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 above their 20 and 100 day moving average settling last Friday in New York at 1,277 while currently trading at 1,288 an ounce down about $12 this afternoon as I have been recommending a bullish position when prices cracked 1,245 and if you took that trade place your stop at the 10 day low which in Monday’s trade will be 1,217 still risking about $70 or $7,000 per contract plus slippage and commission, however the chart structure will start to improve on a daily basis starting next week. Gold prices hit a 5 month high this week and now is being considered as a currency and not a commodity as nobody wants to own any of the foreign currencies especially the Euro currency which was down another 100 points today sending the U.S dollar to an 11 year high as countries like Yemen are collapsing right in front of our eyes and many other countries are getting crushed by the low crude oil prices so investors are seeking a safe haven in gold despite today’s negative tape.
The chart structure in gold is poor at the current time as prices have gone up sharply in recent days as that will tighten up but the trend is your friend in the commodity markets and the trend in the precious metals is higher as I have been very bearish the entire commodity sector except for gold and silver and I will stay with that theory, but continue to make sure you place the proper amount of contracts risking 2% of your account balance on any given trade. If you have not entered this market on the bullish side wait for another price dip lowering risk so keep an eye and sit on the sidelines waiting for a retracement before entering and then continue to place the stop at the proper level.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Silver Futures
Silver futures in the March contract are slightly lower this Friday afternoon in New York after settling last week at 17.75 while currently trading at 18.30 up around $.50 for the trading week continuing its bullish trend as prices are trading above its 20 & 100 day moving average hitting a 4 month high as investors are fleeing out of the foreign currencies and putting money back into the precious metals at the current time. I’ve been recommending a bullish position in silver for several weeks when prices broke above 17.00 an ounce and if you took that trade make sure you place your stop loss below the 10 day low which currently stands at 16.43 currently risking around $2 or $10,000 per contract plus slippage and commission as silver is very large contract controlling 5,000 ounces, however that stop loss will be raised on a daily basis as the chart structure will improve dramatically come next week.
Silver is now considered as a currency in my opinion and not a commodity as nobody wants to own any currencies except for the U.S dollar sending money flows back into the precious metals as I think silver prices could test $20 here in the short term as I’m very pessimistic many of the commodity sectors except for silver and gold at the current time as I think prices continue to climb despite what the U.S dollar does as short term demand has certainly come back into this market in my opinion.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
Crude Oil Futures
Crude oil futures in the March contract are trading far below their 20 and 100 day moving average settling last Friday in New York at 49.13 a barrel while currently trading at 46.00 down over $3 for the trading week continuing its bearish trend and if you’re still short this market my recommendation would be to continue to place your stop loss above the 10 day high which currently stands at 51.73 risking about $6 or $6,000 per contract plus slippage and commission from today’s price levels. The next level of major resistance is the January 13th low of 44.78 and if that level is broken I think prices could head into the mid-30s as over supplies are overwhelming at the current time plus the fact that the U.S dollar is hitting an 11 year high with the Euro currency down over another 100 points this Friday afternoon continuing to put pressure on the entire commodity sector.
The king of Saudi Arabia died this morning sending prices up to 47.76 on the night session before succumbing to pressure once again as the U.S dollar is starting an exponential move to the upside as traders continue to sell all rallies in crude oil. If you have not been short this market I certainly would sit on the sidelines as you have missed the boat, however I am definitely not recommending any type of bullish position as I still think prices go lower, however the 10 day stop will not be lowered until next Friday so you’re going to have to be patient with this trade as the trend still remains bearish in my opinion.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Lean Hog Futures
Lean hog futures in the February contract are trading lower by 225 points breaking the 70.00 level for the 1st time in 4 years currently trading at 69.40 as I’m still recommending a bearish position & if you have been following any of my blogs this trade has completely collapsed as the original recommendation was at the 4 week low around 86.00 so continue to stick to the rules and place your stop loss above the 10 day high which currently stands at 78.75 still risking 800 points or $3,200 per contract plus slippage and commission. Lean hog prices settled last Friday in Chicago at 74.50 finishing down about 500 points for the trading week as I still think prices are historically too high with a deflationary environment worldwide also due to the fact of huge expansion as I’ve talked to many hogs producers who are telling me that there are a lot of hogs available at the current time and that will increase in the next couple of months as I still think prices continue to decline so stick to the rules and stay short, however if you have missed this market the volatility is too high as you have missed the boat so move on and look for less risk.
Cattle prices were limit down again today as they have completely collapsed and you have to remember there is no inflation worldwide as it’s just the opposite as massive deflation is happening in all commodity prices in my opinion and are headed lower due to the fact that the U.S dollar hit another 11 year high & the Euro currency continues to plummet as there is economic panic worldwide in many countries and that’s going to cause lower prices in my opinion so continue to play this to the downside.
TREND: LOWER
CHART STRUCTURE: AWFUL
Oat Futures
Oat futures in the March contract are trading below their 20 and 100 day moving average telling you that the trend is to the downside settling last Friday at 2.89 a bushel while currently trading unchanged this Friday afternoon in Chicago at 2.90 as I’ve been recommending a short position when prices broke 3.00 and if you took that trade place your stop loss at 3.04 risking $.14 or $700 per contract plus slippage and commission.
Oat prices hit 2 1/2 year lows despite the fact that prices have been up 4 straight days, however they have all been very small gains as I’m a trend follower and the trend is to the downside in the oats with outstanding chart structure and the risk reward meets criteria so if you have not taken the trade I am still recommending selling at today’s price while placing the proper stop loss. Many of the commodity markets have been going lower especially the grain market in recent days as oversupply is currently the problem especially coupled with an 11 year high in the U.S dollar so continue to play this market to the downside and take advantage of any rallies as the chart structure is outstanding as the stop will remain at 3.04 throughout next week.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Corn Futures
Corn futures in the March contract are trading below their 20 but still above their 100 day moving average which is at a critical level at 3.77 with that also acting as major support and if prices can break that level I think the bear market would be underway after settling last Friday at 3.87 currently trading at 3.86 basically neutral for the trading week. I’ve been recommending a short position in corn and if you took that trade make sure you place your stop loss above the 10 day high which stands at 4.07 and will remain at that level until late next week as the commodity markets still remain bearish in my opinion due to the fact that the U.S dollar hit an 11 year high this Friday afternoon in New York so continue to play this to the downside as the chart structure will start to improve.
If you have not entered this trade and think prices are headed lower I would still sell at today’s price while placing my stop at 4.07 risking $.21 or $1,050 plus commission and slippage as I think the risk reward is in your favor as soybeans, wheat, are making new recent lows & I think that will start to pressure corn here in the short term but prices have been acting stubborn. There are some bullish fundamentals in the corn market especially with an estimated 88 million which is 3 million less acres than what was planted in 2014 and expanding herds which will increase demand as well, however with the outside commodity markets falling out of bed I think eventually that will start to pressure corn prices as worldwide supplies are still very abundant and we can still grow another 14 billion bushels this year with ideal weather so I remain pessimistic so play this to the downside while placing the proper amount of contracts risking 2% of your account balance on any given trade.
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
Soybeans Futures
Soybean futures in the March contract are hitting a 12 week low in Chicago this Friday afternoon after settling last Friday at 9.92 currently trading at 9.71 down over $.20 for the week still trading far below its 20 and 100 day moving average telling you that the trend is to the downside as I’ve been recommending a short position in soybeans for quite some time & if you took that trade place your stop above the 10 day high which stands at 10.62 risking around $.90 or $4,500 per contract plus slippage and commission as the chart structure is awful at the current time. The chart structure will start to improve on a daily basis starting next week as prices have really fallen dramatically in the last couple of weeks dropping about $.90 with major support between the contract low of $9.20 – $9.60 as the International Grain Council stated that world supply was 10% larger than last year which is a record putting pressure on prices here in the short term.
The U.S dollar is at an 11 year high which is also very pessimistic commodity prices as the dollar is sharply higher again this Friday afternoon also coupled with the fact that farmers might plant 88 million acres next year which would be all-time record which could produce 4.7 billion bushels if ideal weather persists throughout the summer time and that will balloon carryover levels to all-time highs so at this point in time remain short & stick to the rules.
The problem with many of the commodity markets and especially the grains is oversupply and a strong dollar and that is very negative in the short term as it looks to me that deflation is occurring worldwide. The ECB is doing a 60 billion per month quantitative easing program to try & stimulate the economy pushing up asset prices but in my opinion I do not think it will work as the oversupply issue is going to be here for years to come unless some sort of drought happens here in the United States this summer.
TREND: LOWER
CHART STRUCTURE: AWFUL
Cotton Futures
Cotton futures in the March contract are now trading below their 20 and 100 day moving average settling last Friday at 59.23 while currently trading at 57.63 hitting a new contract low and I’m currently recommending a short position in cotton placing your stop loss above the 10 day high which currently stands 62.75 risking about 300 points or $1,500 per contract plus slippage and commission as the 10 day stop loss will be lowered on a daily basis starting next week. Cotton futures continue to move lower due to the fact of an incredibly strong U.S dollar while demand has been relatively weak in recent months as China is not the voracious consumer that used to be as the commodity markets in general look very pessimistic and it still looks to me that this market is headed lower. Last month I was recommending a bullish position in cotton when prices broke 61 hitting a 4 week high as that trade fizzled out as prices could not continue to the upside so now we will have to see if this is the true breakout to the downside and see if prices can possibly test the $50 level in coming weeks.
As a commodity trader I try to keep my trading system extremely simple as the number 1 rule in my opinion is to be a trend follower as it’s easier to trade with the path of least resistance than constantly fight the tape.
TREND: LOWER
CHART STRUCTURE: SOLID
Coffee Futures
Coffee futures in the March contract settled last Friday at 171 while currently trading at 159.80 down around 1500 points for the trading week as I’m still sitting on the sidelines waiting for a trend to develop as prices have traded down for the 6th consecutive trading session right at major support at 160 & if prices break that level you’re looking at a bear market as we have not seen these prices since last February. Coffee futures are trading below their 20 and 100 day moving average telling you that the trend is to the downside, however the chart structure is terrible at the current time but I do believe lower prices are ahead but I’m not recommending any type of futures position as rain has hit key coffee growing regions and it certainly doesn’t look at this time that we are going to have a back-to-back drought situation so the trend is lower and I do think prices can trade as low as 140 in coming weeks as the commodity markets in general are still are headed lower in my opinion.
Coffee is considered a luxury item and is still historically relatively expensive as I will keep an eye on this market and wait for better chart structure to develop as right now the 10 day high is too far away & does not meet my criteria that’s why I’m sitting on the sidelines as the risk is too high but I certainly am not recommending any type of bullish position in this market at all.
TREND: LOWER
CHART STRUCTURE: AWFUL
When Do You Enter A Trade?
What are your rules to initiate a trade on the long or short side of the commodity market? I have been asked this question many times throughout my career and my opinion is simply to buy on a 20-25 day high breakout in price on a closing basis only or sell on a 20-25 day low breakout to the downside also on a closing basis. Many times the price will break the 25 day high and sell off later in the day only to have your trade be negative very quickly.
I would rather buy the commodity at a higher price on the close because that gives me more confidence that the market has truly broken out. However there are more ways to skin a cat and this is not the only answer because some other trading systems might rely on different breakout rules that have also been reliable.
Remember always keeping a 1%-2% risk loss on any given trade therefore minimizing risks because the entry system I use always goes with the trend because I have learned over the course of time the trend is truly your friend in the long run. I also look for tight chart structure meaning a tight trading range over a period of time with relatively low volatility. I try to stay away from a crazy market that hit a 25 day high in 2 trading sessions versus the 25 high that actually took 25 days to create.
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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