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 2 week high today trading up $1.30 a barrel at 95.85 as tensions with Russia continue to prop up prices as I have been recommending a short position but it’s time to move on and look for another market as this trade hit a 10 day high today so if you took my short recommendation it’s time to exit and move on in my opinion. As a trader you must have an exit strategy and my exit strategy is if I’m short I place my stop at the 2 week high so currently sit on the sidelines and wait for a better trend to develop as this trade was disappointing but was pretty neutral but I do believe that over supplies eventually will continue to push prices lower but there is so much chaos going on in the Middle East at this point pushing prices higher so let’s wait for some better chart structure to develop as we might consolidate in the next several weeks so wait for another trend to develop as I like trading the crude oil market because sometimes the risk reward situation is highly in your favor since crude oil is a highly volatile commodity.
TREND: NEUTRAL
CHART STRUCTURE: SOLID
Natural Gas Futures
Natural gas futures in the October contract are trading above their 20 day but still below their 100 day moving average telling you that’s how far prices have come down in recent weeks however I’m now recommending a long futures position at the breakout of 4.04 placing my stop loss below the double bottom and contract low of 3.76 risking around 30 points or $700 per contract if you trading the mini version and if you trading the large contract that risk is around 3,200. If you look at the daily charts it looks like a double bottom was created around 3.78 as we enter the high demand season of autumn and winter and if you remember last year’s winter was historically cold sending natural gas prices to 5.50 as the risk reward is in your favor and that stop loss will be moved up on a daily basis so play this one to the upside as I think there’s a high probability that prices have bottomed out.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Silver Futures
Silver futures in the December contract are currently up $.11 at 19.59 an ounce after rallying sharply earlier on news of Russia invading the Ukraine once again sending prices as high as 19.95 but then reality set in sending prices near session lows as I’ve been recommending a short position in silver when prices broke 20.40 and if you took the original recommendation make sure you place your stop above the 10 day high which is today’s high of 19.95 risking around $.35 or $1,800 per contract as the chart structure is currently outstanding. Silver futures are still trading below their 20 and 100 day moving average stating that the trend is lower however the volatility in silver is at historical lows & in my opinion there’s just a lack of interest and the only reason prices go higher is because of geopolitical news not because of demand so continue to place your stop above today’s high as the risk reward is in your favor as many of the commodity markets today were higher. The trend still remains to the downside with the next major support level of 19.40 and if that level is broken look for a possible retest of the contract low of 18.80 which happened in early June.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Gold Futures
Gold futures in the December contract are currently down $2 this Friday afternoon in New York trading at 1,288 an ounce while still trading above its 20 day moving average but below its 100 day moving average which stands at 1,296 as I’ve been recommending a short position at 1,280 while now placing your stop loss above the 2 week high which stands at 1,322 risking around $25 or $2,500 per contract as prices settled last Friday at 1,280 up about $10 for the trading week. The reason for the rise in gold prices is the fact that Russia is now invading Ukraine and ISIS in Iraq is pushing up gold in the last week as this problem doesn’t seem to be going away however, I’m a short-term trader and the chart structure is outstanding at the current time so I trade with the trend which is still to the downside in my opinion as that stop will also be lowered in the next couple of days. If the gold was truly in a bullish trend prices would be much higher as there is chaos going on in the world and that tells me how weak prices really are as demand is poor as the U.S dollar continues to move higher hitting an 11 month high against the Euro currency which is extremely bearish the precious metals and commodity prices as a whole.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Soybean Futures
The soybean market is still trading below its 20 & 100 day moving average trading at 10.23 a bushel down about 20 cents for the trading week as this has been one of the best trends to the downside in 2014 as prices have not hit a 2 week high in over 3 months as excellent weather conditions in the Mid- West part of the United States has been remarkable and one for the record books in my opinion as rain and mild temperatures have been constant throughout the summer. Traders are awaiting the next USDA crop report which is in a couple weeks as prices are right at 4 year lows and if you are still short this market I would place my stop above the 10 day high which currently stands at 10.60 risking around $.40 or $2,000 from today’s price levels as the problem with soybeans is a 3.8 billion crop being produced and carryover levels going as high as 430 million bushels which historically is extremely lofty and should keep a lid on prices for the rest of 2014 as a farming magazine stated yesterday that there’s a possibility that soybeans might plant as many as 86.5 million acres and that’s compared 84 million acres this year which could produce a crop of over 4 billion and if that’s true I think soybean prices could head dramatically lower over the next 12 months, however spring planting is still quite a distance away and things can change but this could be a secular bear market for several years to come especially if the weather produces another record crop next year as South America should also produce another record crop this year.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Cotton Futures
Cotton futures in the December contract settled last Friday at 66 going out today around the same price after hitting a 4 week high earlier in the trading week now trading above its 100 day moving average telling you that the trend has now turned higher and if you are bullish cotton my recommendation would be to buy at today’s price while placing your stop loss below the contract low risking about 400 points or $2,000 per contract, however I am currently sitting on the sidelines in this market as the chart structure has improved dramatically. Last Thursday’s trade prices were sharply lower reversing some of this week’s gains on the fact of heavy rains in the southern part of the United States propelling crop development and it certainly looks like it’s going be a near record crop with extremely high historical carryover levels as this market currently is consolidating in my opinion as prices dropped over 2000 points from early May. Another negative influence on cotton prices is the fact that the U.S dollar hit an 11 month high against the Euro currency this week and that is always negative commodity prices as we will start to enter harvest season in a little over 1 month.
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
Cocoa Futures
Cocoa futures in the December contract are trading above their 20 and 100 day moving average as were starting to head into the demand season after settling last Friday at 3194 trading up about $.80 for the week and traded as high as 3300 on Wednesday hitting a 3 ½ year high. At the current time I’m recommending a bullish position by buying a futures contract and placing your stop below the 10 day low which currently stands at 3184 risking around 100 points or $1,000 per contract as this has been one of the few bullish commodity trends. The problem with cocoa is the fundamentals are strong as we have had poor crops in recent years as cocoa is grown in the Ivory Coast and must be grown within 20 miles of the equator making this a rare commodity and these countries are very unstable and sometimes unrest pushes prices higher and if there is another poor growing season rest assured prices could go much higher in my opinion, but make sure you place a stop at the 10 day low in case the trend does change because trends can change on a dime.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures in the December contract are stuck in an 8 week consolidation trading at the upper of the trading range all due to Ukrainian problems as prices are now trading above their 20 but still below their 100 day moving average as prices settled last Friday at 5.62 currently trading at 5.66 in Chicago and if your bullish the wheat market my recommendation would be to buy at today’s price while placing my stop below the contract low of 5.46 risking around $.24 or $1,200 per contract, however currently I am sitting on the sidelines waiting for a breakout to develop. If you were following my previous blogs I have a theory on consolidations and that theory states the longer the consolidation the more powerful the breakout so keep an eye on this market and if prices break 5.42 my recommendation would be to get short placing my stop above the 10 day high and if prices breakout to the upside I would buy futures contract while placing my stop at the 10 day low as this market will not consolidate forever. The Ukraine is the 4th largest food producer in the world and with tensions between Russia and Ukraine that is propping up wheat prices currently but has nothing to do with the fundamental crops which look very solid at this time as abundant rain covered much of the Great Plains in the last 2 weeks so just keep an eye on this market because trading in a consolidation or choppy market is very difficult to be successful in my opinion.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures in the December contract are currently trading at 3.63 down 6 cents this Friday afternoon in Chicago after settling last Friday at 3.71 as the volatility is very low as we have been trading in a 6 week consolidation between 3.60 – 3.80 and I’m still recommending a short position and if you took that original recommendation several months ago make sure you place your stop on a closing basis at 3.78 which is around $.15 or $750 per contract at today’s price levels. The next major support is at the contract low at 3.58 and I still believe that prices will break 3.50 in the coming weeks as harvest is right around the corner as we are expecting 170 bushels per acre which is phenomenal with another 14 billion bushels being produced. The scary thing about the corn market is a farming magazine stated yesterday that they are expecting over 90 million acres being planted again next year and if that’s the case you could be looking at long-term secular bear market as supplies are just too large currently but that is a long ways away and things can change by next April, however if we don’t reduce planting in all of the agricultural products prices are going to get depressed and farmland prices start to head south as well.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the October contract are currently trading at 15.51 a pound after settling last Friday at 15.64 as the volatility certainly has come back as prices traded as low as 15.30 then rallied up to the 16.00 level as prices are still trading below their 20 and 100 day moving average as the Brazilian sugar production is estimated to be lower, however world supplies of sugar are historically very high as the bulls and bears are in a tug of war. Sugar prices hit a one year low earlier in the trading week and I’ve been recommending a short position when prices broke 17.45 and if you took that original recommendation make sure you place your stop loss above the 10 day high which currently stands at 16.05 risking around 55 points or $600 per contract as the chart structure has improved dramatically in recent weeks. One thing I can be sure of is that sugar prices will become extremely volatile once the growing season comes about just like last year when prices rallied 300 points on the fact that central Brazil had one of its worst droughts in decades but I’m a short-term trader and the trend is still lower in my opinion so just make sure you place the proper stop loss.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee futures in the December contract settled last Friday at 187.35 while currently trading around 199 up around 1200 points for the week as there are concerns about next year’s crop as dryness is still a problem especially in Central America and the problem with coffee is you cannot have back to back poor growing years because that could send prices up dramatically reducing carry over levels but that is not in the cards currently just perception. Coffee futures are trading above their 20 and 100 day moving average looking to retest the August 1st high of 211 as I’m still sitting on the sidelines in this market waiting for better chart structure and a trend to develop despite the fact that the trend currently seems to be the upside. Many of the commodity markets including the soft markets have been in bearish trends except for cocoa and coffee as they continue to grind higher so keep an eye on this market and wait for a 4 week breakout to the upside before entering making sure that the risk reward equals 2% of your account balance.
TREND: MIXED
CHART STRUCTURE: POOR
U.S Dollar Index Futures
The U.S dollar continues its bullish momentum trading far above its 20 & 100 day moving average as prices have rallied 250 points in the last 2 months as investors are fleeing out of Eastern Europe and the Euro currency putting their money in U.S dollars which is considered a flight to quality and if you took the original recommendation when the breakout occurred above 81.20 make sure you place your stop at the 10 day low which will be on Monday’s trade at 81.64 and that stop loss will be moved up dramatically as this is one of the few bullish commodities around. Prices settled last week at 82.37 going out today around 82.50 basically unchanged for the trading week as the U.S dollar is a very good trading vehicle as it’s not extremely volatile compared to many other commodities so smaller trading accounts can trade this commodity and I still believe higher prices are ahead as these Ukrainian problems are not going to go away as the Federal Reserve is also tapering its bond buying program while the European countries are printing money like crazy so fundamentals are clearly bullish the U.S dollar here in the short term. The chart structure will start to improve on a daily basis next week as prices have basically gone straight up in recent weeks as Europe seems to be going into a recession as deflation is a real problem.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
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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