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 July contract settled last Friday in New York at 48.41 a barrel while currently trading at 48.91 up about $.50 for the trading week still right near a 7 month high. I have been sitting on the sidelines in this market as I missed this trade to the upside and I do not like to chase markets so I will look at other trades that are beginning to trend. Oil prices are trading far above their 20 and 100-day moving average telling you that the short-term trend is higher because of production disruptions in the country of Nigeria coupled with the fact that Canada has also had problems in the province of Alberta sending prices above $50 in Thursday's trade only to come back on profit taking. The interesting thing to see is if rig counts start to increase as they have continually gone down over the last several months, but now that prices are near $50 it might be profitable to start production once again as time will tell if that situation develops. The U.S dollar is hitting a 6 week high up about 30 points this Friday afternoon but has had very little impact on crude oil prices. However if the dollar continues to move higher, you would have to think that would be a negative influence on prices over the long haul.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Canadian Dollar Futures
The Canadian dollar in the June contract settled last Friday at 7612 while currently trading at 7655 up about 40 points for the trading week. I've been recommending a short position from the 7700 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 7790 as you're going to have to be patient with the risk parameter as the chart structure will not improve for another 3 days. The next major level of resistance is around the 76 level, and if that is broken, I think the bearish trend will intensify to the downside as prices are now trading below their 20-day moving average but slightly above their 100-day. So remain short in my opinion as I still think the U.S dollar continues to move higher due to the fact of higher interest rates here in the United States. Volatility in the Canadian at present is relatively low as this is a very large contract with big price swings. That was the main reason why I took a short position as I thought the risk/reward was in your favor as the original risk was around $1,300 so continue to maintain a short position as I still think the bearish trend continues.
TREND: LOWER
CHART STRUCTURE: POOR
Natural Gas Futures
Natural gas futures in the July contract settled last Friday in New York at 2.21 while currently trading at 2.16 down about 5 points for the trading week. I've been recommending a short position from the 2.19 level and if you took that trade the 10 day high has been lowered to 2.27 as the chart structure has improved. Natural gas prices reacted negatively to a bearish inventory report this week, however, was able to crack the 2.10 level which is now major support. This trade has basically gone nowhere over the last several weeks, but remain short as 2.10 is the next major support level, and if that is broken, I still think we can hit the contract low of 1.95 in the coming weeks. Warmer temperatures across the Midwestern part of the United States are increasing demand for air-conditioning, therefore, increasing demand for natural gas. However, I'm a technical trader as the natural gas trend is still bearish in my opinion, but if we are stopped out at 2.27 move on and look at other markets that are beginning to trend as this has now become a very low-risk trade. Natural gas prices are still trading below their 20 and 100-day moving average telling you that the short-term trend is bearish as we enter the long Memorial Day holiday weekend as volatility should come back into this market in Tuesday’s trade.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Live Cattle Futures
Live cattle futures in the August contract experienced a wild trading week to close around 116.50 having over a 500 point trading range as I will be recommending a short position from 117 which would fill the price gap on the daily chart while then placing your stop loss above 120 risking 300 points or $1,200 per contract as the chart structure will start to improve later next week. Volatility in cattle is extremely high as I'm also looking at a possible short position in the hog market come tomorrow as cattle prices hit a 4 week low today, but wait for the rally to happen therefore lowering monetary risk. Cattle prices are still trading below their 20 and 100 day moving average telling you that the short-term trend is to the downside as the volatility is very high at the current time and I don't like price gaps as they are always filled in my opinion so wait for the gap to be completed. Cattle prices continue to be under pressure due to the fact that the grain market continues to explode to the upside as higher feed costs mean lower feeder cattle which then can pressure live cattle prices in my opinion so be nimble and look for a short in tomorrow’s trade.
TREND: LOWER
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.
Cocoa Futures
Cocoa futures in the July contract are sharply higher this Friday afternoon in New York currently trading up 70 points at 2986 after settling last Friday at 2912 up about 75 points for the trading week hitting a 2 week high. Cocoa prices are trading under their 20 day but still above their 100-day moving average. I have not participated in this commodity for quite some time, but I'm keeping a close eye as I do think prices are in a bottoming pattern so wait for a 4 week high coupled with solid chart structure to develop before entering into a bullish position. Volatility in cocoa is relatively high as prices have come all the way down from around 3250 earlier in the month all the way to 2900 in yesterday’s trade as I would like to see some type consolidation, therefore, lowering monetary risk. If you a look at the daily chart it certainly looks like prices continue to bounce off major support between 2750/2850 so be patient and sit on the sidelines while keeping a close eye on this market. Many of the soft commodities have been rallying except for the coffee market which continues to be a complete dog, but sugar, cotton, and orange juice all continue their bullish momentum. I think that will start to spread into the cocoa market, but it will take a couple of more weeks before this trade is initiated.
TREND: LOWER - MIXED
CHART STRUCTURE: IMPROVING
Corn Futures
Corn futures in the December contract which is considered the new crop and is currently being grown this summer and will be harvested this October settled last Friday in Chicago at 3.99 a bushel while currently trading at 4.09 up about $.10 for the trading week hovering right near an 8 month high. At present I'm sitting on the sidelines as the chart structure does not meet my criteria to enter into a new trade as the 10 day low it's too far away which stands at 3.91 risking around $.18 or $900 which is too much in my opinion. Corn prices are trading above their 20 and 100-day moving average telling you that the short-term trend is higher as corn is riding the coattails of the soybean complex to the upside. I think higher prices are ahead, but be patient and wait for the risk/reward to turn into your favor which at the current time is not, but that could change come next week's trade. At present, the crop in the state of Illinois where I'm writing this article from looks very good as we have had many days of rain with warm temperatures, but the commodity markets, in general, continue to move higher as the bearish trends have finally ended. Volatility certainly will increase as we enter the critical month of June as traders are keeping a close eye on the 7/10 day weather forecast.
TREND: HIGHER
CHART STRUCTURE: POOR
Wheat Futures
Wheat futures in the July contract settled last Friday in Chicago at 4.67 a bushel while currently trading at 4.80 up about $.13 right near a 3 week high. I'm currently sitting on the sidelines waiting for a breakout to occur. Wheat prices are now trading above their 20 and 100-day moving average telling you that the short-term trend is to the upside. It certainly looks to me that prices have quadrupled bottomed around the 4.55 level as I'm looking at a possible bullish futures position if prices break above 4.85 while placing your stop loss at the 10 day low of 4.57 risking around 30 cents or $1,500 per contract plus slippage and commission. That risk, in my opinion, is a little bit too high as I probably will be recommending mini contracts and if you do 2 mini contracts the risk is about $600 as then we can add more if the trade starts to work. I like to be as conservative as possible when initiating the original trade. The chart structure will not improve for another 6 days as this market has been extremely volatile and choppy over the last 6 months so keep a close eye on this to the upside as volatility will continue especially come Tuesday due to the fact of the long Memorial Day holiday weekend.
TREND: HIGHER
CHART STRUCTURE: POOR
Coffee Futures
Coffee futures in the July contract settled last Friday in New York at 124.70 a pound while currently trading at 121.50. This continued its remarkable bearish run which really surprises me as the soft commodities have caught fire to the upside, but coffee is so negative at the current time and if coffee could speak it would bark as that tells you how big of a dog this market has been lately. Coffee prices have sold off 8 out of the last 9 trading sessions right at major support as I'm still bullish this commodity. I’m very reluctant to sell at these price levels as every time we've gone down to the 120 level we have rallied so be patient and keep a close eye on this sleeping giant as I still think a rally is going to occur soon. Coffee prices are trading far below their 20 and 100-day moving average telling you that the short-term trend is to the downside. There is very little bullish fundamental news to dictate prices to the upside despite the fact that many commodities grown in the country of Brazil such as orange juice, sugar, and soybeans continue to move higher, but oversupply issues continue to keep a lid on prices. Coffee traded as high as 135 about 10 days ago then dropping about 1300 points as the chart structure is terrible at the present time so avoid this market and look at other markets that are beginning to trend, but I’m not giving up on this market.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Soybean Oil Futures
Soybean oil futures in the July contract settled last Friday in Chicago at 31.27 while currently trading at 31.35 basically unchanged for the trading week. I've been recommending a short position from 33.35 and if you took that trade continue to place your stop loss above the 10 day high which now has been lowered to 33.13 as prices are still right near a 3 month low. Soybean oil futures are trading below their 20 and 100-day moving average telling you that the short-term trend is to the downside as prices have had a very difficult time breaking the 31 level as that level has been hit on consecutive days but unable to penetrate as that is now the key support at present. Volatility has certainly increased in this commodity and will get even larger as we enter the critical month of June. The growing season is in full swing at present, and this is the weak sister out of the soybean complex. The soybean meal continues to move higher on a daily basis, but this market still remains in a bearish trend so stay short & place the proper stop loss, but if you have missed this trade you have missed the boat so move on and look at other markets that are beginning to trend. Traders are keeping a close eye on the 7/10 day weather forecast which will definitely dictate short-term price action as the next USDA crop report is still 2 weeks away and will definitely send even more volatility into the grain market which is already experiencing large daily price swings.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Sugar Futures
Sugar futures in the July contract settled last Friday in New York at 17.07 a pound while currently trading at 17.47 up about 40 points for the trading week still right near a 2 year high continuing its bullish momentum to the upside. Sugar prices are trading far above their 20 and 100-day moving average telling you that the short-term trend is higher with the next major level of resistance at the 18 level which I think could be touched next week. I've been recommending a bullish position from around the 16.00 level and if you took that trade continue to place your stop under the 10 day low at 16.36 as the chart structure will not improve for another 10 days, so you're going to have to be patient with the risk tolerance. Many of the commodity markets continue their bullish trends as sugar prices have been following crude oil prices to the upside as sugar is used as a biodiesel as strong demand for this product coupled with the fact of lower production worldwide continues to prop up prices here in the short-term. So stay bullish while placing the proper stop loss as volatility will start to increase at these higher price levels.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Trading Theory
If you follow this rule you will have a chance of being successful over the course of time, if you don’t follow this rule you will be sure to lose your money quickly. This rule is simple Do Not OVERTRADE EVER for this is an easy way to lose all your capital quickly. My definition of over trading is risking too much money on any given trade, for example if you are trading a $100,000 dollar account and you place a gold trade today you should limit your loses to 2% of the account value which in this case is $2,000 which allows you to be wrong on many trades and still be around to play another day. In futures and option trading you will have losing trades that is for certain so make sure you manage those losses and move on to another trade.
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
Michael Seery, President
Seery Futures
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Twitter–@seeryfutures
Phone #: 312-224-8140
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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.
