Weekly Futures Recap With Mike Seery

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.

Gold Futures

Gold futures in the December contract settled last Friday in New York at 1,271 an ounce while currently trading at 1,277 up about $6 for the trading week in a very non-volatile trading manner. I'm currently sitting on the sidelines as there is no trend at the current time. The U.S. dollar is trading at a three month high, and that is keeping a lid on gold prices in the short-term coupled with the fact that the U.S. stock market is hitting all-time highs. All of the interest lies in the equity market & not in gold as money flows continue to come out of this commodity. Gold prices are trading under their 20 and 100-day moving average telling you that the trend is lower. I still think we will retest major support around 1,262 and if that is broken, we could head below 1,250 in the coming weeks. I just don't see any reason to own gold when the stock market goes up on a daily basis. The chart structure is starting to improve due to low volatility in recent weeks, and we could be involved in this commodity shortly so keep this market on your radar, but in the short term look at other markets that are beginning to break out.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Silver Futures

Silver futures in the December contract is currently trading at 17.10 an ounce after settling last Friday in New York at 16.75 up $0.35. Silver is acting much stronger than gold as it has started to follow the coattails of the stock market as silver is used in smartphones and strong demand could start to push prices higher in my opinion. I think silver prices have been bottoming out for quite some time and I'm looking at a bullish position if prices break the October 16th high of 17.49 which is just an eyelash way as prices are still trading above their 20 and 100-day moving average. The trend is higher despite the U.S. dollar hitting a three month high which is generally negative towards silver prices. If you have read any of my previous blogs, you understand that I'm bullish many commodity sectors and I think that as we head into 2018, the story will change as prices are too cheap compared to the stock market. I see silver prices higher in next year's trade as I continue to look for an entry point in the low $16 range. Silver prices are trading above their moving averages, and that is the exact opposite of the gold market as silver is not used as a flight to quality and we could be involved in this market soon.
TREND: HIGHER
CHART STRUCTURE: IMPROVING

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

Cocoa Futures

Cocoa futures in the December contract settled last Friday in New York at 2115 while currently trading at 2057 down by over 60 points for the week. I had been recommending a bullish position for almost two months with an average price of around 2077 getting stopped out in yesterday's trade around the 2055 level as this market absolutely went nowhere as prices finally hit a two week low in yesterday's trade. The trend in cocoa now is mixed as we are trading under the 20-day moving average but above the 100-day and I will look at other markets that are beginning to trend. However, the chart structure is excellent because prices stalled out around the 2150 level and we could be involved in another position relatively soon. I still think the downside in cocoa is limited as we head into the strong demand season for chocolate, however you must have an exit strategy and the fact that we were in this trade for almost two months which was very time consuming so it's time to move on and look at other markets with a better monetary potential.
TREND: MIXED
CHART STRUCTURE: SOLID

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.

Sugar Futures

Sugar futures in the March contract are currently trading at 14.63 a pound after settling last Friday at 14.63 unchanged for the trading week. I have been recommending a bullish position from around the 14.57 level and if you took the trade continue to place the stop loss under the two week low standing at 13.84 and in 2 days that will be raised to 14.00 as the chart structure will start to improve on a daily basis. Sugar prices are trading above their 20 and 100-day moving average as the short-term trend is higher as volatility has come back into this market as this Friday afternoon we are higher by 40 points after trading lower by nearly 40 points in yesterday's trade and that is a good sign to see. I believe that volatility in a lot of these commodity sectors is going to be to the upside, not the downside. For the bullish momentum to truly continue we need to break the September 15th high of 15.20 which is still about 60 points away as sugar is starting ride the coattails of unleaded gasoline which is hitting another contract high and is truly in a bullish trend. Sugar is used as a biodiesel as well, and I do think these prices still look cheap, and if you're not involved, I would still be buying at today's price level as the risk is around $750 per contract plus slippage & commission.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT

Wheat Futures

Wheat futures in the December contract settled last Friday in Chicago at 4.27 a bushel while currently trading at 4.25 down slightly lower for the trading week after hitting a fresh contract low on October 31st at 4.16 as the trend remains to the downside with very low volatility. I am not going to initiate a short position, but if you are short a futures contract I would place the stop loss above the 10-day high which stands at 4.43. The chart structure will start to improve in next weeks trade as the U.S. winter wheat crop is off to an excellent start as ideal weather conditions continue to put pressure on prices here in the short term. The U.S. dollar is at a 14 week high, and that is also hurting wheat and many of the other agricultural markets as prices are still trading under their 20 and 100-day moving average. I'm certainly not recommending any bullish position as I do think there is a possibility that prices could crack the $4 level in the weeks ahead. Wheat is starting to enter the very volatile season. However, there is no volatility at all at present which is very surprising as we need some type of weather problem to spur prices to the upside.
TREND: LOWER
CHART STRUCTURE: SOLID

S&P 500 Futures

S&P 500 is trading higher for the 2nd consecutive session up another 6 points at 2583 after settling last Friday in Chicago at 2578 continuing this grinding bullish trend hitting another all-time high in today's trading session. If you have read any of my previous blogs, you understand that I am extremely bullish the entire equity market which also includes the NASDAQ 100 and the Dow Jones. I see nothing bearish as we are starting to enter the extremely bullish holiday season and 2600 is probably going to be tested in next week's trade so stay long. If you are involved in a bullish position continue to place the stop loss under the 10-day low which stands at 2542, however in Tuesday's trade that will be raised to 2555 as the chart structure will start to improve on a daily basis. Excellent earnings continue to propel prices higher, and I don't see anything stopping this trend at the current time. I am certainly not recommending any type of bearish position, and I think that would be foolish as prices are trading far above their 20 and 100-day moving average as this by far has been the strongest trend in 2017. With the tax cuts looming this market could go much higher in my opinion as the stock market certainly loves the Trump administration's agenda towards businesses especially with the repatriation of trillions of dollars coming back to the United States from overseas.
TREND: HIGHER
CHART STRUCTURE: SOLID

Soybean Futures

Soybean futures in the January contract settled last Friday in Chicago at 9.86 a bushel while currently trading at 9.88 down about $0.11 in today's trade and I'm not involved in this market. I was recommending a bullish position while getting stopped out in last week's trade as I am sitting on the sidelines as this market is choppy to sideways. Soybean prices are trading under their 20-day but slightly above their 100-day moving average as the harvest should be around 90% completed after this weekend which is a good thing in my opinion as the volatility should start to come back. Generally speaking, lows are created in October or November due to harvest pressure. I do not have any grain recommendations as they all remain very stagnant to slightly lower as the chart structure across the board is excellent, and the risk/reward will start to come into your favor over the next couple of weeks. Keep a close eye on this market as we could be involved again, but at present look at other markets that are beginning to trend as they are far and few between as the commodity markets remain very quiet.
TREND: MIXED
CHART STRUCTURE: SOILD

Crude Oil Futures

Crude oil futures in the December contract are trading higher for the 2nd session after settling last Friday in New York at 53.90 while currently trading at 55.05 up about $1.15 for the trading week continuing its bullish momentum right at a six month high. I have been recommending a bullish position from around 53.15 and if you took the trade place the stop loss under the 10-day low which now has been raised to 51.55 as the chart structure will start to improve as well lowering the monetary risk. The energy sector as a whole is very bullish and is one of the strongest trends out of the commodities at the current time as unleaded gasoline continues to carry this market on its back. I still see higher prices ahead, and I'm looking at adding more positions once the chart structure and the risk/reward become more in your favor. The next major level of resistance is the April 12th high of 55.02 and if prices can close above that area then look to head up to the 56/57 level. As I have written about in previous blogs, I think we can trade above $60 as strong demand continues to prop up prices as this is now riding the coattails of the stock market. The monthly unemployment report was released today stating that 4.1% is the unemployment rate which is a 17 year low and a bullish fundamental indicator towards crude prices.
TREND: HIGHER
CHART STRUCTURE: SOLID

Cotton Futures

Cotton futures in the December contract is currently trading at 68.20 while settling last Friday in New York at 68.80 up about 60 points for the trading week still stuck in a very tight seven-week consolidation waiting for some fresh fundamental news to dictate short-term price action. Traders are awaiting next week's USDA crop report which could send volatility back into this market as a frost in West Texas looks like it damaged some of the crop coupled with the floods after the hurricanes which should have had some impact on cotton yields, but we will find out next week on the exact situation. Cotton prices are trading right at their 20 and 100-day moving average as the trend is basically mixed as I am not involved. I'm looking at a possible breakout above the 70.22 level as the chart structure is excellent and the risk/reward will be in your favor and if that level is breached which could happen off the USDA crop report. The agricultural sectors have gone nowhere because the U.S. dollar is at a fourteen week high coupled with the fact that we are in the midst of harvest which does keep a lid on prices.
TREND: LOWER
CHART STRUCTURE: IMPROVING

Trading Theory

What Does Risk Management Mean To You? I tell people that the reason people lose money in commodities is not that they are bad at predicting where prices are headed, it's that they are bad when it comes to losing trades and refusing to take a loss which results in heavy monetary losses that are difficult to come back from.

For example, if a customer has $100,000 account 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, they will risk 20% to 30% on any given trade or even higher. If you are wrong on two or three trades that $100,000 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 the losses can add up to be staggering. What I am suggesting to you is if you have a $100,000 account risk between $2,000 – $3,000 per trade so that if you lose on five straight trades, the worst-case scenario is that you're down $15,000 and still have an $85,000 balance. It is possible to still come back from as your still in the game.