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.
S&P 500 Futures
The S&P 500 futures in the December contract settled last Friday in Chicago at 2933 while currently trading at 2924 lower by 9 points for the week as the volatility remains very low. I have been recommending a bullish position from the 2803 level and if you took that trade place the stop loss under the 10-day low which stands at 2883. However, in Tuesday's trade that will be raised to 2905 as the chart structure will turn outstanding at that time as I remain bullish, however for the trend to continue we have to break the September 21st high of 2947 as I still think that is in the cards possibly next week. Low-interest rates and great corporate earnings continue to propel prices higher although this week's small setback as this is still where all the interest lies as the holiday season is right around the bend and historically and seasonally speaking that is a bullish time for stock prices. The S&P 500 is trading above its 20-day moving average and far above its 100-day as this remains the strongest trend to the upside. The U.S. economy is hitting on all cylinders, and if you take a look at crude oil prices, it broke $73 a barrel today as that tells you how well the economy is doing as strong demand for that commodity continues to push prices higher. I will be looking at adding more contracts to the upside once the risk/reward become better in your favor as that could happen on a sharply lower trading session so keep a close eye on this market.
CHART STRUCTURE: SOLID
Silver futures in the December contract are sharply higher this Friday afternoon in New York up $0.43 at 14.72 an ounce and if you have read any of my previous blogs you understand that I'm looking at entering into a bullish position as I will do so next week on any price retracement. I'm looking at entering a bullish trade at the 14.55 level and if that does occur I will place the stop loss under the contract low and multi-year low which was hit on September 11th at 13.96 as the risk would be about $0.60 or $3,000 per large contract or $600 per mini contract plus slippage and commission. In my opinion, I do believe the precious metals except for gold look strong as I also have a bullish recommendation in the copper market which is higher in today's trade as well as I think they're starting to catch up to crude oil prices which are hitting a fresh four year high today. Silver prices are now trading above its 20-day but still far below its 100-day moving average. I like the fact that we've broken out of a three-week consolidation pattern coupled with the fact that the downtrend line finally has been broken over the last several months. Historically speaking silver looks cheap in my opinion and is very limited to the downside so look to play this to the upside on any price retracement in next week's trade.
CHART STRUCTURE: SOLID
Natural Gas Futures
Natural gas futures in the November contract settled last Friday in New York at 2.97 while currently trading at 3.00 hitting a fresh yearly high in Thursday's trade as the volatility certainly has come back into this market which was lacking over the last six months. If you have been following any of my previous blogs, you understand that I have been bullish natural gas, but at the current time, I'm not involved. I will be looking at a possible bullish position in next week's trade if prices to go back down to the 2.90 level while placing the stop loss under the contract low of 2.75 as the risk would be about $1,500 per contract plus slippage and commission. Record demand continues to support prices as the volatile winter season is around the bend as that is when you can have tremendous price swings to the upside in December, January, and February as I think the bottom has occurred. Natural gas prices are trading above their 20 and 100-day moving average as the trend is to the upside as the entire energy sector continues to hit multi-year highs this week as a robust U.S. economy continues to support prices. Look the play this to the upside while risking 2% of your account balance on any given trade as the proper money management technique.
CHART STRUCTURE: POOR
Coffee futures in the December contract is currently trading higher by 250 points at 101.80 a pound after settling last Friday in New York at 99.90 as a possible bottom may have finally occurred on September 18th at 95.10 in my opinion. Coffee prices have now hit a two week high and is currently trading above its 20-day moving average, but still below their 100-day, but for the real break out to occur prices have to break the 4 week high of 104.15 in my opinion as the chart structure is excellent at the current time due to the fact of the very low volatility. The harvest of Brazil has finally been completed, and we are now looking at the Vietnam harvest which should produce about 30 million bags which is a record, but all of the poor fundamental news, in my opinion, has already been reflected into the price. We will start to focus on the 2019 Brazilian crop which should put a price premium back into this market over the course of time. If you take a look at the daily chart, the downtrend line has finally been broken which has remained intact over the last three months as this commodity may have turned the corner. I will be looking at a bullish position possibly in next week's trade as the risk/reward could be in your favor due to the fact of the tight chart structure so keep a close eye on coffee as we could be involved soon.
TREND: LOWER - MIXED
CHART STRUCTURE: EXCELLENT
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 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.
Orange Juice Futures
Orange juice futures in the November contract settled last Friday in New York at 147.250 currently trading at 147.00 unchanged for the week as the volatility has come to a crawl recently as prices are stuck in the mud. For the bearish momentum to continue, we have to break the September 19th low of 145 in my opinion & if that does occur I will be looking at adding more positions to the downside as the risk/reward would be in your favor as I think the 140 level could be in the cards soon. I've been recommending several bearish trades the original from the 163 level while then adding more contracts at the 154 level as the downtrend line remains intact so continue to place the stop loss above the two week high standing at 152.25 as an exit strategy. Juice prices are trading below their 20 and 100-day moving average as the bearish trend continues as the fundamental and technical picture remains negative. At the present time there are no hurricane threats to the state of Florida, but we do need some fresh fundamental news to bring back the volatility into this market at the current time as this strictly is a technical trade so stay short & continue to place the proper stop loss.
CHART STRUCTURE: POOR
Cocoa futures in the December contract are trading lower for the 4th consecutive session trading right near eight-month lows at 2066 continuing its bearish trend as prices broke the contract low which was hit on August 6th at 2100 looking to test 2000 in my opinion. The West African harvest has begun as that will take about a month to wrap up as large supplies continue to keep a lid on prices coupled with the fact that Ghana and Nigeria both should produce huge crops as supplies are abundant at the current time. Cocoa prices are trading below their 20 and 100-day moving average as the trend is to the downside as the downtrend line also remains intact. I'm certainly not recommending any bullish position as that would be counter-trend trading and if the 2100 level is broken prices could drop down to the 1800 level as seasonally speaking harvest time generally has a negative impact on prices. Strong demand for cocoa happens typically around Halloween and then Christmas time as we still have some time before that occurs as it looks to me that we will continually drift lower on a weekly basis & if you are short stay short as the soft commodities all remain negative.
CHART STRUCTURE: SOLID
Copper futures in the December contract is currently trading at 2.8000 a pound as I have been recommending a bullish position from the 2.7700 level while placing the stop loss under the contract low at 157.00 as the risk is $2,500 per mini contract plus slippage and commission. If you take a look at the daily chart copper prices bottomed out around the 2.57/2.60 level as that was touched on about 1/2 dozen occasions creating major support as I think that level will not be breached in the coming weeks ahead as a strong U.S economy should spur demand for copper. Copper prices are trading above their 20-day but still below their 100-Day moving average as the trend is higher to mixed. However, I like the chart pattern as it looks to me that there is a lot of room to run to the upside as home sales have slowed down and I think that was the main reason why prices have declined over the last several months. The chart structure will start to improve in next week's trade, therefore, the monetary risk will be reduced. I want to give it some room at this time as copper historically speaking is a very volatile commodity & if you take this trade make sure that you risk 2% of your account balance and if you are trading the large contract the risk would be $5,000 per contract plus slippage and commission.
TREND: HIGHER - MIXED
CHART STRUCTURE: SOLID
Wheat futures in the December contract are trading lower for the 4th consecutive session after settling last Friday in Chicago at 5.21 a bushel while currently trading at 5.09 as prices are still stuck in the mud. Corn and soybeans have rallied over the previous several weeks, but wheat has gone in an opposite direction. Ideal weather conditions for the U.S. winter wheat crop is at hand putting pressure on prices as traders are awaiting this afternoon's quarterly grain stocks report with the trade average at 2.344 billion bushels as we will have to see what that report says, but it certainly should send volatility back into this market. Wheat prices are trading under their 20 and 100-day moving average as the trend is the downside coupled with the fact that the downtrend line also remains intact & as I've written about previously in blogs there is a possible head and shoulders bottom that has occurred over the last six months. However, that would only be true if the 4.90 level holds. I am sitting on the sidelines as I do not have any grain recommendations as I was stopped out of the corn and soybeans recommendations earlier this week, however, I do think the downside is minimal as I will be looking at a bullish position in the coming weeks ahead going into the very volatile winter season.
CHART STRUCTURE: SOLID
How Much Money Do you Risk On Any Given Trade? Trading futures or options can be a very lucrative business, or it can be devastating on the bottom line with tremendous losses unless you are smart enough to have a successful money management system in place before you ever place a trade. The question is how much money should you risk on any given trade? My answer is always the same you should risk between 1-2% on your account balance. This is a solid money management technique which does not allow one bad trade to wipe out your equity, if you need help with money management, please give me a call at 630-408-3325.
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.