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.
Cotton Futures-- The cotton market continues its downward trend finishing lower for the 9th consecutive trading session in New York breaking major support at 78 currently trading at 76.65 trading below its 20 and 100 day moving average hitting a new 10 month low and in my opinion prices are possibly heading down the 70 in the next several weeks. The problem with cotton as with many of the soft commodities as there is very little demand at this time continuing to pressure prices & I recommended selling this market when it broke 82 and this has been successful trade at this point but remember to place your stop above the 10 day high in case the trend changes but I do believe prices are headed substantially lower as harvest is progressing on a daily basis bringing in more and more supply. The chart structure in cotton when prices broke out at 82 was outstanding risking around $1,200 at that time so I hope some people are listening out there and continue to stay short as prices are still expensive in my opinion. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Orange Juice Futures-- Orange juice futures rose for the 3rd consecutive day hitting a 2 week high currently trading at 124.75 in the January contract as I was recommending a short position at 125 basically getting stopped out today very little to show for it as the trend continues to be mixed. There will be less production this year due to greening disease but that’s already been factored in the market as excellent growing conditions are persisting at this time so I’m advising traders to sit on the sidelines and wait for a trend to develop before reentering into this market. I still believe prices look weak as the soft commodities generally trade in the same direction & that direction currently is to the downside especially in cotton and coffee so I think this rally in orange juice will be short lived. TREND: MIXED –CHART STRUCTURE: EXCELLENT
Coffee Futures-- Coffee futures for the December contract continue to slump in New York right near a 5 year low as prices had been down 14 consecutive trading days currently at 105.55 a pound up 15 points in a lack luster trade today as prices look to break 100 and the next couple of weeks as supplies around the world are huge. The huge world production and harvest continuing in Vietnam pressuring prices as nobody has interest in buying coffee at this point and there is a real possibility of prices dropping to the 90 – 100 level and if prices do get down to the 90 level in my opinion I would start to be a buyer as eventually this market will turn around and all the bad news is already reflected in the price but it still looks weak at this time. Coffee is trading way below its 20 and 100 day moving average down over 400 points for the week continuing to be one of the best bear markets around. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Sugar Futures-- Sugar futures continued to head lower finishing down 11 points this Friday afternoon in New York at 18.23 a pound down about 80 points for the week trading below its 20 but above its 100 day moving average hitting a 3 week low on giant world supplies still pressuring prices despite the fact of the recent rally and the spike high at 20.26 as a fire consumed some sugar supply pushing prices temporarily higher but in my opinion I think prices are still headed lower. In previous blogs I was recommending taking profits at sugar around 19 and prices went above 20 but now it looks to me that its resumed its bearish trend following coffee, cotton, and many other commodities that continue to look weak despite the fact that the Obama administration is going to continue printing money but there is just the worldwide glut in many commodities at this time. I’m still advising traders to sit on the sidelines in this market but I do believe prices are headed lower & if you’re looking at getting on the short side I would sell a futures contract and place a stop above the 10 day high limiting my risk in case the trend does change. TREND: LOWER –CHART STRUCTURE: IMPROVING
Soybean Futures--- Soybean futures for the January contract finished down $.14 at 12.52 a bushel this Friday afternoon in Chicago hitting new 10 week lows while still trading below its 20 and 100 day moving average as a private forecaster stated that the soybean crop could be as high as 3.3 billion bushels when the USDA announces the crop production and carryover levels this Friday November 8th. Soybean meal prices dropped to a 10 week low on demand concerns and this commodity has been the leader to the upside and now possibly the leader to the downside. Soybean prices finished lower for the 2nd consecutive day and if you’re looking to get short this market my advice would be to sell a futures contract placing a stop above the 10 day high which is at 13.13 risking around $2,500 per contract, however if the trend remains lower the 10 day high stop will come down significantly reducing risk probably in just a matter of 3 or 4 days and in my opinion I am bearish soybeans I do think you will have a much larger crop than expected as harvest is bringing in a very solid yields. This market had a false breakout above 13.05 just recently and now I think breakout to the downside is the real trend as prices could head back down to the summer lows of 11.80 in my opinion as this crop report coming out is highly anticipated since we’ve had very little fundamental news in the last 2 months so I’m advising to be short this market with either a futures contract or look at some bear put option spreads in the March contract therefore limiting your risk to what the premium costs as global supplies are rising. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Corn Futures-- Corn futures for the December contract finished the week down about $.13 settling last Friday at 4.40 a bushel going out today at 4.27 hitting a new 3 year low still trading below its 20 & 100 day moving average as estimates came out from a private forecaster stating the corn crop could hit 14.3 billion bushels as harvest is in full swing putting pressure on prices. I have been talking about the corn market for a long period of time & I still think prices are going lower and if you’re looking to get into this market sell a futures contract as the volatility is relatively low or look at the March put options which limit your risk to what the premium costs as I have a hard time believing that corn prices are going higher here in the short term. Remember the fact that Brazil will have another record soybean and corn crop and global supplies are reaching extremely high levels historically and with a bearish commodity market currently prices look to head under $4 in my opinion as farmers across the country are in amazement how great their corn crop actually ended up. Look at many of the agricultural commodities which are hitting new lows once again today and corn does not have bullish fundamentals as next year we will also grow 97 million acres in corn which could really put pressure on this commodity especially if another record crop is produced so if your farmer you have to start thinking about possibly hedging next year’s crop at this time in my opinion. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Wheat Futures--- Wheat futures for the December contract basically finished unchanged this Friday afternoon at 6.67 a bushel trading below its 20 but right at its 100 day moving average with excellent weather across the Great Plains allowing the winter wheat planting to progress smoothly hitting a 4 week low today as crossing $7 proved extremely tough resistance as prices backed down quickly. In my opinion at this time I’m recommending to sell wheat futures contract placing a stop above 7.11 risking around $2,000 per contract as I think prices could head under $6 here in the short term as there is no weather market currently developing as world supplies are huge and growing. The chart structure is excellent at this time as the 10 day high stop will come down basically on a daily basis so the original $2000 risk will be reduced in happen just a matter of a couple of days or if you’re looking at the a longer-term trend look at bear put spreads for the March contract minimizing your risk to what the premium costs as I do think the grain market as a whole are in giant bear markets that continue to grind lower over the course of time until at least next spring as concerns about our crop will start to develop. TREND: LOWER –CHART STRUCTURE: EXCELLENT
Silver Futures—The silver market finished unchanged today after hitting a 5 week high earlier in the week then selling off $1.00 in yesterday’s trade to settle today around 21.80 an ounce. The Federal Reserve will continue its bond buying for the foreseeable future therefore which is bullish silver in my opinion but what happened in yesterday’s trade was buy the rumor and sell the fact as I think prices are still headed higher. I have been recommending a long position in many previous blogs and I do think that silver will re-test the summer highs of $25 dollars and head towards $30 an ounce possibly by Christmas time. Silver is trading above its 20 and 100 day moving average signaling that the trend is getting stronger and with stronger economies around the world coupled with a weak U.S dollar silver gains may have just begun as I still think prices are cheap. Remember silver prices are down about 35% from their 52 week highs so there is room to run on the upside especially if the dollar drops another 300-500 points which is what the Federal Reserve is trying to accomplish and they are doing an excellent job I just wish they were as good at building websites as they are at printing money. TREND: HIGHER –CHART STRUCTURE: EXCELLENT
Crude Oil Futures--- Crude oil futures continued their downward trend finishing lower by $1.75 a barrel in the December contract closing last Friday at 97.80 and going out this Friday at 94.50 a barrel hitting a 4 month low. Crude oil prices have declined in the last 4 consecutive trading days as the next major resistance is at 91 and I have been recommending a short position in this market for quite some time and I do think prices are headed lower as there is a global supply glut of crude oil with slowing demand and rising inventories. This is the 1st time I can remember in many years where the stock market & crude oil prices are going in opposite directions which tells me the stock market is starting to benefit from lower gas prices as the unemployment rate still remains relatively high keeping demand low. When I recommended this trade a couple weeks ago it had excellent chart structure risking around $500 on the trade and this one continues to move lower so continue to place your stop at the 10 day high if you took my advice because I do think prices are headed under $90 a barrel within the next couple of weeks especially if the U.S dollar continues to move higher as it’s done in the last 2 trading sessions. Many of the commodity markets continue to move lower with crude oil acting as the leader as the characteristics in many commodities at this time is an oversupply which is pressuring prices currently but economies around the world are starting to improve & it will put a floor on prices, however crude oil in my opinion is headed sharply lower. TREND: LOWER –CHART STRUCTURE: EXCELLENT
What Does Risk Management Mean To You? I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from. For example if a customer has $100,000 account in my opinion on any given trade he or she should risk 2% – 3% of the account value meaning if you are wrong the worst-case scenario is still a $97,000 remaining balance, however what I always see is traders risking ridiculous amounts of money and instead of the 3% stop loss will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar account could dwindle down to nothing very quickly and I’ve seen it many times throughout my career. What many traders forget to realize is they might have 4 or 5 commodity positions on and if you have too many contracts on all at the same time and all of those trades go against you which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from and your still in the game.
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
Phone # (800) 615-7649