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.
Gold Futures
Gold futures in the February contract are trading below their 20 and 100 day moving average settling last Friday in New York at 1,222 currently trading at 1,196 continuing its long-term bearish trend as I’m currently sitting on the sidelines in this market as volatility is too high and the price remains extremely choppy as we head into the new year. Gold prices rallied as high as 1,240 last week before settling back despite the fact that the stock market had a wild ride but the interest still is in the S&P 500 which looks like it’s going to close right near another record high today. The problem with the gold market is the ETF market in gold might be sold come year end for tax purposes and when that happens the ETF than has to sell the futures contract so I still think lower prices are ahead but this market is difficult to trade at the current time so move on and find a market that is trending strong in one direction. The U.S dollar hit another multiyear high which is generally pessimistic commodity prices and especially precious metals prices, however with turmoil in Russia gold prices have been extremely volatile with many $30/$40 price ranges on any given day so if you do trade this market make sure you place the proper amount contracts limiting risk to 2% of your account balance as I have to admit it’s fun to watch but I remain on the sidelines until a true breakout occurs. Rumors of Russia having to sell some of their gold reserves sent gold prices down nearly down $30 in Wednesday’s trade however that rumor has not been verified at the current time but with the problems in Russia it would not surprise me about anything.
TREND: MIXED
CHART STRUCTURE: POOR
Crude Oil Futures
rude oil futures in the February contract are up $3 this Friday afternoon in New York currently trading at 57.40 after settling last Friday around 58.08 a barrel finishing down nearly $1 for the trading week and traded as low as 53.94 before slightly rallying as oversupply and lack of demand continue to push oil prices to 5 year lows. If you’re still short this market I would continue to place my stop above the 10 day high which in Monday’s trade will be 64.35 risking around 700 points or $7,000 per contract plus slippage and commission, however the chart structure will improve on a daily basis as the 10 day high will be lowered significantly in the next several days. This has been one of the best trends in recent memory as prices have basically collapsed in recent weeks ever since OPEC announced that they will not cut production on Thanksgiving Day which sent prices sharply lower as there is also huge supplies here in the U.S so who knows how low prices can go as I still highly recommended not to be buying this market so if you are currently not short I would sit on the sidelines and look for a market with better chart structure and less risk. Crude oil futures are trading far below their 20 and 100 day moving average as consumers around the country are certainly benefiting from lower oil prices at the pump which is also good for the stock market in my opinion as volatility in oil is as high as I’ve ever seen it so be careful as volatility is here to stay.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Lean Hog Futures
Lean hog futures in the February contract are slightly lower this Friday afternoon in Chicago after settling last Friday around 83.25 currently trading at 81.72 and traded as low as 78.67 earlier in the week then rebounding along with cattle prices which have been under pressure as well. I’ve been recommending a short position in this market and if you took that trade make sure you place your stop loss above the 10 day high which currently stands at 85.77 as the chart structure will improve dramatically next week lowering your stop almost on a daily basis. Hog prices are trading below their 20 and far below their 100 day moving average telling you that the trend is getting stronger to the downside as an increase in supply is ahead in my opinion as the virus is behind which affected hog prices tremendously sending prices near 135 which were an all-time record, however this is a different situation and the trend is your friend so continue to place your stop loss above the 10 day high while maintaining a bearish position taking advantage of any rally as I think lower prices are still ahead. Cattle prices have been extremely volatile as feeder cattle had 6 consecutive limit down days and I think that’s also pressuring hog prices as cattle has been remarkably strong in recent years except for the last several weeks as fear of expansion of herds is also pressuring that market. If you are a hog producer I would highly recommend that you have some type of hedge as prices could still drop significantly even from today’s depressed price levels and if you need any help please give me a call as I will be more than happy to help you with your hedging needs.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Cocoa Futures
Cocoa futures in the March contract finished higher for the 6th consecutive trading session hitting an 8 week high up over 130 points for the trading week as I’ve been recommending a bullish position since last Friday as the risk reward was about $300 per contract plus slippage and commission and if you took that trade continue to place your stop loss below the 10 day low which currently stands at 2848 risking around 132 points or $1,320 per contract. Cocoa futures in my opinion have bottomed out as the chart structure was outstanding and met criteria so therefore I was recommending the trade as the next level of resistance is 31.50 as cocoa prices are still 10% below Septembers peak of 3350 as the Ebola scare sent prices sharply higher, however record production in the Ivory Coast sent prices lower bottoming out in November. The chart structure will not improve for at least another 5 days so the risk will remain at the same level and if you have not entered this trade at the current time wait for a pullback before entering while maintaining the proper stop loss. Cocoa futures are trading above their 20 day but just slightly below their 100 day moving average telling you that the trend is currently mixed but due to the fact that prices hit a 4 week high and had excellent chart structure that’s the reason why I recommended this trade.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures in the March contract settled up about $.02 this week in Chicago closing around 4.10 a bushel hitting 6 month highs as this market continues on its bullish trend as I was recommending a bullish position getting stopped out last Friday as I was wrong on this market as it just seems to grind higher on a weekly basis. Corn futures are trading above their 20 and 100 day moving average telling you that the short term trend is higher as there was a price gap created over the Fourth of July weekend around the 4.25 level so there’s a chance prices might try to fill that gap over the coming weeks, however in the long run I still think prices are limited to the upside but I’m sitting on the sidelines at the current time. Estimates of next year’s acreage have been coming out however it’s still very early, as estimates in the corn are around 88 million acres versus around 91 million acres last year so if an excellent crop is produced that would produce around 14 billion bushels, however if there are any problems the crop could be significantly less which I think is also pushing up prices. Corn futures bottomed out on the 1st day of October rallying around $.80 or 25% since harvest lows which has been a terrific rally in my opinion and one that I did not expect as carryover levels are historically high with back to back record crops as now traders are keeping an eye on South American weather. If you are currently long a futures contract my recommendation would be to place your stop loss below the 10 day low as the chart structure is outstanding at the current time at 3.87 risking around $.23 or $1,100 plus commission and slippage however as I stated I am currently neutral.
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
Cotton Futures
Cotton futures in the March contract are trading above their 20 day but still below their 100 day moving average telling you that the trend currently is mixed, however prices did hit a 4 week high last week as I’m recommending a bullish futures position buying at today’s price of 60.36 while placing your stop below the contract low which stands at 58.71 risking around 170 points or $850 per contract plus commission and slippage. Earlier in the week Chinese production was slightly lowered as many of the commodity markets including the grains have been going higher in recent weeks with the possibility that cotton prices have bottomed especially if you look at wheat, corn, and soybeans all near six-month highs so continue to play this to the upside as the risk/reward is in your favor in my opinion. Volatility in cotton at the current time is relatively low as we enter the holiday season that is why the chart structure is outstanding allowing you to place a tight stop loss minimizing the risk to 2% of your account balance so take a shot at this to the upside.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the March contract settled unchanged for the trading week currently at 14.99 a pound still trading below their 20 and 100 day moving average telling you that the trend is to the downside as I’ve been recommending a short position for several months in this market as prices hit a new low of 14.62 earlier in the week and if you took that recommendation make sure that you place your stop loss above the 10 day high which currently stands at 15.62 risking $650 per contract plus slippage and commission. Crude oil prices are at a 5 year low as that’s what’s pressuring sugar prices as well as global supplies are still historically large and I do think there’s a possibility that prices will retest the summer lows of 2010 around 13.50 especially if weather remains ideal in Brazil. The chart structure will improve next week as the 10 day low will be lowered allowing you to place a tighter stop loss and I would take advantage of any rallies as the chart structure is outstanding with the possibility of adding another contract as long as you make sure that proper risk management is at hand.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures in the March contract had an extreme volatility this week settling last Friday at 6.06 a bushel while currently trading at 6.34 due to concerns about Russia’s exports and the fact that the Russian Ruble has absolutely collapsed sending wheat prices sharply higher as prices traded as high as 6.77 on Thursdays night session. A couple of days ago I was recommending if you have multiple contracts on take 25% off and then play the rest of the contracts at the 10 day low which currently stands at 5.72 a bushel which is still around $.60 or $3,000 risk per contract plus slippage and commission. The stop loss will not be raised until later next week as volatility should remain extremely high as wheat has rallied around $2 in the last 3 months which has been remarkable in my opinion because the world does have adequate supplies and this is not brought on by a drought as these type of situations usually settle down so let’s keep a close eye on this market. Wheat futures are trading far above their 20 and 100 day moving average telling you that the trend is higher and as a commodity trader you never want to guess how high prices can go as you generally will be wrong especially in the long run but if you’re not in this market at the current time the risk is too high as you have missed the boat so look at another market with less risk and better chart structure.
TREND: HIGHER
CHART STRUCTURE: POOR
Soybean Futures
Soybean futures in the March contract finished the trading week down about $.20 in Chicago settling around 10.38 a bushel as prices look to be rolling over in my opinion as I’m recommending a short position in soybeans while placing your stop above the 10 day high which currently stands at 10.65 risking around $.32 or $1,600 per contract as the chart structure is outstanding at the current time. The long-term downtrend in soybeans is still intact as prices are having a difficult time cracking 10.60 so if you’re looking to go counter trend the risk/reward is in your favor in my opinion as the holiday markets are upon us with low volatility at the current time. Acreage estimates are coming out for next year with the possibility of another 84 million acres which is just about 200,000 less than what was planted this year which could produce another massive crop around 4.4 billion bushels if the weather is ideal which could balloon carryover levels even higher than they stand right now around 410 million bushels so the long-term outlook in soybeans is still bearish in my opinion. Soybean prices have been riding the coattails of corn and wheat which are much stronger at the current time as traders are keeping an eye on South American weather which currently is ideal but it’s still very early in the growing season as the next 4 weeks will be very important for the soybean crop so if you agree with my opinion buy a futures contract at today’s price and remember to keep the stop at the 10 day high which will be lowered next week.
TREND: MIXED
CHART STRUCTURE: IMPROVING
Coffee Futures
Coffee futures in the March contract are currently trading at 175.65 a pound after settling last Friday in New York at 174.00 up slightly for the trading week as I’ve been recommending a short position as prices are still trading below their 20 and 100 day moving average and if you took that recommendation when prices broke 185 place your stop above the 10 day high which currently stands at 182.20 risking around 700 points or $2,800 plus commission and slippage per contract. Coffee prices are right near six-month lows as the next level of support in my opinion is around 167 which was hit several months ago as I continue to recommend to sell any rally in this market while maintaining the proper amount of contracts because coffee is a high risk trade as weather in Brazil so far has been ideal which has been pressuring prices in recent weeks as prices topped out around 225 several months ago. The chart structure in coffee will improve on a daily basis as we enter the holiday season as volatility should remain relatively low, so look for prices to continue its bearish trend in the short term. Coffee Futures will become extremely volatile as they did in 2014 in the months of January & February when the drought really struck the growing regions hard so look for volatility to increase tremendously in the beginning of 2015.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Do You Add To Losing Trades?
This rule is extremely important and I witness it being abused constantly creating tremendous loses that are sometimes difficult to come back from. Never add to a losing position because if the position continues to go against you and now you have added even more contracts which are all losing money your account will suffer loses much more than 2% and in some case adding positions and never getting out of a losing trade has wiped peoples trading accounts down to zero because of 1 or 2 bad trades. Remember always play for another day you will have losing trades and the good traders manage losses and move on to the next possible trade.
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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