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 October contract down are $.30 this Friday afternoon currently trading at $93.60 a barrel finishing down about $1.50 for the trading week and I’m still recommending a short position in crude oil placing your stop above the 10 day high which on Monday’s trade will be at 97.10 risking around $4 or $4,000 per contract as the trend seems to be getting stronger to the downside as the U.S dollar is pressuring commodity prices hitting an 11 month high against the Euro currency this afternoon. The chart structure in crude oil will improve dramatically in the next several days so be patient as prices are still trading below their 20 and 100 day moving average dropping around $12 in the last 3 months as world supplies are extremely large at the current time and my theory states that the United States government wants to hurt Russia and the one way to hurt Russia’s economy is by pressuring oil prices as Russia’s economy is basically based on high energy prices so continue to play this to the downside as I think we will crack $90 a barrel in the next couple of weeks.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Silver Futures
Silver futures in the September contract settled down around $.20 for the trading week currently at 19.34 an ounce continuing its grinding bearish trend as I’ve been recommending a short position when prices broke below 20.30 as this trade has been grinding lower in the last couple of weeks and if you took that recommendation make sure you place your stop above the 2 week high which currently stands at 20.15 which is around $.75 away or $3,800 risk per contract as the chart structure remains outstanding. The U.S dollar is the main culprit pushing silver and gold prices lower as the dollar hit an 11 month high against the Euro currency pressuring the precious metals and especially silver which has extremely low volatility and lack of interest at the current time with the next major support down at $19 an ounce and in my opinion I think that level will be retested in the next couple of weeks. With the end of quantitative easing coming that has pressured many commodity prices just like it pushed up many prices in late 2010 however continue to play this to the downside and take advantage of any rallies making sure you place the proper stop loss as the trend is your friend in the commodity markets and the trend currently in silver is lower.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Gold Futures
Gold futures in the December contract hit a 9 week low this week in New York and I’m recommending a short position when prices broke 1,280 currently prices are trading at 1,277 an ounce while placing my stop above the 10 day high which currently stands at 1,322 risking around $45 or $4,500 per contract as prices are trading below their 20 and 100 day moving average telling you that trend has now been confirmed to the downside in my opinion. The U.S dollar hit an 11 month high against the Euro currency which is pressuring gold prices as well as the fact that there seems to be very little demand for many commodities despite a lot of turmoil across the world but still not able to support prices which tells me that this market is weak and should be sold.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Soybean Futures
Soybean futures in the November contract which is considered the new crop which will be harvested this October finished up $.04 this Friday afternoon at 10.42 a bushel finishing down about $.10 for the trading week as volatility has slowed down due to the fact that the weather market is coming to an end as we are starting to enter September with harvest just a stones throw away as I continue to recommend a short position while placing your stop above the 10 day high which currently stands at 10.90 risking around $2,500 per contract as the trend is to the downside as prices still remain far elow 20 and 100 day moving average telling you that trend is bearish. As I write this article in the suburbs of Chicago heavy rains have fallen over the last 24 hours with several inches in much of Illinois with hot temperatures arriving in the next 4 days as I continue to think this crop is going to get larger and larger throughout the fall estimates and should increase in the next USDA crop report which comes out in 3 weeks so continue to play this to the downside as the commodity markets as a whole remains bearish also because the U.S dollar hit an 11 month high versus the Euro currency pressuring commodity prices as a whole. Crop production for 2014 is estimated at 3.81 billion bushels with an approximation of 45.2 bushels per acre as I think that will increase with the heavy rains we received in the Midwestern part of the United States over the last several days as this has been an incredible year weather-wise and I would have to think that 2015 would be difficult to repeat this type of outstanding weather.
TREND: LOWER
CHART STRUCTURE: SOLID
Cotton Futures
Cotton futures in the December contract are trading above their 20 day still below their 100 day moving average as I am currently sitting on the sidelines in this market while prices settled last Friday at 65.45 while currently trading around that same price level today. If you are bullish this market and you think the bottom has finally been put in cotton prices my recommendation would be to buy at today’s price while placing your stop below the contract low of 62 risking around 350 points or $1,750 risk per contract. I had been short the cotton market for quite some time but prices hit a 2 week high last week and it was time to exit that position and wait for another trend to develop as this simply in my opinion is a consolidation after the 2000 point drop in 3 months so it would not surprise me to see some sideways action here in the next several weeks as traders await the next USDA crop report which comes out in about 3 weeks. Cotton production in the year 2014 will be excellent but it will not produce a record as the problem with cotton currently is the carryover levels historically are very high so lots of supply and lack of demand are putting pressure on prices in recent months.
TREND: HIGHER
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 in the October contract finished slightly lower this Friday afternoon in Chicago finishing down about 200 points for the trading week hitting a 6 month low as I have been recommending a short position for quite some time and I do believe prices are still historically too high as the hog virus is behind us in my opinion so continue to play this to the downside. If you took my original recommendation make sure you place your stop above the 10 day high which currently stands at on Monday’s trade around 99.00 which is around 600 points or $2,500 risk per contract as prices are trading far below their 20 and 100 day moving average telling you that the trend is lower as the commodity markets as a whole remains bearish and as I’ve talked about in many previous blogs when the Russians banned chicken imports that sent shockwaves throughout the meat sector sending cattle and hogs lower and I believe that trend will continue as there is now a surplus of chicken which is going to suppress prices which is also going to pressure cattle and hog prices in my opinion so continue to play this to the downside making sure you place a proper stop loss and if you have not participated in a short position in this market so far sit on the sidelines as the chart structure is poor and the risk is too high in my opinion.
TREND: LOWER
CHART STRUCTURE: TERRIBLE
Orange Juice Futures
Orange juice futures in the September contract settled last Friday at 148 going out today around 146 in a relatively quiet trade with a possible double bottom being created on the daily chart at 138 as I’m currently sitting on the sidelines in this market as there is no solid trend currently so be patient and keep an eye on this market. The problem with orange juice futures and the reason why prices have dropped in recent months is the fact that demand for the actual commodity is very low at the current time and that’s what’s been pressuring prices in recent months before bottoming out and consolidating in recent weeks but the chart structure is very poor at the current time so look for another market to trade. Orange juice futures are trading above their 20 day but still below their 100 day moving average telling you that the trend is mixed and I don’t like to trade choppy markets because they are difficult to be successful as the odds are against you.
TREND: MIXED
CHART STRUCTURE: POOR
Sugar Futures
Sugar futures in the October contract are trading below their 20 and 100 day moving average currently trading at 15.64 down about 35 points this Friday afternoon in New York after settling last Friday at 15.92 basically unchanged for the trading week as prices did hit a fresh 6 month low in Wednesday’s trade at 15.38 before rallying about 70 points as the volatility has come back into this market. I’ve been recommending a short position in sugar from early July when prices broke 17.45 and if you took that recommendation make sure you place your stop at the 10 day high which currently stands at 16.23 which is around 60 points away or $700 risk per contract from today’s price levels. Many of the commodity markets and especially the soft commodities continue to head lower and as a trend follower I remain bearish this market making sure that you do place the proper stop loss and use a proper money management system risking 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Coffee Futures
Coffee futures in the December contract are trading right at their 20 day and slightly above their 100 day moving average as I’ve been sitting on the sidelines in this market as the trend remains choppy settling last Friday at 193 going out around 190 this Friday afternoon in a relatively quiet trading week. Coffee prices have been consolidating in recent weeks still near the upper end of their yearly trading range after topping out 3 weeks ago around 210 as this market is just waiting for some fresh fundamental news to dictate short-term price action as I still recommend to sit on the sidelines and wait for an official breakout to occur which is either a 4 week high or a 4 week low in my opinion. Production numbers have been coming in slightly bullish out of Brazil pushing up prices in recent weeks so be patient as the chart structure will improve especially if the volatility remains low as we might have to sit on the sidelines in this market for at least 2 or 3 more weeks.
TREND: MIXED
CHART STRUCTURE: POOR
U.S Dollar Index Futures
The U.S dollar continues its bullish momentum hitting an 11 month high against the Euro currency trading higher 4 out of the last 5 trading sessions currently trading at 82.41 trading up about 90 points for the week as investors are fleeing out of the Euro currency while going to a flight to safety which is considered the U.S dollar. I’ve been recommending a long position in the dollar and it’s the only position I’m recommending to the long side and if you been following any of my previous blogs I’m short the entire commodity market and long the U.S dollar so make sure you place your stop below the 10 day low which is at the 81.41 risking around 100 points or $1,000 risk from today’s price levels. The U.S dollar is trading far above its 20 and 100 day moving average continuing its bullish momentum and you have to ask yourself what would you rather own the Euro currency or the dollar and the answer to that currently is the U.S dollar which is a more stable currency while problems in Eastern Europe especially with the Ukrainian situation as that problem is not going away anytime soon so continue to play this market to the upside and take advantage of any dip in price.
TREND: HIGHER
CHART STRUCTURE: SOLID
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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