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 December contract settled last Friday in New York at 1,222 while currently trading at 1,231 an ounce hitting a ten-week high breaking out of an eight-week consolidation last week. I’m looking at a bullish position if prices trade at the 1,220 level while then placing the stop loss under the 10-day low standing at 1,186 as the risk would be $,3400 for a large contract or $1,100 per mini contract plus slippage and commission. The monetary risk at this time is too much in my opinion and I’m waiting for a pullback as volatility is also starting to increase. I’m currently recommending a bullish silver position which continually grinds higher in a very methodical manner. Gold prices are trading above their 20-day and right at their 100-day moving average as the U.S. dollar has been flip-flopping over the last couple months with no trend having minimal impact as I do believe prices have bottomed out. The chart structure is starting to improve on a daily basis. However, problems with Saudi Arabia could bring money flows back into the sector so look to play this to the upside on any price retracement while risking 2% of your account balance on any given trade.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Silver Futures
Silver futures in the December contract finished unchanged for the trading week currently at 14.61 an ounce as I’ve been recommending a bullish position from the 14.50 level as this trade is starting to put me to sleep as volatility has come to a crawl. Silver futures are trading above their 20 day, but below their 100 day as the trend is mixed as I will continue to place the stop loss under the contract low which was touched on September 11th at 13.96 as the original risk on a mini contract was $540 or $2,700 on a large contract plus slippage and commission. The U.S. dollar reacted positive earlier in the week off of the Federal Reserve notes yesterday, and that has put pressure on silver and the precious metals in recent days. I will not second guess while continuing to place the proper stop loss as major resistance lies at the $15 level as we need that to be broken for the bullish momentum to continue in my opinion. Historically speaking I think silver prices look cheap as I still think the commodity markets will rally in 2019 as demand and money flows will start to come back into these sectors.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
Crude Oil Futures
Crude oil futures in the December contract is currently trading at 69.42 a barrel after settling last Friday in New York at 71.18 down about a $1.75 for the trading week hitting a four week low experiencing high volatility. I have been recommending a bullish position from around the 71.55 level and if you took the trade continue to place the stop loss on the closing basis only at 67.50. I remain bullish, but prices have not reacted as I thought especially with the possible conflict with Saudi Arabia looming as prices have been following the U.S. stock market to the downside. Oil prices are trading below their 20-day, but still slightly above their 100-day moving average as the trend is lower, however like I’ve talked about in previous blogs this was a counter-trend recommendation as I do think the downside is limited. Excellent demand for the entire energy sector has pushed prices higher as we have now dropped about 10% over the last two weeks in a rather dramatic fashion, but I still think with the Iranian sanctions coming in the next couple of weeks prices will find a bottom soon.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
S&P 500 Futures
The S&P 500 in the December contract several last Friday in Chicago at 2768 while currently trading at 2780 up slightly for the trading week experiencing extreme volatility as I don’t see that situation calming down until the midterm elections which is still about 18 days away. The S&P is trading below its 20 and 100-day moving average as the trend is lower. However, I am looking at a possible counter trend trade and I remain bullish as I think we will head higher for the rest of 2018 as corporate earnings have been excellent and stock buybacks will participate once again in November as the blackout date ends and that will be in full force sending prices higher. I think the recent selloff from the high around 2950 was blamed on panic coupled with higher interest rates that are spooking the market as the 10-year note is yielding about 3.17% which is the highest level in nearly a decade. But historically speaking, it remains low especially with this type of economic growth that the United States is witnessing at this time. If you take a look at the daily chart, there is major support at the 2700 level as I will keep a close eye on this market looking to buy on one of those panic selloffs that are occurring about once a week as I will not go short as I think the downside is a fool’s game.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Coffee Futures
Coffee futures in the December contract is currently trading at 123.30 after settling last Friday in New York at 116.55 up nearly 700 more points continuing its torrid run to the upside hitting a four-month high. Coffee prices have now rallied about 25% from the contract low which was also around the twelve year low which was touched on September 18th at 95.10. I had many clients who did take advantage of this market at the four week high which was around the 104 level. I missed this recommendation, however, at this point, this market has run so far so quickly that I would have to suggest that you take some profits as the easy money has been made. Coffee prices are trading far above their 20 and 100-day moving average as the trend is clearly to the upside. The only fundamental situation that has changed is the fact that Brazil has elected a right-wing pro-business president who is going to reduce regulations and try to spur the economy and that is bullish coffee, but at this point, I think prices are overextended. Volatility is starting to pick up as I believe that will continue as we head into 2019 as investors are also putting a price premium into this market on concerns about next year’s crop, but at this point, I think prices are very vulnerable to a considerable pullback.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market allowing you to place a stop loss relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure as I like to place my stops at 10-day highs or 10-day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loss.
Orange Juice Futures
Orange juice futures in the November contract is trading lower for the 3rd consecutive trading session finishing the week ending on a sour note down 375 points at 139.05 continuing its bearish momentum as I still think there’s room to run to the downside. Juice prices settled last Friday in New York at 144.15 down 400 points for the trading week hitting a fresh contract low as I still prices could go all the way down to the 130 level possibly next week. I will be rolling over from the November contract at today’s close and into the January contract due to expiration, and if you took the original trades I would continue to remain short as this trend is powerful as the fundamental and technical picture remains bearish. Juice prices are trading under their 20, and 100-day moving average as the trend is to the downside as there are no hurricanes in the Atlantic at present coupled with the fact of large production numbers and carryover levels that we haven’t seen in years. So stay short and continue to place the stop loss above the 10-day high as an exit strategy.
TREND: LOWER
CHART STRUCTURE: SOLID
VOLATILITY: LOW
Cocoa Futures
Cocoa futures in the December contract finished unchanged for the trading week currently at 2160 in a relatively quiet trading manner as I am looking at a possible bullish position in next week’s trade as the chart structure is starting to improve on a daily basis, therefore, lowering the monetary risk. I believe the contract low which was touched on October 1st at 1982 will hold as we are starting to enter the high demand season for chocolate and that should support prices in the coming months ahead. I’m waiting for the four week high to be broken coupled with the fact that I need the downtrend line to be broken as we are on the brink of both of those situations occurring. Cocoa prices are trading above their 20-day but still below their 100-day moving average which stands at major resistant at 2298 as the volatility should also start to increase as cocoa can have tremendous price swings on a daily basis, but that is not occurring at this time. The soft commodity markets except for orange juice continue to rally as I think that will start to bleed into this commodity down the road as I am bullish most commodity sectors at this time.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
Sugar Futures
Sugar futures in the March contract settled last Friday in New York at 13.07 while now trading at 13.87 a pound up about 80 points for the trading week hitting a six month high in yesterday’s trade experiencing a remarkable rally since the contract low was touched on September 27th at 10.80. Prices have now rallied around 300 points in a matter of 3 weeks. The Brazilian Real has rallied against the U.S dollar which is one main reason for the rally, but the election in the country of Brazil to a right-wing pro-business president has spurred optimism about cutting massive regulations sending coffee and sugar sharply higher since that situation has occurred. Sugar prices are trading far above their 20 and 100-day moving average as clearly the trend is higher. I am not involved in this market as the chart structure has been terrible over the last couple of months as this market is gone absolutely straight up, but now is experiencing overbought conditions at this time as my head is spinning on how tremendous this rally has been coming out of nowhere in my opinion. The fundamental situation in sugar has not changed as we have abundant worldwide supplies as this was massive short covering as the open interest has also dropped, however, the risk/reward is not in your favor to take a position at this time.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING
Trading Theory
If you follow this rule you will have a chance of being successful over the course of time if you don’t follow this rule you will be sure to lose your money quickly. This rule is simple Do Not OVERTRADE EVER for this is an easy way to lose all your capital quickly.
My definition of over trading is risking too much money on any given trade, for example, if you are trading a $100,000 account, and you place a gold trade today you should limit your loses to 2% of the account value which in this case is $2,000. This allows you to be wrong on many trades and still be around to play another day.
In futures and options trading you will have losing trades that is for sure so make sure you manage those losses and move on to another trade.
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Michael Seery, President
Seery Futures
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Twitter–@seeryfutures
Phone #: 630-408-3325
mseery@seeryfutures.com
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.