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 September contract settled last Friday in New York at 41.60 a barrel while currently trading at 41.10 basically unchanged for the trading week as I’ve been sitting on the sidelines in this market for quite some time as prices are right near a 4 month low. Prices have dropped about $10 over the last 2 months as massive supplies continue to hamper prices as I still think a bottom has not been created and if you are short this market my stop loss would be above the 10 day high which stands at 43.39 as prices are still trading below its 20 and 100-day moving average telling you that the short-term trend is lower. At present I have very few trade recommendations as I took the month of July off, but I am keeping a close eye on many different sectors as I think we will be involved in many trades very soon. The trend is lower and as the commodity trader I always believe that must be a trend follower as trading with path of least resistance is the most successful way to trade over the course of time. The chart breakout in crude oil was at the $46 level as the chart structure was very solid at that point but that was in July, so the easy money has already been made as the commodities in general have a bullish bias to the upside as deflation worldwide is coming to an end in my opinion as you must be a short term trader as predicting what the long-term will do is extremely difficult and frustrating.
CHART STRUCTURE: SOLID
Silver futures in the September contract settled last Friday in New York at 20.34 an ounce while currently trading at 19.80 ending the week on a very sour note down $.64 due to the fact of a very positive U.S employment number which is suggesting higher interest rates are here to come. I’ve been recommending a bullish position from around the 17.35 level and if you took that trade continue to place your stop loss at the 10 day low which stands at 19.49 which is only about $.30 away as we could be stopped out in Monday’s trade, but I will place the proper stop loss which is one of the most important rules in consistent and successful trading in my opinion. Silver prices are still trading far above their 20 and 100-day moving average despite the fact that we trading lower for the 3rd trading session as prices are looking to retest major support around the 19.50 level as gold prices are down $24 putting pressure on silver and the precious metals as a whole in today’s trade. The stock market is sharply higher today as money flows are going back into the equity markets & out of the precious metals I still do think we are in a secular bull market in the precious metals, but if we are stopped out we will move on and look at other markets that are beginning to trend as you must keep trading guidelines in mind & when prices hit the 10 day low it’s time to move on.
CHART STRUCTURE: SOLID
Gold futures in the December contract settled last Friday in New York at 1,357 an ounce while currently trading at 1,354 down slightly for the trading week but ended on a sour note down about $15 all due to a positive monthly unemployment number as the United States added around 250,000 jobs sending the precious metals sharply lower. At the current time I’m sitting on the sidelines, but I still think this is a bullish trend as prices still look to move higher but the risk/reward is not in your favor as the 10 day low is too far away, therefore, the monetary risk does not meet my criteria to enter into the trade, but I’m certainly not recommending any type of short position in the precious metal sector. Gold prices are still trading above their 20 and 100-day moving average telling you that the short-term trend is higher with major support around 1,320 & until that level is broken you would have to think the bullish trend stays intact as prices have had a hard time getting above the most recent high around 1,380 as prices seem to be stuck in a $60 trading range over the last 7 weeks. At the present time my only recommendation in the precious metals is a bullish position in the silver market which is also down about $.45 this Friday afternoon as the U.S dollar is up about 50 points putting pressure on many different sectors so look at other markets that are beginning to trend with better risk/reward scenarios.
CHART STRUCTURE: IMPROVING
Canadian Dollar Futures
The Canadian dollar in the September contract is down 100 points this Friday afternoon due to a positive U.S employment number, however I was recommending a short position from around the 7622 level getting stopped out in yesterday’s trade as I am fuming at present. As a trader you must have an exit strategy and if I’m short a market my stop is always at the 10 day high which happened in yesterday’s trade by a hair as this type of scenario will happen to you once in a while, but there will also be situations when you are stopped out of a market & it will continue to move in the direction and you are glad that you moved on, but sticking with your trading system is the most important thing over the course of time despite the fact of what happened to me yesterday. If you are still short the Canadian dollar I would continue to place your stop loss at 7692 as the market still remains weak as prices are right at a 4 month low as the market is telling you that the Federal Reserve might actually raise interest rates possibly in December, but only time will tell if that’s actually true as I certainly don’t believe they will, but the market is the market & you must accept losses as I did in yesterday’s trade.
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.
Cotton futures in the December contract settled last Friday in New York at 74.04 while now trading at 76.25 up about 200 points for the trading week continuing its bullish momentum. I have been recommending a bullish position from around the 64.75 level and if you took that trade continue to place your stop loss at 71.65 which is the 10 day low as the chart structure is very poor at the present time due to the fact that prices have been racing higher. Prices are trading far above their 20 and 100-day moving average telling you that the short-term trend is higher as this market has more room to run and actually traded as high as 77.98 earlier in the trading session before profit-taking ensued as I do think 80 or higher is a possibility, but I don’t like to guess how high or low prices can go in my opinion, but this trend is very strong due to the fact of very adverse weather conditions in the southern part of the United States, therefore, lowering yields and lowering carryover levels at the same time shifting the supply/demand tables quickly. The chart structure will not improve for another 5 days so you will have to be accepting of the monetary risk as the chart structure is very poor at present and if you have missed this trade move on as the risk/reward is not your favor as you have missed the boat.
CHART STRUCTURE: POOR
Corn futures in the December contract settled last Friday in Chicago at 3.43 a bushel while currently trading at 3.32 down about $.11 for the trading week hitting prices that we had not seen since October 2014 when the United States produced a record crop of 14 billion bushels, but the 2016 prediction is 14.5 billion bushels as I still see lower prices ahead. At the current time, I’m sitting on the sidelines as I’ve not been involved in the corn market for quite some time as the chart structure was poor therefore the risk/reward was not in your favor. However, I think we will continue to move lower as harvest is just around the corner as I see a possibility of prices trading at 2.80/2.90 come November. Corn prices are trading far below their 20 and 100-day moving average telling you that the short-term trend is lower as outstanding weather conditions in the Midwestern part of the United States in 2016 have put pressure on prices as I see no reason to own corn at the current time. There is one bright spot in the corn situation that will develop next year as I certainly think we will not plant 94 million acres and we certainly will not produce 14.5 billion bushels as I think acres will be significantly lower, and you will start to see a bullish trend in 2017 but for the rest of this year lower prices are coming.
CHART STRUCTURE: SOLID
Coffee futures in the September contract settled last Friday in New York at 146.20 a pound while currently trading at 143 down about 300 points for the trading week as I have been sitting on the sidelines in this market for the last several weeks still maintaining a bullish bias to the upside, but waiting for better chart structure to develop. Coffee prices remain choppy and look to remain choppy in the coming weeks so keep a close eye as we could be entering into another position relatively soon. Coffee prices are trading below their 20-day, but still above their 100-day moving average telling you that the short-term trend is mixed as the soft commodities have rebounded sharply this week as my only recommendation is in the cotton market which is up another 150 points due to weather problems in the southern part of the United States. Coffee prices are stuck in a 2 week channel so you’re going to have to be patient and wait for a 4 week break out to occur as I still think a possible retest of the 155 level which was touched early last month will be retested once again as this bearish long-term trend is over in my opinion, as the commodity markets in general except for a select few look to be in secular bullish trends as the deflation problem worldwide is coming to an end.
CHART STRUCTURE: IMPROVING
Soybean futures in the November contract which is considered the new crop and will be harvested this October settled last Friday in Chicago at 10.03 a bushel while currently trading at 9.70 down over $.30 for the trading week continuing its bearish momentum right near a 4 month low despite the fact that prices are up nearly $.15 this Friday afternoon. I have not been involved in the soybean market for quite some time as I do think prices are near a short-term bottom as all of the bad news has already been reflected in the price, but I do think lower prices are ahead as we should produce a near-record crop as the weather in the Midwestern part of the United States has been outstanding as carryover levels will remain high continuing to keep a lid on prices throughout 2016. Soybean prices are trading below their 20 and 100-day moving average telling you that the short-term trend is lower as the grain market general is really the only bearish sector in the commodity markets, and that’s all due to excellent weather and massive crops that will be harvested here just around the corner, but 2017 could be a different story but you’re going to have to be patient as a bullish situation will not develop for quite some time. If you are short soybeans, my recommendation would be to place your stop loss above the 10 day high which stands at 10.03 risking about $.33 or $1,700 per contract plus slippage and commission as prices are right near major support.
CHART STRUCTURE: IMPROVING
Sugar futures in the October contract settled last Friday in New York at 19.05 a pound while currently trading at 19.95 up 90 points for the trading week higher for the 4th consecutive trading session as I was looking at a possible short position earlier in the week but that is off the table as prices are right near a 2 week high. Sugar prices hit a 4 week low in last week’s trade as I was looking at a possible bearish position, but I wanted the chart structure to tighten up before entering, therefore, lowering monetary risk as the 10 day high was at 20.11, however, prices have spiked up tremendously over the last 2 days so sit on the sidelines and look for better risk/reward scenarios. At the current time sugar is now trading above its 20 and 100-day moving average as prices are mixed and very choppy as I don’t like trading choppy markets, but keep a close eye on this as a possible short position could still be in the cards if prices break 19 once again, but the soft commodities in general look very strong continuing its bullish momentum so avoid this market at the present time. The next major level of resistance is at 20.11 and if that is broken you might see a retest of the contract high around 21.00, but this does not meet criteria to enter into a bullish or bearish position so I’ll find better markets at the present time.
CHART STRUCTURE: IMPROVING
Lumber futures in the September contract settled last Friday in Chicago at 318.40 while currently trading at 324 as I’ve been recommending a short position from around the 318 level and if you took that trade continue to place your stop loss above the 10 day high which now stands at 333 as the chart structure will not improve until later next week. The United States released its monthly unemployment number which was positive towards lumber prices this Friday morning, but I will make sure to place the proper stop loss as lumber is still trading below its 20-day moving average but above its 100-day moving average as the chart structure is tight at present. Lumber can become an extremely volatile commodity with huge price swings on a daily basis as volatility has been relatively low with major resistance at last Monday’s low around 314 and if that is broken, I think the bear market could be underway again. I will stick to my rules and accept the monetary risk as second-guessing is a terrible way to trade over the course of time as sticking to your rules & your trading system is the most prudent thing to do in my opinion.
TREND: LOWER - MIXED
CHART STRUCTURE: EXCELLENT
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
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.