been recommending a long position for quite some time are trading far above their 20 and 100 day moving average hitting a 3 week high settling last Friday at 20.46 in the December contract and going out this Friday at 23.37 up nearly $3.00 this week and is traded higher in 7 straight trading sessions with the next major resistance at $25. The reason I really liked the silver market was the fact of excellent chart structure which allowed you to risk around $1,000 dollars if you got long on the breakout which was at 20.50 and now you are profitable by around $3,000 if your trading the mini contract and I still recommend being long this market because I do believe we could still hit $25 /$26 possibly here in the next couple of weeks as the bullishness has certainly come back in this market. Copper futures for the September contract which I’ve also been recommending long positions is trading above their 20 and 100 day moving average right near a 3 month high and has rallied over 3000 points in the last 2 weeks finishing up about 700 points this week on renewed optimism about the housing market and economies around the world and this market also had very good chart structure or it did before this week. If you’re still long this market make sure you place a stop loss at the 10 day low minimizing your risk or protecting profits. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Grain Futures-- The grain market saw extreme volatility after last Monday’s USDA report which stated that the soybean carryover for the new crop dropped from 295 to 220 million bushels which is a tremendous decrease in supply over the course of 30 days pushing prices higher by $1.00 in the last 5 days while also reducing the crop by 175 million bushels currently estimated at 3.25 billion bushels and if you remember last year we only had a crop of 3.1 billion bushels during the worst drought in a 100 hundred years & that just shows you how amazing or confusing this year’s estimate is due to the fact that we’ve not had a drought but it has been extremely cold in certain areas and the crop has just not come along as well as expected. At this time I’m sitting on the sideline in the soybean market as prices hit the 10 day high on the Mondays session at 12.21 so wait for some type of chart structure to develop because at this time there is absolutely no chart structure and wait for a real trend to develop. Corn futures which I’ve been recommending a short position for quite some time but at this moment corn is at 4.64 a bushel I’m recommending just to get out taking profits as I really don’t know how much lower corn can go especially if soybeans continue their bullish run but this has been a very good trade but sometimes you just move on and at this time I think you should sit on the sidelines and wait for something to develop. Wheat futures for the December contract which I’ve been bearish for quite some time and I still am finished down another $.06 this Friday at 6.44, however I would be recommending to put some tight stops on wheat in case the trend changes which happened in soybeans this week. TREND: HIGHER –CHART STRUCTURE: POOR
Cotton Futures--- Cotton futures continued their bullish momentum settling last Friday at 88.93 and going out this Friday at 93.40 up 450 points for the week and is up over 800 points in the last 2 weeks trading far above their 20 and 100 day moving average hitting a 1 ½ year high this Friday afternoon. The USDA predicted 13.052 million bales in the crop report which came out last Monday, but analysts are figuring that the crop is going to be shrinking as harvest starts to begin due to the fact of extremely hot weather in Texas and the crop is way behind in some of the other Southern states due to the wetness and cool temperatures. The trend is your friend in commodities and as I wrote in last Friday’s blog you should be long this market and I still believe prices could head higher but make sure you do place your stop loss at the 10 day low which is a good distance away but will be tightening up in a couple of days as the commodity markets as a whole have been rallying pretty significantly in recent weeks. The great thing about the cotton contract is the fact that it is very large and if you bought this when prices hit the 4 week high at 87 the 10 day low at the time was 84.50 so you are only risking around $1200 per contract and if you’re still in this trade you are up over 600 points is now $3,000 per contract and in my opinion whenever there is a low-risk situation with a high reward possibility you should always take that trade regardless of your opinion. TREND: HIGHER –CHART STRUCTURE: POOR
Coffee Futures--- Coffee futures are trading right at their 20 day moving average but still below the 100 day settling last Friday at 125.60 down slightly for the week with an incredibly tight trading range as the current crop in Central America is developing very well with very little new fundamental news to dictate where short-term prices are headed. Coffee has been going sideways for several weeks now and at this point I’m still advising traders to sit on the sideline because there really is no trend, however if I had a gun to my head I would think that coffee prices will start to rally with all the other soft commodities and commodities in general due to the fact that the giant bear market might be over at this time. Coffee futures are still right at 3 year lows and have been one of the weaker commodities in recent weeks as many markets have been hitting new monthly highs, but with ample surplus and a lack of demand at this point coffee prices in my opinion probably will go sideways for at least several more weeks. TREND: SIDEWAYS –CHART STRUCTURE: EXCELLENT
Sugar Futures--- Sugar futures are trading above their 20 but below their 100 day moving average which stands at 17.18 settling last Friday at 16.98 going out this Friday right around 16.94 with the next major resistance at 17.50 which would be 3 ½ month highs and I have been recommending a long position in sugar due to the fact that it has excellent chart structure allowing you to risk a small amount with the 10 day low which still stands at 16.50 risking around $550 per contract. The weather down in Brazil has been pretty poor which is been hampering the sugar crop and that is why you seen a rally off of 3 year lows and I still believe prices could head higher due to the fact that crude oil prices right near yearly highs once again which usually helps out sugar to the upside but the great thing here is you can risk small amount my opinion due to the fact of excellent chart structure and this trade if that works could continue for quite some time especially if weather problems occur what I always like trades when the risk reward scenario is in your favor dramatically and in this case I believe it is. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Cocoa Futures--- Cocoa futures for the September contract are above their 20 and 100 day moving average hitting 9 month highs after settling last Friday at 24.63 going out up 30 points for the trading week as dry weather in West Africa has been damaging the crop and demand is starting to improve as Europe has gotten out of recession levels with a positive GDP number this week which is sparking the possibility of renewed demand for many of the soft commodities. Cocoa futures does not have very good chart structure at this time because prices have exploded to the upside in the last couple of weeks and consolidating in the last several days, however the trend is your friend in the commodity markets and if you’re looking at a bullish position in cocoa I would be looking at either a futures contract or bull call spreads to the upside which minimizes your risk to what the premium costs. The higher cocoa prices go the more volatile this commodity becomes and I’ve seen days in cocoa that have been up or down 200 points and I do believe prices could move higher & you will start to see some terrific volatility and that’s what traders like to see. TREND: HIGHER –CHART STRUCTURE: POOR
When Do You Add To Your Winning Trade?--- This has always been a very interesting question because it can create a situation of going from rags to riches or from riches to rags in a very short amount of time. Many times I see traders abuse pyramiding or adding to positions with utter lack of any type of money management system in place and letting it ride which usually ends up in a complete wipeout of capital and sometimes even worse. Commodity prices can move very quickly with large gains or loses like we experienced in the 2008 crash of stock and commodity prices, so you always have to use stops and not fall in love or marry a position. In my opinion the answer to this question is add only once to the trade if that position has made you at least 1%-2% of your account balance while still having stop losses on all positions that equal 2% loss at a maximum risk. Remember your stop loses will be different on both positions because of the fact that you entered those trades at a different date and price.
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