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.
Crude Oil Futures
Crude oil futures in the June contract settled last Friday in New York at 43.73 a barrel while currently trading at 45.73 up about $2 for the trading week hitting a five-month high which has been a very impressive rally over the last 3 months. Crude oil prices are trading above their 20 and 100-day moving average telling you that the short-term trend is higher. However, I have been sitting on the sidelines as the chart structure has not been terrific over the last several months as I do think there is a top in the near future as I think prices can retest $50, but if that happens production will start to come back online. The U.S dollar continues to move lower as that has definitely helped crude oil prices rally about $17 over the last 3 months as the next major level of resistance is around $48. I’m going to remain on the sidelines and wait for a better chart pattern to develop while looking at other markets that are beginning to trend. If you have been following any of my previous blogs you understand that I have a bullish bias as I have several bullish futures positions on at the current time. I think the commodity markets look bullish, but crude oil may have gotten a little bit ahead of itself so avoid this market at present, but I’m certainly not recommending any type of short position as the trend is higher.
CHART STRUCTURE: POOR
Silver futures in the July contract settled last Friday in New York at 16.95 an ounce while currently trading at 17.90 up about $1 for the trading week continuing its bullish momentum while also hitting another contract high. At the current time, I’m sitting on the sidelines as I’m kicking myself that I missed this trade to the upside as the risk/reward was not enough in your favor to ever enter into a bullish position. However, I’m certainly not recommending any type of short position as the trend is higher. Silver prices are trading far above their 20 and 100-day moving average telling you that short-term trend is to the upside and if you are probably longer futures position while placing my stop loss at the 10 day low which currently stands at 16.17 as that will start to improve next week. Volatility in silver is very high as the U.S dollar continues to move lower pushing the precious metals to levels that we haven’t seen in quite some time as the commodity markets in general continue to move higher as the trend is your friend and right now the trend clearly is to the upside. The next major level in silver is 18.50/19.00 as volatility I think will increase in the commodity markets over the next several months as money flows are coming back for the first time in several years.
CHART STRUCTURE: POOR
Gold futures in the June contract settled last Friday at 1,230 an ounce while currently trading at 1,280 up about $50 for the trading week also posting another contract high as gold prices have broken out to the upside. At the current time, I am still sitting on the sidelines, but I am not recommending any type of short position as I do think higher prices are ahead. However, the 10 day low stands at 1,228 risking over $50 or $5,000 per contract plus slippage and commission which does not meet my criteria to enter into a trade. The U.S dollar continues to move sharply lower against the foreign currencies continuing to push prices higher across the board as silver is also hitting a contract hit in today’s trade as the trends are higher. Gold prices are trading far above their 20 and 100-day moving average telling you that the short-term trend is to the upside as it certainly looks like prices will test $1,300 an ounce here in the next couple of days. Gold prices consolidated over the last 3 months breaking out in today’s trade as I will be looking at entering a bullish position especially on a price pullback, therefore lowering monetary risk as the chart structure will start to improve later next week.
CHART STRUCTURE: POOR
Live Cattle Futures
Live cattle futures in the June contract settled last Friday in Chicago at 114.65 while currently trading at 115.65 up about 100 points for the trading week as I’ve been recommending a short position from around 124 and if you took that trade continue to place your stop loss above the 10 day high which now stands at 119.90 as the chart structure has tighten up considerably. Prices are trading far below their 20 and 100-day moving average telling you that the short-term trend clearly is to the downside as I was also recommending a short position in the hog market getting stopped out in yesterday’s trade, however, cattle continues its bearish momentum so stay short if you took the original recommendation. If you did not take this trade sit on the sidelines as the risk/reward is not in your favor as volatility is too high to enter into this trade so look at other markets that are beginning to trend. The problem with cattle prices is the fact that feed costs have surged over the last month as soybean meal and corn prices are hitting multi-month highs sending feeder cattle prices sharply lower which is now putting pressure on the live cattle prices so continue to place the proper stop loss as I think 110 as in the cards and possibly as low as 105 in the next couple of weeks.
CHART STRUCTURE: POOR
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
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.
Oat futures in the July contract are currently trading at 2.06 a bushel as I have been recommending a bullish position and if you took this trade place your stop loss at the 10 day low which now stands at 2.00 risking 6 cents or $300 per contract plus slippage and commission as the chart structure is outstanding at the present time. As I have talked about in many previous blogs is that trading is about risk only & whatever I can risk $300 in the oats I will take that trade regardless of what I think so play this to the upside while placing the proper stop loss. The commodity markets in general continue to move higher as the grain market has had a significant spring rally as I still think there is more room to run in the oat market which can become extremely volatile as I might be adding more positions to this commodity next week so please give me a call if you have any questions about this situation.
CHART STRUCTURE: EXCELLENT
Wheat futures in the June contract settled last Friday in Chicago at 4.74 a bushel while currently trading at 4.82 slightly higher for the trading week. I’ve been recommending a bullish position from around the 4.90 level and if you took that trade continue to place your stop loss which is just an eyelash away at 4.68 as the chart structure is outstanding at present. Wheat prices are still trading above their 20 and 100-day moving average as the fundamental picture remains weak as spring planting is off to an outstanding start, but I’m a technical trader, and the risk/reward must meet my criteria to enter as I remain bullish while continuing to place the proper stop loss. The grain market certainly has caught fire in recent weeks as volatility has increased tremendously as I’m also recommending a bullish position in oats as I do believe most commodities have bottomed at present. As I’ve talked about in many blogs is that risk is the main factor in trading as the only reason I want to be involved in wheat and oats was due to the fact that the risk/reward was in your favor as I don’t allow fundamentals to dictate my position strictly risk/reward and following the trend. The U.S dollar is sharply lower this Friday afternoon continuing to prop up commodity prices. However, it has had very little impact on wheat in the short-term, but eventually, it will have a bullish influence.
CHART STRUCTURE: EXCELLENT
Cotton futures in the July contract settled last Friday in New York at 63.69 while currently trading at 63.80 basically unchanged for the trading week. I have been recommending a bullish position from around the 59 level and if you took that trade continue to place your stop under the 10 day low which in Monday’s trade will be 61.51 as the chart structure will start to improve daily. Prices are trading above their 20 and 100-day moving average telling you that the short-term trend is to the upside as a very weak U.S dollar continues to prop up agricultural prices here in the short term so continue to play this to the upside while placing the proper stop loss. The next major level of resistance is between 64/66 as the fundamentals have certainly changed in many markets including cotton as we will plant less in 2016 than we did in 2015 as the supply/demand tables have changed in recent months. The volatility in cotton is relatively low. However, that should not continue as we enter the month of May as planting is in full swing in the United States as now the weather is the main focus and will determine short-term price action.
CHART STRUCTURE: IMPROVING
Corn futures in the July contract settled last Friday in Chicago at 3.75 a bushel while currently trading at 3.91 up about $.16 for the trading week as the bullish trend continues due to weather problems in South America. I have been sitting on the sidelines in corn as I’m currently recommending a bullish position in wheat and oats as the grain market remains strong with corn now having strong demand coupled with a very weak U.S dollar which continues to prop up the grain market and corn over the last several weeks. Volatility in corn at present is extremely high as I will wait for better chart structure to develop, therefore allowing me to place a tight stop loss, therefore, minimizing risk as much as possible, so I’m just keeping a close eye this market presently. The commodity markets, in general, look very bullish to me as the U.S dollar looks to continue its bearish trend as interest certainly has come back into the grain market as now the weather situation is on all traders’ minds. In my opinion, I think we are off to a very solid start in 2016 with nice temperatures across the Midwestern part of the United States, but the problem is Brazil with hot and dry weather impacting corn yields so continue to keep a close eye on this market.
CHART STRUCTURE: POOR
Sugar futures in the July contract settled last Friday in New York at 15.47 a pound while currently trading at 16.04 up about 60 points for the trading week hovering right near a 4 week high. Sugar prices are trading above their 20 and 100-day moving average telling you that the short-term trend is higher. I have been sitting on the sidelines over the last couple of months waiting for better chart structure to develop which could be at hand in next week’s trade. The commodity markets, in general, look strong to the upside as a weak U.S dollar continues to prop up prices and I think that trend will continue so look to play the sugar market to the upside once the chart structure improves next week. At the current time the 10 day low stands at 15.10 as the risk is about $1,250 per contract plus slippage and commission as I would like to see that risk lowered to around $700/$800 so be patient as that could happen in Monday’s trade. At the current time, my only recommendation in the soft commodities is a bullish position in cotton as it certainly looks to me that sugar prices are headed higher as crude oil prices are now trading above $45 a barrel which has been an impressive rally over the last several months also supporting sugar prices.
CHART STRUCTURE: IMPROVING
What’s the difference between old crop & new crop in the agricultural commodities? When analysts and traders talk about agricultural commodities such as soybeans & corn, the one thing they generally mention is old crop versus new crop, and that might confuse some beginners on what exactly is the difference. I will keep it simple because the only difference between old crop and new crop is that old crop in soybeans is any month other than November as an example is March or May and all months that were grown last year while the new crop is the November soybeans and will be harvested this October of 2016 and will be grown this summer. That’s why sometimes there is a price difference between the old crop and the new crop because of the fact that this year’s harvest in soybeans could be as high as 4.0 billion bushels pushing prices lower in the November contract as old crop, and new crop can also have different carryover levels or supply levels. Old crop corn is any month other than the December contract while the new crop is only the December contract which will be grown this summer and harvested in October and sometimes there’s a price difference between old crop and new crop as well because as we will be harvesting around 13.7 billion bushels in October which is the reason why the December corn can be lower than the May corn because that was old crop which was harvested last October also having a different supply situation. Many of the agricultural commodities are affected by old crop & new crop including the grains, meats, coffee, and cotton. So if you need help understanding which month you should be trading feel free to give me a call at anytime & I will be more than happy to make sure that you are trading the correct month.
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
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.