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.

S&P 500 Futures

The S&P 500 in the June contract settled last Friday in Chicago at 2941 while currently trading at 2939 unchanged for the trading week, but ending on a positive note up over 20 points due to the incredibly strong monthly unemployment number which was released this morning. The economic figures that have been released in the last week have been impressive as we had a 3.2% first-quarter GDP and now we added 263,000 jobs with an unemployment rate of 3.8% as I see further growth in the U.S. economy and higher stock prices. I have been talking about the S&P 500 for months, and I still believe we will continue the bullish trend as 3000 is my next level of resistance. If you are long a futures contract, I would continue to place the stop loss under the 2 week low standing at 2899. However, the chart structure will not improve so you will have to accept the monetary risk. The volatility in the S&P remains historically low especially at these elevated prices as I see no reason to be short as the U.S. economy is astonishing at the current time. The S&P 500 is trading far above its 20 and 100-day moving average telling you that the trend is to the upside, but for the bullish momentum to continue, we have to break the May 1st high of 2961 which was also the all-time high which I think will be breached possibly in next weeks trade.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Dollar Index Futures

The U.S. dollar broke a 2-day winning streak finishing lower by 30 points at 97.55 as I've been recommending a bullish position from around the 97.40 level and if you took that trade continue to place the stop loss under the 2 week low of 96.87 as an exit strategy. The U.S dollar is generally a non-volatile currency with lower risk because it is known as a basket against all foreign currencies. The United States economy is the strongest by far in the world in my opinion as the dollar is resurrecting, so continue to play this to the upside as the risk/reward are in your favor as the commodity markets continue to go lower due to a resilient dollar. The monthly unemployment number will be released in tomorrow's trading session as that should send some volatility back into this currency as the chart structure is outstanding at the current time. I will be looking at adding more contracts to the upside if prices break the April 26th high of 98.80 as then 100 would be the next level that could be tested.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
VOLATILITY: INCREASING

Copper Futures

Copper futures in the July contract settled last Friday in New York at 2.8940 while currently trading at 2.8240 as I have been recommending a bearish position from around the 2.8250 level and if you took that trade continue to place the stop loss above the 2 week high which now stands at 2.9240 as an exit strategy. The commodity markets across the board are higher in today's trade as the U.S dollar is lower as I'm also recommending a bullish position in that currency as today looks like a relief rally due to oversold conditions as I remain bearish. Copper prices are trading under their 20 and 100-day moving average as the trend continues to the downside. However, today's monthly unemployment number was so impressive it help push copper higher. Volatility in copper is relatively high at this time as copper historically speaking is a very volatile commodity with large price swings so if you are involved in this commodity make sure that you place the proper amount of contracts coupled with the fact that you must risk 2% of your account balance on any given trade. The next major level of support is around 2.76 / 2.78 & if that is broken like I have talked about in many previous blogs, I think then the bearish trend would accelerate to the downside.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: HIGH

Mexican Peso Futures

Live cattle futures in the June contract settled last Friday at 115.05 while currently trading at 113.65 down about 240 points for the trading week hitting a 5 month low and now has traded lower for 10 consecutive sessions as this market has turned on a dime. Large money managed funds had record long positions as they have been liquidating as that is part of the reason why you have seen this collapse as I was bullish cattle about a month ago, but when prices hit the 2 week low as it was time to move on that's why you must have an exit strategy. The next major level of support is around the 110 / 112 level and if that is broken there could be problems ahead as the damage from the floods in the midwestern part of the United States did not seem to have as big of an impact as once thought. Cattle prices are now trading below their 20 and 100-day moving average as the trend is to the downside, however, the chart structure is poor as I'm advising clients to sit on the sidelines and wait for a better risk/reward situation to develop. The agricultural markets remain weak as I have several short recommendations at present as it looks to me that prices will try to test the contract low which was hit on November 13th around the 111.62 level.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Soybean Futures

Soybean futures settled last Friday in Chicago at 8.67 a bushel while currently trading at 8.44 down about $0.23 for the week traders continue to sell soybeans and buy corn due to the excessive wet weather that we have witnessed in the Midwestern part of the United States over the last 2 weeks. If you have been following any of my previous blogs, you understand that I have been bearish for quite some time as I think prices will retest 8.10 and then possibly test the 7.75 level as I see no reason to be buying soybeans at this time as technically and fundamentally speaking this market remains bearish. Soybean prices are trading under their 20 and 100-day moving average as the trend continues to be negative as the large money managed funds are short 155,000 contracts as they still believe lower prices are ahead. The entire soy complex is negative as soy meal, and soybean oil are right at contract lows once again as additional acres look to be planted for soybeans for 2019 as that is a negative influence on prices. In my opinion, until a trade agreement with China comes to fruition I think soybeans will continue to drift lower as a 900 million carryover number is way too high to absorb especially if we produce another excellent crop.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

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.

Corn Futures

Corn futures in the July contract settled last Friday in Chicago at 3.61 while currently trading at 3.70 a bushel rallying due to excessive wet weather in the midwestern part of the country delaying planting. Soybean prices have been going in the opposite direction of corn as it looks at this point that corn acres will be lowered while soybean acres will rise as we are exceptionally wet especially in the state of Illinois. On average by May 1st 35% of the corn crop has already been planted as we will see what the crop progress report states Monday, but it probably will not be even near that number. Corn prices are now trading above their 20-day but still below their 100-day moving average as I am currently not recommending a trade in this commodity, However as I've written in the past if you are bullish I would place the stop loss under the contract low which was hit on April 25th at 3.51 as an exit strategy. The volatility in corn will start to explode here as we enter the summer months as it looks to me that a spike bottom was created in the short-term. The agricultural markets almost across the board remain bearish as the rally in corn is all due to weather as that will dictate where short term price action goes over the next couple of months.
TREND: MIXED
CHART STRUCTURE: SOLID
VOLATILITY: INCREASING

Cotton Futures

Cotton futures in the July contract is currently trading at 75.80 after settling last Friday in New York at 77.70 down almost 200 points for the trading week as a rounding top chart pattern looks to have been formed in my opinion. I have been recommending a bearish position from around the 75.78 level, and if you took that trade continue to place the stop loss at 79.57 as an exit strategy, however, the chart structure will improve in next week's trade therefor the monetary risk will also be lowered. Cotton prices are trading under their 20 and 100-day moving average as the trend has turned to the downside with the next major level of resistance at the 74.00 level & if that is broken, I think we could test the contract low which was hit on February 12th at 72.33 as the agricultural markets remain bearish. Spring planting is in full swing in the southern part of the United States as we have no complications yet, but it's a long growing season as the trend is your friend & this trend and the risk/reward are in your favor to take a short position. I will be looking at adding more contracts to the downside possibly in next week's trade as we await the next crop report which will be released in early May and certainly will send volatility back into this market.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Sugar Futures

Sugar futures in the July contract is currently trading at 12.04 after settling last Friday in New York at 12.65 a pound continuing its bearish momentum as I've been recommending a short position from the 12.25 level & if you took that trade continue to place the stop loss above the 2 week high which stands at 13.05 as an exit strategy. The chart structure will not improve until later next week as the monetary risk will remain as I believe we will crack the contract low which was hit on January 3rd at 11.99 so stay short in my opinion. The commodity markets remain in bearish trends despite today's slight rally in most sectors as oversupply, and weak demand continues to keep a lid on sugar prices in the short term. Sugar is trading below its 20 and 100-day moving average as the trend has turned negative as the volatility remains low as I will be looking at adding more contracts to the downside once the risk/reward become more in your favor. I also have a short cotton recommendation as I think many sectors will remain bearish until some type of agreement with China on trade develops.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Orange Juice Futures

Orange juice futures in the July contract broke a 5-day losing streak finishing higher by 45 points at 93.90 hitting a 10 year low this week as I still think prices look expensive. I have talked about orange juice for quite some time, and I do believe prices could test major support on the yearly chart at the 75 level as I see no reason to be a buyer at this time as the trend is very strong to the downside. I have short recommendations in cotton and sugar as I also bearish the entire grain market, as well as I, see no reason to be a buyer at this time. If you are short a futures contract, I would place the stop loss at the 2 week high which in tomorrow's trade will be 110.00 as an exit strategy. However, the chart structure will start to improve on a daily basis next week therefor the monetary risk will also be reduced.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING

Coffee Futures

Coffee futures in the July contract is currently trading at 90.60 a pound as prices are still stuck in a 3-week tight consolidation with very little fresh fundamental news to dictate short-term price action. The chart structure in coffee is outstanding as we have traded in a 500 point range over the last 3 weeks. I am currently sitting on the sidelines waiting for a bullish position, however, if you think a bottom has been formed, I would buy it at today's price level while placing the stop loss under the 14 year low at 89.00 as an exit strategy as the risk would be around $1,200 per contract plus slippage and commission. I have short recommendations in sugar and cotton as I'm also bearish the orange juice market, but I do think the downside in coffee is limited, but I will be patient and wait for a breakout to occur which could happen soon. We are now entering the frost season soon for coffee as in 1994 we had 2 touches of frost that sent coffee from around 75.00 to around 250,00 in a matter of a month as I think a price premium might start to be put into this market or at least the downside is limited until after the frost risk.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Wheat Futures

Wheat futures in the July contract settled last Friday in Chicago at 4.42 a bushel while currently trading at 4.39 down about $0.03 for the trading week still hovering right near a multi-year low. The Wheat Quality Tour estimated that the Kansas wheat crop will be around 47 bushels per acre well above the 5 year average of 40 bushels as fundamentally & technically speaking this market remains bearish in my opinion. Wheat prices are trading under their 20 and 100-day moving average as clearly the trend is to the downside, but for the bearish momentum to continue, we have to break the April 30th low of 4.26 as I still see no reason to be a buyer of wheat as I remain bearish the entire grain sector. As I have talked about in previous blogs, I think there is a chance that wheat prices can head down to the $4 level as weak demand is also hampering prices at the current time. If you are short a futures contract, I would place the stop loss above the 2 week high which stands at 4.48 as an exit strategy as the chart structure is outstanding at present, but if that does occur move on and wait for another situation to develop.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE

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.