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.
Silver Futures
Silver futures in the December contract settled last Friday at 17.53 currently trading at 16.75 down about $.30 in New York this Friday afternoon as the U.S dollar is up over 100 points this afternoon sending the precious metals sharply lower as silver has hit a 5 year low and if you took my original recommendation selling at the 4 week low of 20.44 continue to place your stop at the 10 day high which stands at 18.00 as the chart structure will improve on a daily basis. I remain very pessimistic silver prices and I do think that prices will continue their downtrend as the U.S dollar is very strong to the upside and I do not believe that trend is going to reverse so continue to sell rallies in this market placing the proper stop loss as the commodity markets in general over the last several months have been very pessimistic and I don’t think the bottom has occurred. Silver futures are trading far below their 20 & 100 day moving average continuing to grind lower as deflation in Europe and around the world is a real concern and that is also helping put pressure on prices here in the short term as nobody wants to step in front of a falling knife and that’s what’s occurring at this time as platinum prices are down another $45 this afternoon. I’ve been trading commodities for over 20 years and the one lesson I try to harp on is the fact that you must be a trend follower & the trend is to the downside because it’s easier to trade with the path of least resistance rather than trying to pick a top or bottom.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Gold Futures
Gold futures in the December contract are plummeting this Friday afternoon in New York down over $20 breaking $1,200 an ounce currently trading at 1,194 with the next major level of support which was hit on New Year’s Eve of 2013 at 1,184 and I think that level will be broken as I’ve been recommending a short position gold when prices hit a 4 week low many weeks back at 1,287 and if you took the original recommendation place your stop above the 2 week high which currently stands at 1,237 as the bearish trend is getting stronger to the downside on a weekly basis in my opinion. The main reason for the sell off today was the fact that the unemployment came out this morning stating that the economy added 250,000 new jobs with an unemployment rate of 5.9% sending the U.S dollar up 100 points as the Euro currency is down 150 points which is a very bearish fundamental indicator to the precious metals and the commodities as a whole as gold prices are still trading far below their 20 & 100 day moving average so continue to play this to the downside and take advantage of any rallies while placing the proper stop loss as lower prices are ahead. The United States unemployment rate is at 5.9% which is the lowest since July 2008 which basically means that the interest rates almost have to be raised as they are way too low for an economy that is back on its feet as there is no reason to own gold or any of the precious metals at the current time as platinum is also in a complete free-for-all.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
U.S. Dollar Futures
The U.S dollar index skyrocketed this Friday afternoon up over 100 points which is a tremendous move as the U.S dollar generally is one of the least volatile commodities as it is a basket against the foreign currencies hitting another high today continuing its bullish momentum. If you followed my original recommendation when prices broke above 81.20 in late July continue to place your stop loss below the 10 day low which currently stands at 84.50 or 225 points away as the chart structure is very poor current time. This market still has not hit a 2 week low since the month of June so continue to place the proper stop loss as I believe higher prices are ahead as the unemployment report came out showing that the United States added 250,000 jobs showing that the economy is improving as Europe is in a mess as the Euro currency is down another 150 points today so the trend is your friend in the commodity markets so continue to play this to the upside, however if you have missed this trade sit on the sidelines due to the fact that the risk is too high at the current time as you have missed the boat. Not only is the Euro currency and the British Pound selling off sharply but the Japanese Yen is also incredibly weak as these countries continue to do stimulus pushing their currencies lower while the United States is ending quantitative easing next month so all the fundamentals are bullish the U.S dollar with the next major level of resistance between 88 – 89 as the U.S dollar has rallied for the 7th week consecutive and seems to be getting stronger to the upside.
TREND: HIGHER
CHART STRUCTURE: POOR
Crude Oil Futures
Crude oil futures in the November contract are down $1.50 a barrel currently trading at 89.53 right near two-year lows with extreme choppiness over the last several weeks with many rallies and sell offs as I’ve been sitting on the sidelines but now the trend clearly is to the downside, however the chart structure is terrible at the current time so I am not taking a short at this time, however if you are interested in selling this market I would sell a futures contract at today’s price of 89.53 while placing my stop above $95 risking around $5,500 per contract. The chart structure is very poor as volatility is extremely high but I am certainly not recommending anybody to buy this market as I do think prices are headed lower and if the chart structure improves in the next couple of days I will take a shot at the downside as we are awash in supplies worldwide plus the fact that the U.S dollar hit 2 year highs today as I see oil prices possibly heading down to the $80 level here in the next couple of months due to the fact of low demand and the fact that many of the commodity markets continue bearish trends as deflation is a problem not inflation. The fact that prices are not rallying with havoc over in the mid-East as oil used to rally sharply on problems in the Middle East but now the U.S is an exporter of oil so these ISIS events are not as important as they used to be so continue to sell any type of rally while placing your stop loss properly risking 2% of your account balance on any given trade.
TREND: LOWER
CHART STRUCTURE: TERRIBLE
Copper Futures
Copper futures in the December contract settled last Friday in New York at 3.0350 a pound currently trading at 3.00 down over 300 points for the trading week as I’ve been recommending a short position when prices broke out below 3.10 and if you took the original recommendation place your stop loss above the 10 day high which currently stands at 3.09 as the chart structure has improved dramatically and will continue to improve next week as well. The commodity markets are being affected by a strong U.S dollar so continue to play copper to the downside as I do think lower demand from China will continue to pressure prices as copper has hit a 5 month low and has held up much better than the rest of the precious metals as the next level of support is at 2.80 and I think that will be tested here in the next week or so as I am bearish the entire commodity market as a whole. Copper prices are unchanged this Friday afternoon being supported by a very strong stock market showing an improving economy which means there could be more short-term demand for copper as the housing market continues to remain strong, however I do think pressure from gold, platinum, and silver will eventually overwhelm copper prices while historically speaking prices are still very high so continue to play this to the downside in my opinion. I like to keep my trading philosophy very simple and one of my rules is when prices hit a 4 week low with excellent chart structure I become a seller while placing my stop above the 10 day high & that’s exactly what happened in the copper market as I do believe some trading systems are way too complicated so keep your trading theory simple as you should be able to explain your reasoning to a 10-year-old child.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee futures in the December contract skyrocketed this week after settling last week around 186 going out this afternoon in New York at 2.07 a pound hitting a 5 month high with the next major resistance at 2.25 however the chart structure is terrible as prices have gone straight up due to dryness in Brazil causing concerns about another terrible crop developing lowering carryover levels, however it is very early and prices are very sensitive. If you have been following any of my previous blogs my main characteristic of getting into a trade is solid chart structure and the chart structure here is terrible so I cannot play this market because the 10 day low is at 1.78 which is 30 points away almost $12,000 per contract and remember I was short this market when prices broke 180.00 getting stopped out at the 10 day high around 188 but that is my strategy because now the market has moved up another 20 points. At this point I am not recommending a short position in coffee because I’m a trend follower & the trend clearly is to the upside, however I’m very pessimistic many of the commodities and if you have read any of my previous blogs I continue to sell many of these markets but wait for coffee to develop better chart structure before entering because the risk is just too high while remembering the fact that I only want to risk 2% of my account balance on any given trade and that’s just not possible now with the poor chart structure that has developed.
TREND: HIGHER
CHART STRUCTURE: TERRIBLE
Soybeans Futures
Soybean futures in the November contract had a quiet and nonvolatile trading week going out last Friday at 9.10 a bushel closing this Friday afternoon in Chicago around 9.12 a bushel basically unchanged for the trading week as traders are keeping a close eye on Thursdays USDA crop report which will show crop production numbers as estimates range from 3.9 – 4.1 billion bushels which is all-time record high with carryover levels possibly climbing to 500 million bushels as I’ve been recommending a short position in soybeans for 5 months and this trade has yet to hit a 2 week high so continue to place your stop at the proper level which currently stands at 9.44 and that stop will come down in the next couple of days as I think $8.50 is a reality here in the next couple of weeks. Harvest season is in full swing in the Mid-Western part of the United States currently as there were heavy rains here in Illinois which propped up prices earlier in the trading session only to succumb to pressure as the U.S dollar hit another 2 year high today against the foreign currencies which is definitely pessimistic grain prices but the truth is that we have too high of a carryover level and too large of as crop coming in the next 5 weeks so continue to play this to the downside as the chart structure has improved dramatically as this trade has been one of the most remarkable trades I can remember.
TREND: LOWER
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 February contract finished down 135 points this Friday afternoon in Chicago still trading higher by 100 points for the trading week as I’m now recommending a short position in this market while placing your stop above 94.25 risking around 365 points or $1,500 per contract and that stop will be lowered on Monday down to 92.50 risking around $800 as I do believe that hog prices are overpriced and will continue their downtrend as producers are rapidly expanding production as soybean meal and corn prices have plummeted in the last couple of months making the margins or the profits extremely high. I only trade markets that have low risk with high reward situations and if you can risk $1,500 in the next couple of days I think it is worth it however that stop will come down and I definitely love risking $800 in a hog contract because the volatility is extremely high with huge percentage moves so play this to the downside as long as prices stay below 94 for the current time as deflation is pressuring commodity prices, however cattle prices hit all-time highs once again this week and it looks like there’s no stopping cattle to the upside and that is helping support hog prices at the current time but if cattle starts to selloff that will definitely put pressure on prices in my opinion so I remain bearish.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the March contract rallied sharply this Friday afternoon in New York finishing up 39 points at 16.44 a pound after finishing last Friday at 16.56 finishing slightly lower for the week as volatility has increased dramatically in the last several weeks as I was recommending a short position for several months getting stopped out last week at the 10 day high at 14.40 as I’m currently neutral this market sitting on the sidelines waiting for a better chart pattern to develop. There are concerns down in Brazil once again about lack of rain which sent coffee prices to 5 month highs sending volatility back into the sugar market but wait for a better chart pattern to develop as prices are very choppy at the current time and as you know if you followed any of my previous blogs in the past I’m only a trend follower & the trend currently in sugar is choppy as I’m not convinced that a bottom has been made. I still think deflation is a problem worldwide and look at many of the commodity markets as they continue to move lower as the U.S dollar hit 2 year highs against many of the foreign currencies so I think this is just a kick back from oversold conditions, however I will not reenter this market until a true breakout occurs and that break out on the downside is at 15.50 in the March contract. The volatility in sugar will be extremely high over the next several months so make sure you use the proper amount of contracts minimizing your risk to 2% of your account value on any given trade as I still think there’s a high possibility that sugar trades back down to 12 – 13 level as corn and crude oil prices continue their bearish trends which will affect sugar prices as well in my opinion. Sugar prices are trading above their 20 day but below their 100 day moving average telling you that the trend is mixed and should be avoided at the current time.
TREND: NEUTRAL
CHART STRUCTURE: POOR
Where Should You Place Your Stops?
Identifying where stops exist in the market is an important lesson to learn because placing a correct stop loss that will improve your trading tremendously over the course of time. Nobody knows for sure where stops are located, however I have learned a couple of things over my 20 year career and I have a general idea where stops are placed and why. Buy stops are generally placed above the 10 day high as well as above contract highs as the bulls generally are buying more and the short selling are getting stopped out. Sell stops are usually placed at the 10 day low as well as below contract lows which means the shorts are adding to their position and the longs are getting stopped out as they figure they are wrong.
The other common places to have stops are at certain moving averages such as the 20 or 100 day moving average where traders think either the trend is turning bullish or the market is starting to break down. Placing stops to close or not at important price levels can get very frustrating because the market can stop you out and then go the direction that you thought leaving you behind and out of the market. Placing stops is one of the most important aspects of trading in my opinion.
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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