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 49.33 a barrel while currently trading at 49.00 basically unchanged for the trading week continuing its nonvolatile action still hovering right near the $50 level. Crude oil prices are trading above their 20 and 100-day moving average telling you that the short-term trend is still higher as I've been sitting on the sidelines in this market as I'm possibly looking at a short position in the next week or two as the chart structure is outstanding as prices are stuck in a three-week channel. As a trader I look for risk/reward to be in your favor with outstanding chart structure as that is starting to develop in the crude oil market but at this point you have to be patient and wait for the downtrend to develop as OPEC announced yesterday that they were leaving production unchanged. Generally speaking crude oil is a very volatile market, but has been extremely quiet over the last month or so as that will change down the road as volatility will certainly come back into this market, but look at a possible short position when prices hit a four week low as the commodity markets in general still remain very strong.
CHART STRUCTURE: EXCELLENT
Canadian Dollar Futures
The Canadian dollar in the June contract settled last Friday at 7688 while currently trading at 7720. I've been recommending a short position from around the 7700 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 7745 as the chart structure is outstanding at present. The Canadian dollar now is trading above its 20 and 100-day moving average as prices are up 100 points this Friday afternoon all due to an extremely poor unemployment number sending the U.S dollar down 150 points which is a huge move. It certainly looks like the Federal Reserve will not raise interest rates which is rattling many different markets in today's trade. The Canadian dollar basically has gone nowhere over the last three weeks holding major support around the 76 level. I will stick to my rules and place the proper stop loss as we are hanging in there by the skin of our teeth. However, if we do lose on this recommendation it will be a small monetary loss
CHART STRUCTURE: IMPROVING
Gold futures in the August contract settled last Friday at 1,216 an ounce while currently trading at 1,243 up around $30 this Friday afternoon all due to the extremely poor unemployment number as the United States only added 38,000 jobs which was extremely disappointing sending money out of the equity market and back into the precious metals. Gold prices hit a three month low earlier in the week before the tremendous rally in today's trade as prices are still trading below their 20 but above their 100 day moving average telling you that the short-term trend is mixed. At the current time I'm sitting on the sidelines in this market as prices really have gone nowhere over the last several months, but if you do have a short position my recommendation would be to place your stop loss above the 10 day high which stands at 1,260 as an exit strategy. The U.S dollar is down 130 points today which is a very large move and that is also helping support gold prices to the upside as I still think this market will remain in a trading range over the next several weeks so look at other markets that have better trends as trading choppy markets are very difficult to trade successfully in my opinion as trading with the trend is the way to go.
CHART STRUCTURE: SOLID
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.
Live Cattle Futures
Live cattle futures in the August contract settled last Friday in Chicago at 116.42 while currently trading at 117.82 up about 140 points for the trading week as I have been recommending a bearish futures position from around the 117 level and if you took that trade continue to place your stop loss above the 10 day high which stands at 120, however that will be lowered in Monday's trade to 118.70 as the chart structure will tighten up therefore lowering monetary risk. Cattle prices are trading right at their 20 day but still below their 100 day moving average as the price gap was filled earlier in the week around the 117 level as I still think lower prices are ahead despite the fact that hog prices have exploded to the upside as I was recommending a short position in hogs getting stopped out at the 84 level in yesterday's trade as hogs are now trading at 86 all due to exceptional demand coming out of China. Feeder cattle prices are unchanged this afternoon and really have not reacted negatively towards higher grain prices, but I think eventually that will happen as the grain market has certainly caught fire to the upside which is a negative influence on cattle prices so stay short and place the proper stop loss.
CHART STRUCTURE: EXCELLENT
Cocoa futures in the July contract settled last Friday at 3005 while currently trading at 3016 basically unchanged for the trading week still hovering right near a 3 week high as I'm currently sitting on the sidelines in this market waiting for a breakout to occur. Prices are trading above their 20 and 100 day moving average telling you that the short-term trend is higher as I'm looking at a possible bullish futures position in the next week or so as the chart structure is solid at the present time as it certainly looks to me that cocoa prices have bottomed. The soft commodity markets have exploded to the upside as I'm currently recommending a bullish position in sugar and coffee as I do think cocoa prices will start to follow, but be patient and wait for a 4 week high before entering while then placing the stop loss below the 10 day low as an exit strategy. If you take a look at the daily chart there is major support in cocoa prices at the 2900 level as this market is grinding higher very slowly with higher lows on a monthly basis so keep a close eye on this market for a possible trade.
CHART STRUCTURE: IMPROVING
CHART STRUCTURE: SOLID
Coffee futures in the July contract settled last Friday in New York at 121.30 a pound while currently trading at 125.20 as I broke my trading rule in yesterday's trade buying a futures contract around the 123 level. I believe coffee prices are too cheap compared to the rest of the commodity markets, so I took a shot while placing my stop loss at 118.90 risking around 400 points or $1,500 per contract plus slippage and commission. If you take a look at the soft commodity markets they continue to move higher as sugar and orange juice continue to hit contract highs and I think it's just a matter of time before coffee joins the commodity party to the upside as this is probably the cheapest commodity available at the present time. Anything that is being grown in the country of Brazil continues to explode to the upside except for coffee as we still have ample supplies, but demand is very strong as I still think prices are bottoming out around the 120 level so I took a shot at this market to the upside while placing the proper stop loss as the risk/reward are highly in your favor at the present time in my opinion.
CHART STRUCTURE: EXCELLENT
Wheat futures in the July contract settled last Friday in Chicago at 4.82 a bushel while currently trading at 4.88 as I will be recommending a bullish futures position if prices close above 4.85 while then placing my stop loss under the 10 day low which stands at 4.57 risking around $.30 or $1,500 per large contract plus slippage and commission. The volatility in wheat is relatively high at the present time, so I'm also recommending investors to trade 2 mini contracts therefore risking $600, and if that trade starts to work we will then add more positions, but trade this as light as possible at the current time. Wheat prices are trading above their 20 and 100 day moving average telling you that the short-term trend has turned higher as major support is around the 4.55 level which has been hit on about a half a dozen times only to rally every single time as I do think wheat prices have bottomed out and are relatively cheap compared to the rest of the grain market. The next major level of resistance is around 4.95 and then all the way up to around 5.15 which was hit in late April so take a shot at this market to the upside while maintaining a 2% risk on any given trade.
CHART STRUCTURE: SOLID
Sugar futures in the July contract settled last Friday in New York at 17.52 a pound while currently trading at 18.30 up about 80 points for the trading week continuing its remarkable bullish run to the upside. I've been recommending a bullish position from around 16.00 & if you took that trade continue to place your stop loss under the 10 day low which stands at 16.42 as the chart structure is very poor at the current time. Sugar prices are trading above their 20-day and 300 points above their 100-day moving average telling you that the short-term trend is sharply higher as prices have hit a 2 year high. The commodity markets, in general, have caught fire to the upside as the U.S dollar is down 120 points today supporting many markets. I do think sugar prices are off to the races with the next major level of resistance all the way up around 20 so there is more room to run in my opinion so stay long and place the proper stop loss. If you have missed this trade, the risk/reward is not in your favor at the current time so avoid this market and look at other markets that are beginning to trend. However, I do not think that a top has been created as who knows how high prices could actually trade.
CHART STRUCTURE: POOR
What Is Your Definition Of Adding To A Losing Position? My rule for adding to a losing trade differs from mainstream thinking because for this reason that if you buy soybeans and the trade goes against you adding to this trade would be adding to a loser, which is correct. However many traders won’t add to the soybean long position but they will buy gold or some other commodity without getting out of soybeans first. My rule states that if you have a losing long position and want to get long another market you must exit the soybeans before you enter a long position otherwise you are adding to a loser. Remember many commodities trend in the same direction so if you have a losing long gold position and now you’re buying silver you are basically doubling down which is a bad money management technique and this also applies to adding to short positions as well. Remember try and keep a balanced portfolio of longs and shorts so you never get top heavy on one side of the market.
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.