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 hit a 5 month low this week in New York finishing higher this Friday afternoon at 96.95 up around $.1.40 as I have been recommending a short position in crude oil for quite some time and if you took that recommendation when the breakout occurred around 98.70 make sure you place your stop at the 10 day low which also stands at 98.70 as prices have been pretty nonvolatile in the last week or so except for Thursday’s trade when oil finished down over $2 as the U.S dollar is pressuring crude oil and many other commodity prices to the downside. The next major level of support is around 94.50 a barrel and if that level is broken I think there’s a possibility prices trade as low as $90 as the U.S government wants oil prices to go lower due to the fact that Russia’s economy relies on high oil prices so if prices drop dramatically Russia’s economy goes in the tank and with all the sanctions against them that could change the current situation with Putin. Crude oil futures are trading below their 20 and 100 day moving average so continue to play this to the downside as the chart structure is outstanding and take advantage of any rally making sure that you use a proper stop loss and proper money management techniques to limit your loss to 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures in the December contract are under pressure this Friday afternoon in New York trading lower by $.25 trading at 19.65 hitting an 8 week low as I’ve been recommending a short position in silver placing your stop above the 10 day high which currently stands at 20.35 around $.70 or $3,500 risk per contract at today’s price level as the commodity markets remain bearish as the U.S dollar hit a 6 month high against the Euro currency this week pushing commodities even lower. In my opinion I do believe that the U.S dollar will continue higher against the Euro currency due to all the problems in Europe and the Ukraine and I don’t think those problems are going away anytime soon so continue to look at for higher prices in the U.S dollar which could pressure the precious metals especially silver prices as the next level of major support is around $19 an ounce. Silver futures are trading below their 20 and 100 day moving average telling you that the trend is lower as the chart structure is outstanding at the current time so continue to play this to the downside and sell any rallies making sure that you place the proper stop loss risking 2% of the account value on any given trade.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Gold Futures
Gold futures in the December contract went out on a sour note this Friday afternoon in New York trading down $20 at one point before rallying on tensions in Ukraine only to trade lower by 7 dollars an ounce currently trading at 1,308 an ounce after settling last Friday 1,311 as there is currently no trend in this market as prices are trading below their 20 day still right at their 100 day moving average so continue to keep an eye on this market but sit on the sidelines as choppy markets are very difficult to trade. The problem with gold is that the U.S dollar continues its bullish momentum to the upside which is bearish commodity prices especially the precious metals so if you are bearish this market my advice would be to sell today’s price while placing your stop above the 10 day high which is around 1,325 risking around $17 or $1,700 per contract and if prices break 1,280 there could be a possible retest of 1,240 which was hit in early June as the trends in many of the commodities continue to go lower as deflation especially in Europe is occurring not inflation.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Soybean Futures
Soybean futures in the November contract had a volatile trading week as this week’s crop estimates showed a possible record crop of 3.81 billion bushels pushing prices to new contract lows at 10.38 a bushel, however prices have rebounded closing around 10.52 a bushel remaining in a pessimistic trend as traders are keeping an eye on the 7-10 day weather forecast which looks mild and wet. The problem with soybeans is the fact that we planted 84 million acres causing a massive oversupply which could linger for years to come especially if next year another record crop is produced in Brazil and the United States as carry over levels are ballooning up to 430 million bushels which historically is very high. If you took my original recommendation back in May place you stop at the 10 day high of 10.89 risking around 40 cents or$2,000 risk per contract.
TREND: LOWER
CHART STRUCTURE: OUTSTANDING
Cotton Futures
Cotton futures in the December contract hit a two-week high this week after settling last Friday at 64.21 going out around 64.35 basically unchanged for the week now trading right at its 20 day but still far below its 100 day moving average as the trend now has become neutral. I have been recommending a short position in cotton for quite some time, however prices hit a 2 week high in Wednesday’s trade so it’s time to exit and I’m sitting on the sidelines waiting for another trend to develop as cotton prices dropped over 2000 points in the last 3 months as oversupply is pressuring prices as an excellent U.S crop is being produced and will be harvested in the next couple of months. The problem with many of the commodity markets is they have established bearish trends and over planting and that is exactly what is happening in cotton and I still think deflation is in the air and that low prices will remain in 2014 as a trader you go with the trend and right now is sideways to neutral so look for a better market that has a stronger trend. If you think that cotton has bottomed my advice would be to buy a futures contract at today’s price while placing my stop below the contract low of 62.00 risking around 235 points or 1,200 risk per contract.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
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
Lean Hog Futures
Lean hog futures had a wild trading session as volatility certainly has picked up in the October contract currently trading at 95.10 a pound down about 10 points after trading nearly limit up earlier in the trading session only to succumb to profit taking sending prices basically unchanged this afternoon in Chicago. I’ve been recommending a short position in the hog market for several weeks as this trade has completely collapsed, however I was in the August contract and you need to rollover into the October contract placing your stop above the 10 day high at 104 which is still around 900 points away or $3,600 from today’s price levels however that 10 day high will be lowered on a daily basis as the chart structure will improve dramatically so continue to play this to the downside .The problem is with Russia banning chicken imports from the United States as I do believe that is going to pressure prices, however cattle prices are sharply higher this afternoon but I continue to believe that lower prices are ahead as the virus scenario is behind us so make sure you use the proper stop loss as my exit strategy is always the 10 day high if I’m short. Hog futures are trading far below their 20 and 100 day moving average telling me that the trend is lower, however nothing goes straight down so it would not surprise me see some type of consolidation but the trend clearly is to the downside in my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Corn Futures
Corn futures rebounded over 20 cents from their contract low over the past week in the December contract as prices are looking for a short term bottom as prices hit a 10 day high for the 1st time in over 3 months as corn has traded higher for the 4th straight trading session and if you took the original sell recommendation at 4.87 in May place you stop on a closing basis at 3.78 as the trend is becoming neutral in my opinion. It looks to me that corn will consolidate until the next crop report as prices are now trading above their 20 day but still below their 100 day moving average telling you that the trend is mixed so if you are stopped out in Mondays trade move on and look for another trend as this trend was outstanding to the downside over the last 3 months. Many traders struggle on where to exit a winning or losing trade as I have found the simplest and most effective method using the 10 day high or low depending on your position as everything eventually comes to an end.
TREND: MIXED
CHART STRUCTURE: OUTSTANDING
Sugar Futures
sugar futures had a relatively quiet trading week currently trading at 15.91 finishing down around 22 points for the week as prices still are trading below their 20 and 100 day moving average telling you that the trend remains to the downside and I’ve been recommending a short position when prices broke 17.45 and if you took that recommendation make sure you place your stop above the 10 day high which currently stands at 17.26 and that stop will be lowered considerably on Mondays trade. The chart structure in the sugar will start to improve next week as I think there’s still a high probability that prices retest the contract low of 15.10 as production cuts were overblown due to the central Brazilian drought causing prices to rally up to 18.50 in the month of June only to start their downtrend in recent weeks.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Coffee Futures
Coffee futures still remain in a choppy to sideways pattern as I’m still sitting on the sidelines waiting for better chart structure to develop as a blow off top was created 2 weeks ago around the 210 level as prices are going out this Friday around 193 a pound up almost 500 points looking for some fresh fundamental news to dictate short-term price action as the short term trend seems to be higher. As a trader you must look for trends and this market is very choppy and choppy markets in my opinion are extremely difficult to trade and should be avoided so look for another market but keep an eye on coffee because eventually the chart structure will improve and the trend will develop so patience is the name of the game.
TREND: MIXED
CHART STRUCTURE: POOR
Cattle Futures
Cattle futures in the October contract are currently trading at 147.30 a pound up 100 points this Friday afternoon in Chicago as prices settled last Friday at 150 continuing its downward momentum as I’ve been recommending a short position while currently placing your stop above the 10 day high which is around 157.25 still risking around 1000 points or $4,000 per contract as I’ve talked about in previous blogs this was a high risk trade which should only have been considered if you are trading a larger account. Cattle futures are trading below their 20 and 100 day moving average hitting an 8 week low in Wednesday’s trade as I continue to believe prices are headed lower due to the fact that Russia has really thrown a wrench into the closet by banning chicken exports which I think will flood the domestic market pushing all meat prices lower and currently I’m recommending a short position in hogs as well so continue to play this to the downside. This market has dropped over 1300 points in 2 weeks so it would not surprise me to see some type of consolidation but take advantage of any rallies as I believe the commodity markets as a whole will continue to go to the downside. If you have not participated on the short side in this market sit on the sidelines as the chart structure is terrible at the current time and wait for some type of rally to enter making sure you use a proper stop and risk management.
TREND: LOWER
CHART STRUCTURE: TERRIBLE
What Does Risk Management Mean To You?
I generally tell people that the reason people lose money in commodities is not due to the fact that they are bad at predicting where prices are headed, however they are bad when it comes to losing trades and refusing to take a loss which results for heavy monetary losses that are difficult to come back from. For example if a customer has $100,000 account in my opinion on 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 will risk 20% to 30% on any given trade or even higher therefore if you are wrong on two or three trades that $100,000 dollar 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 which is very possible the losses can add up to be staggering so what I am suggesting to you is if you have $100,000 account risk between $2,000 – $3,000 per trade so if you lose on five straight trades the worst-case scenario is that your down $15,000 and still have an $85,000 balance which is very possible to still come back from and your still in the game.
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
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
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.
Michael Seery, President
Seery Futures
http://ift.tt/1fGCqDc
Twitter–@seeryfutures
Phone #: (800) 615-7649
mseery@seeryfutures.com
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