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 for the December contract sold off about $37 dollars from last Friday’s settlement of 1,287 as pessimism continues to grow in the precious metals as demand is at 4 year low as investors are selling gold ETF’s pushing prices lower and taking that money and putting it into the S&P 500 and NASDAQ which continue to make new highs once again today. Volatility in gold at this time is a 6 out of 10 meaning volatility can get much higher in my opinion as gold has been kind of grinding lower so if you’re looking to get short the gold market I would look at February put options or look at some bear put spreads for the month of April limiting your loss to what the premium costs as gold has entered into a bearish trend at this time. Gold looks weak right now and I do think prices will retest 1,180 but there will be a bottom in this market someday I just don’t know at what level as easy money in the stock market will most certainly end as well as the money flow starting to come back in the precious metals but I do not think that’s going to happen for quite some time as the stock market will benefit from the holiday season while gold looks like it’s going to retest summer lows come Christmas time.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures in the December contract which expires next Wednesday settled at 19.83 breaking major support between 20.50 – 20.70 this week and as I have talked about in previous blogs if those levels were breached you would have to think that silver prices are headed down to the 18.50--1 9.00 level here in the next couple of weeks even a very weak U.S dollar did not help silver and gold to the upside as they finished slightly lower and that’s got to be very concerning if you’re bullish this market. Silver futures are trading below their 20 and 100 day moving average with excellent chart structure allowing you to place a short futures position placing your stop loss above the 10 day high minimizing risk or if you’re bearish this market look at the March put options as silver premiums are extremely expensive so I would recommend some type of bear put spread. The money flow has not come back into the precious metals for quite some time and that’s why prices are headed lower because the money flow is going into the stock market which is causing a demand market while the precious metals can’t seem to find a buyer at this point in time and what happens if the U.S dollar does start to rally that could really hurt prices here in the short term. I have been talking about silver for quite some time and I still think if silver does get down at the $18 level prices will look attractive if you’re a long-term investor.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Copper Futures
Copper futures are trading below their 20 and 100 day moving average hitting a 4 month low in the December contract earlier in the week now currently at 3.22 a pound up nearly 300 points this Friday afternoon and I still believe prices are headed down to 3.00 a pound here in the next couple of weeks as demand has slowed dramatically with historically high supplies & I do believe that copper is in a big bearish trend with the possibility of trading all the way down to 2.50 in the next 6 months. The commodity markets in general have turned very pessimistic while copper had broken out of a three-month trading channel continuing to hit new lows with the next major support at 3.05 as prices have finally decoupled from the S&P 500 because in the old days when the stock market would go higher that meant that economies around the world were strengthening and copper demand would be strong, however many of the commodity sectors including crude oil, and copper are decoupling meaning they are going in opposite directions because supplies are high currently pushing prices lower while all the demand from investors is going into the S&P 500 hitting new all-time highs once again today.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Live Cattle
Live cattle futures were down over 300 points this week with a possible all-time top being created in the last month or so as now I have turned bearish & I’m recommending selling the futures contract at 133 which was the breakout on Tuesday afternoon placing your stop above the 10 day high which is 135 risking about $800 in case you are wrong because all-time highs in cattle prices may have occurred as the commodity markets have turned pessimistic. Cattle futures are trading below their 20 and 100 day moving average going out this Friday down 60 points at 131.75 and if you agree with my analysis of this market & are looking to get short my recommendation would be to sell a futures contract at today’s level risking around $1,300 per contract as all bull markets come to an end and I’m guessing prices have peaked out. I have been bullish cattle prices for quite some time but I’m a technical trader and when prices start to turn around you have to be nimble and be able to go in that direction so I’m advising traders to be short the cattle market.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Feeder Cattle
Feeder cattle prices for the January contract are trading below their 20 day but above their 100 day moving average as prices have been grinding lower hitting a 7 week low earlier in the week finishing down about 250 points as the feeder cattle market may have finally topped out after a heck of a bullish run where prices went all the way up near 170. I’m recommending a short position in feeder cattle for the January contract at this time selling it at today’s price of 163.37 a pound and place your stop above 166 risking around $1,300 per contract as I do think the trend has changed to the downside.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Lean Hogs
Lean hog futures for the February contract are trading below their 20 but above their 100 day moving average which tells me there’s really no trend at this time as prices were relatively mixed this week finishing basically unchanged right near 4 week lows and I’m advising traders to sit on the sidelines as I don’t like to trade markets that remain choppy as you want to look for markets like the S&P 500 and the NASDAQ which continue to go up on a daily basis as the trend is your friend when you trade commodities. If you’re looking to get short this market I think there’s a high probability that was a blow off top created at 95 in late October so sell a futures contract at 90 placing a stop above 91.25 risking around $500 per contract and if you’re right on the trade continue to lower the stop as the hog contract equals $400 for every 100 points up or down.
TREND: LOWER
CHART STRUCTURE: OK
Stock Futures
The S&P 500 continues its torrid pace to the upside breaking 1800 this afternoon trading up around 6 points in the December contract & as I’ve written about in many previous blogs I am very bullish the stock market & I do think higher prices are ahead as Friday remains the most bullish day and is consistently higher as investors are very optimistic going into the weekend pushing prices even higher & in my opinion I think the S&P could be off to the races to the upside as there’s no other game in town plus you have the Federal Reserve wanting higher prices so this is the perfect storm if you are bullish. The S&P 500 is trading above its 20 & 100 day moving average grinding higher on a daily basis with outstanding chart structure so if you’re looking to get into this market either buy the futures contract or look at some of the call option which are relatively cheap because volatility is low and if you look at the VIX index it is trading at 12.55 which is very low historically meaning that nobody thinks this market is headed lower as the holiday season begins.
The NASDAQ 100 continues to move higher up 20 points in the December contract at 3420 as the technology sector is on fire once again as investors continue to jump in when prices slump as we had a three-day losing streak earlier but it looks like new highs as were going to have 8 consecutive weeks of gains. The NASDAQ 100 is trading far above its 20 & 100 day moving average and I still do believe that 4000 in the cash index is going to be broken in the next couple of days and I still recommend being long this market throughout the rest of this year as the bullish momentum should continue. The one great thing about this market is there are lots of people that are extremely bearish and a lot of people who missed the move and are afraid to get in at this time and that’s why I think the market can continue to move higher because eventually investors will start chasing pushing prices to ridiculous levels down the road. Remember companies continue to buy back their own shares lowering their float and increasing the earnings per share because of the lower number of shares outstanding and this is pushing up stock prices as well because free money policies continue which means equities continue their bull run.
TREND: S&P 500 - LOWER / NASDAQ - HIGHER
CHART STRUCTURE: EXCELLENT
SoyBean Futures
Soybean futures rallied sharply in the last 2 trading days as large purchases from China sent prices up 50 cents at 13.19 after settling last Friday at 12.80 as the choppy trend continues and I have been recommending being short this market with a stop at 13.21 which looks like there’s a high probability of prices reaching that level as the trend remains choppy and I’m just not exactly sure where prices are headed at this time. Soybean futures are trading above their 20 and 100 day moving average in the January contract as a sharply lower U.S dollar in the last several days is starting to push up soybean prices in my opinion as worldwide supplies are still very solid and excellent weather conditions are persisting in Brazil which should produce another record crop but this market is very resilient and it seems to rally every time it looks like a bear markets about to begin. If you look at the daily chart there could be a possible reverse head and shoulders chart pattern created in the last 6 weeks so if you are bullish this market my recommendation would be to buy at today’s price of 13.19 and place a stop below the last shoulder which was 12.68 risking around $2.400 per contract if the chart pattern doesn’t work out.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures in the December contract finished the week at 4.22 a bushel trading below their 20 and 100 day moving average basically unchanged for the trading week after hitting a contract low of 4.10 early in the week as the EPA announced it will reduce the amount gallons for ethanol pushing prices to 3 year lows only to rebound back to 4.25 following the coattails of soybeans which rallied sharply in the last couple of trading sessions as traders are wondering if the harvest lows have been made. I have been bearish corn prices for a very long time and I still recommending a short as I think prices are still headed lower as there is a massive supply at hand with large worldwide supplies and when the soybean rally fizzles corn will be the 1st one to head lower in my opinion. I still believe by Christmas time you could see corn under $4 as this market has low volatility in the last several months with a 20 trading range which is relatively small especially with historically relatively high prices, but if we have another 97 million acres planted next year with another 14+ billion crop corn prices will head dramatically lower.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures in the December contract are up $.01 at 6.48 with very little volatility in the last couple weeks as prices are still hovering around contract lows of 6.35 a bushel and I do think wheat prices are still headed lower as the Kansas City wheat for December 2014 hit new contract lows with excellent growing conditions in the Great Plains currently I see another record crop being produced as the same old story with the rest the grain market with huge supplies and waning demand. The strongest grain by far is the soybeans and the soybean meal market while corn and wheat main bearish in my opinion as carryover levels for wheat are large and with excellent chart structure I would still recommend selling the futures contract or looking at the March put options because volatility is low and you’ll be able to buy those relatively cheap limiting your risk to what the premium costs because by that time I do believe wheat prices could hit the low $5 range.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean Futures-- Soybean futures for the January contract tumbled sharply this Friday afternoon finishing down $.33 at 12.80 a bushel reversing much of the last week’s gains on a construed bullish report which really befuddled me because I did not think that last Fridays report was bullish it was neutral but soybean prices rallied $.70 since last Tuesday’s low and I still remain bearish the entire soybean complex. Soybeans are trading below their 20 and 100 day moving average and if you’re looking to get short this market my recommendation is to sell at today’s price in the January contract at 12.70 a bushel placing your stop above yesterday’s high at 13.21 risking around $1100 per contract as I think that was a false rally created by short covering as the grain market still looks pessimistic in my opinion with many of the other commodity sectors bearish as a huge harvest is about to be completed with the 3rd largest crop in world history. The soybean market has been choppy in recent months as we await next summer where the fireworks happen & all the fun begins because of a possible drought which can send prices up very quickly but I think prices are headed lower as global supplies are increasing especially if Brazil continues to have solid weather which will create another record crop.
TREND: LOWER
CHART STRUCTURE: POOR
Cotton Futures
Cotton futures this Friday afternoon in New York are down 125 points 77.15 still trading below its 20 and 100 day moving average after settling last Friday at 70.20 continuing its bearish trend to the downside and I’ve been recommending a short position in cotton when it broke out at 82 and if you been taking my advice I would place my stop above the 10 day high which was just a couple of days ago at 79.45 and remember let your winners run and cut your loses quickly. Cotton has a lot of bearish fundamentals pressuring prices at this time with global supplies and China releasing some of their supplies as demand is weakening building high carryover levels and as a whole the commodity sector seems to have turned bearish except for a remote few. In my opinion I still believe cotton can head all the way back down to the 70 level in the next couple of months as prices are too high in my opinion so continue to play this to the downside and if you’re looking at getting into this market look at the March put options near the money or some type of bear put spread limiting your risk to what the premium costs allowing you to deal with these daily fluctuations.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee futures in the March contract are trading right at their 20 day but below their 100 day moving average which stands at 119.50 trading down over 300 points this Friday afternoon in New York at 108.25 a pound after hitting a 2 week high in yesterday’s trade and as I stated in previous blogs if coffee traded above 110 I would be recommending to the shorts to get out as that was a 10 day high because when a commodity goes against me for 2 weeks that tells me that the trend might be changing, however I’m not bullish coffee and I think there’s still a chance to go down to 90 but the trend is sideways and I’m advising traders to sit on the sideline and wait for another trend to develop such as a 20 day high or new contract lows below 105. Coffee futures have very little bullish fundamentals to help boost prices as worldwide supplies are huge with excellent growing conditions in the coffee growing regions at this point in time so I still think low volatility will continue for the rest of this year. This market one day will come out of its hibernation and that generally happens in the springtime with a possible freeze down in Brazil which happened in 1994 sending prices up dramatically.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures continued their downward trend trading below their 20 & 100 day moving average settling last Friday at 17.55 and going out this Friday afternoon at 17.40 hitting an 11 week low and I was recommending a short position when the sugar breakout occurred at 18.50 and I do believe we will retest the lows which were hit on July 16th at 16.70 as worldwide supplies are just too large at this time. Sugar has outstanding chart structure at this point allowing you to place a stop at the 10 day high if you are short this market or look at March put options close to the money as global supplies should continue to pressure this market as volatility has slowed down dramatically recently while the U.S dollar was sharply lower this afternoon which generally lends support to many of the commodities but didn’t help sugar today because demand is weak and it’s still overpriced in my opinion.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Orange Juice Futures
Orange juice futures are higher by 50 points today continuing their bullish momentum hitting a 9 week high currently trading at 139.40 after bottoming about a month ago at 120 prices continue to rise as production was cut from the USDA a couple weeks back pushing prices higher and is one of the few commodities that is actually in a bullish trend. Prices settled last Friday at 138.70 and I’m still recommending to sit on the sideline in this market as I’m not really convinced about this rally as the soft commodities all have weak demand & large supplies but once the USDA report came out that changed the trend here in the short term to the upside but if you think orange juice prices are negative look at some of the March put options giving you plenty of time for the market to break down once again while if you’re looking at getting a futures contract I would advise sitting on the sidelines.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
When Do You Enter A Trade? What are your rules to initiate a trade on the long or short side of the commodity market? I have been asked this question many times throughout my career and my opinion is simply to buy on a 20-25 day high breakout in price on a closing basis only or sell on a 20-25 day low breakout to the downside also on a closing basis. Many times the price will break the 25 day high and sell off later in the day only to have your trade be negative very quickly. I would rather buy the commodity at a higher price on the close because that gives me more confidence that the market has truly broken out. However there are more ways to skin a cat and this is not the only answer because some other trading systems might rely on different breakout rules that have also been reliable. Remember always keeping a 1%-2% risk loss on any given trade therefore minimizing risks because the entry system I use always goes with the trend because I have learned over the course of time the trend is truly your friend in the long run. I also look for tight chart structure meaning a tight trading range over a period of time with relatively low volatility. I try to stay away from a crazy market that hit a 25 day high in 2 trading sessions versus the 25 high that actually took 25 days to create.
When Do You Exit A Trade? The biggest question that I have been asked is when do I exit a winning trade and when do I exit a losing trade? In my opinion the rule of thumb that I use is placing my stop loss at the 10 day high if I’m short or a 10 day low if I’m long. The other rule of thumb is to place your stop loss at the 2% maximum loss allowed in your account for any given 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
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