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 settled mixed this week in Chicago as traders are anticipating a major report on September 30th which is this Monday at 11 o’clock central time showing where carryover levels currently stand and the last several reports have been big price movers as carryovers fluctuate tremendously with soybeans finishing up $.03 this Friday afternoon settling at 13.20 basically unchanged for the trading week with the carryover level estimated at 125 million bushels consolidating this week after a $.70 hair cut in last week’s trade.
Corn futures in the December contract are trading below their 20 and 100 day moving average with trade estimates coming in at 694 million bushels settling last Friday at 4.51 and going out this Friday down $.03 at 4.54 in a directionless trade this week as traders are anticipating Monday’s trade which should give short-term price direction and I’m still recommending a short position in the corn market with a stop loss at 4.68 which is the 10 day high risking around $700 per contract as I think & I could be wrong but harvest is accelerating every single day and I do think that will put pressure on prices as I think the USDA could come out with a 14 billion crop estimate & I think there’s still a possibility for trading under $4 a bushel. The story this week in the grain market was the wheat market which we have not talked about for quite some time & is now trading above its 20 and 100 day moving average hitting a 10 week high trading up for the 5th consecutive day settling at 6.82 up $.04 this Friday afternoon. I have been recommending a long position in the wheat market placing stops below the contract low of 6.35 which is now $.45 away carrying a $2,250 risk if you’re in a 5000 bushel contract. At this time there is possible damage caused by a freeze in Argentina and rumors that the U.S production is going to be lowered on Mondays report but only time will tell .The wheat market has excellent chart structure and I think the short term bottom has been hit and now take advantage of weakness as long as you keep your stop below the contract low as there can be a divergence happening between wheat and corn prices as one is being harvested as in corn and the other is just being planted as in wheat. TREND: MIXED –CHART STRUCTURE: EXCELLENT
Coffee Futures--- The coffee market continues its bearish trend in New York this week trading as high as 119 on Wednesday in the December contract looking to possibly breakout to the upside but then prices got slammed hitting a 4 1/2 year low down another 180 points at 113.90 this Friday with the next major support between 100 – 110 & in my opinion it looks like were headed to those price levels. The coffee market has excellent chart structure allowing you to place a tight stop loss above 119 if you’re looking to get short risking around $2,000 per contract as rumors of a massive crop coming out of Vietnam possibility 29 million bags which is well above recent estimates of 27 million bags pushing prices lower and I still believe if prices get down to the 100 level & your long term investor prices look awful cheap at major yearly support. The biggest fundamental problem with coffee currently is supplies are huge with excellent growing conditions around the world which is keeping a lid on prices at this time. The one positive influence coffee has is the fact that all the bad news is already priced into the market and the fact that the U.S dollar is hitting another 8 month low today could start to support coffee and all the other commodities as well in my opinion. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Cotton Futures—The cotton market has broken out of its recent sideways trend propelling higher this Friday afternoon in New York by 110 points currently trading at 86.60 as rumors of U.S production coming in lower in the upcoming report and now trading above its 20 and 100 day moving average. At this time I’m recommending a long position in the December cotton placing stop loss below the 10 day low risking around $1,500 if this is a false breakout but I do believe the risk reward situation is in your favor with cotton possibly filling the gap at 89 which happened about a month ago. I like trade where the risk reward relationship is in your favor and a $1500 risk in cotton is not a lot because this is a large contract but if you are correct it can really pay you off on the upside. This market has been going sideways for the last month and I like markets that break out of a consolidation especially when they were in a very tight consolidation which this one was on the daily chart while still having excellent chart structure allowing you to minimize risk. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Sugar Futures-- Sugar futures in the October contract collapsed this Friday afternoon finishing down 66 points to trade at 16.85 after hitting a 4 1/2 month high in yesterday’s trade as it looked to continue its bullish momentum, however coffee and sugar got hammered to the downside today as profit taking sent sugar prices right near the 10 day low of 16.74 settling at 16.86 and I’ve been recommending placing stops at 16.74 so if you’re still in this market that’s where I would place my stop loss while risking about $110 more per contract. Sugar can be a strange commodity sometimes with small grinding moves higher like it was acting recently and then huge down moves out of nowhere like today so this is why you need to place a stop loss to minimize your risk in case something like today happens, however I am disappointed due to the fact that this was a nice trade with outstanding chart structure that just fell apart in one day so keep your stop at 16.74 if your long as the chart structure is no longer outstanding. TREND: MIXED –CHART STRUCTURE: DECLINING
Cattle Futures—Feeder cattle prices hit all-time highs this week in Chicago settling last Friday at 160.22 and going out at 164.15 in the October contract up another 400 this week continuing its bullish momentum as small herds historically are sending prices much higher recently and I still think feeder prices could possibly test between 180-190 as a blow off top is possible in the October contract. If you look back historically when a commodity hits an all-time high it can continue to move much higher because of a possible short squeeze or extremely tight short term supplies and that is what is developing in feeder prices right now. I am still recommending if you are long to place your stop loss at 157 which is the 10 day low and that stop will be raised quite a bit in a couple of days protecting profits in case the trend changes. Traders are keeping an eye on the USDA crop report which comes out this Monday afternoon which will affect the price of corn and feeder cattle. Live cattle futures for the December contract traded higher for the 8th straight trading session up by 50 points this Friday and up 250 points for the trading week to close around 132.15 and if you are long a futures contract I would place my stop loss at 128 minimizing your risk and that stop will be raised in a couple of days as well as the bullish momentum continues. TREND: HIGHER –CHART STRUCTURE: IMPROVING
Lean Hog Futures--- Lean hogs futures in the December contract had a volatile trading week with big price swings trading up over 200 points for the week and 50 points this Friday afternoon in Chicago to close around 88.22 right near contract highs while still trading above its 20 and 100 day moving average with outstanding chart structure & if you’re looking to get long this market and buy a futures contract at today’s price while placing your stop at 85.90 which is the 10 day low risking around $900 per contract. The hogs are a volatile commodity and the risk reward relationship is in your favor due to the fact that you’re only risking $900 per contract and if you’re correct the profit could be much more and that’s how I like to trade risk as little as possible and try to let your winners run as much as possible. The hog market basically has been riding the coattails of the cattle markets as Feeder cattle prices have hit all-time highs again so the trend is your friend in the commodity markets and the trend in the hogs is higher. Take a look at buying a futures contract to the upside or an option taking advantage of possible higher prices in my opinion and a possible retest of all-time highs as smaller herds are pushing prices higher in the meat markets. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Gold Futures-- Gold futures traded up $7 for the trading week and higher by $15 dollars an ounce this Friday afternoon at 1,340 still in a sideways to downward pattern & I am still advising traders to sit on the sidelines and wait for a real trend to develop, but I do believe that prices look weak at this level and are headed lower with the possibility of testing 1,290 once again. Gold is still trading below its 20 and 100 day moving average and it wouldn’t surprise me to see gold retest the June 28th low of 1,182 but that day prices closed at 1,225 & that’s only about $100 dollars away and I think in the long run if your bullish gold you probably want to see gold retest that level and rebound strongly confirming that the possibility of a long-term bottom would be in place. The chart structure in gold is improving which will allow you to place a closer stop loss in the futures market minimizing your risk especially if you trading the mini contract and the liquidity in the gold futures are outstanding as money flowed back into the stock market today and out of the precious metals. TREND: SIDEWAYS TO LOWER –CHART STRUCTURE: IMPROVING
Silver Futures--- The silver market was basically unchanged for the trading week and finished up 10 cents at 21.85 this Friday afternoon in New York in a real lack luster trade as volatility has slowed down in recent days but I don’t think that will last for long as silver is one of the most volatile commodities in the world on a daily basis. Silver futures are still trading below their 20 but right at their 100 day moving average with a possible retest of the recent low at 21.22 and is still looks relatively weak in my opinion but if you’re a long term investor I still believe silver prices are cheap & I do think prices will head higher eventually but they might retest the $20 level first in my opinion. Silver is extremely volatile and impossible to try & pick a top or bottom so the object is if your bullish is to try to buy near the bottom or what I still believe is to take advantage of big down days in silver. The most recent high in silver was 25.17 which was during the Syria situation so prices have dropped around $3.50 from those highs; however I think prices will chop around for a while and form a long term bottom at these levels. TREND: SIDEWAYS –CHART STRUCTURE: SOLID
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.
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