In trading commodities, Mike Seery likes to keep it simple. His preference is to enter on a trade on a four-week low or a four-week high. He's also a trend-follower.
“If something has hit the lowest price in the last 20 trading days, I am going to short it,” he said. “If something is hit a 20-day high, I will be buying that and placing my stock below the 10-day low as my risk parameter.”
The Seery Futures president was recently a guest on Benzinga's #PreMarket Prep show to talk about meat, crude and metals.
Seery spoke to Benzinga from the suburbs of Chicago, where there is a lot of corn and soybean crops. He said nice rain and mild temperatures have been pushing prices lower. Trading in the grains market is a combination of both technicals and fundamentals, he said.
Keep It Simple
Seery has been trading for more than 20 years. He said he's system was developed from taking bits and pieces of other ones he's encountered over the years. He uses stops, and he'll place his stop if he's short at the ten-day high. But Seery doesn't have any targets and thinks it's a foolish game to put a target.
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“Sometimes I throw a number out there, but its too difficult to do,” he said. “All I do is keep moving my stop up to the ten-day low or the ten-day high, and eventually I get stopped out, but I am going to try to get as much of that trend as I can get.”
After Pork Bellies End, Hog Market Holds On
Although the Chicago Mercantile Exchange no longer trades pork bellies, Seery said that the hog market has been a “terrific” trade. “We caught that earlier this year, and the hogs went to all time highs just like the cattle market,” he said. “So, hogs are still a very viable commodity, and you definitely can trade those.”
Here Is My Lean Hog Trade: Lean Hog Futures--- Lean hog futures in the August contract... http://t.co/IJpedS7WoO
— Mike Seery (@seeryfutures) July 11, 2014
Two things have driven pork prices so high this year. The first was a virus that resulted a the slaughter of numerous young pigs, Seery said, which left a significantly decreased supply. In addition, the spread between pork and cattle was very wide. If steak is selling for $14 a pound and pork was only $2 a pound, more demand will start coming in for pork, Seery said.
“The meat complex, by far, has been the biggest bull market in 2014,” he said.
There's a battle within the crude market between West Texas Intermediate and Brent, Seery said. While WTI is lighter and cleaner, Seery explained, while the Brent is crude from the middle east. “So, problems over in Iraq can send the Brent up because you have supply issues,” he said.
I Am Bearish Crude Oil Prices http://t.co/PlYHDkLoFo
— Mike Seery (@seeryfutures) July 11, 2014
But Seery said the U.S. is starting to become a huge exporter because there is plenty of gas and oil around. But that's also why he doesn't think that the price will go up. He said we're in a deflationary period, and he looks for lower crude oil prices.
In terms of crude, the problem with geopolitical nonsense is that it fades, Seery said. “Last August, we had the Syrian thing. Crude went up to 112. The world was coming to an end,” he said. “Literally the next day, you never heard about Syria again, and that's kind of what's happening in Iraq. You don't even hear about it anymore.”
Silver & Gold
The problem with gold is that everyone wants stocks, Seery said.
The money flow is coming out of gold and into stocks, and he doesn't see that stopping. Seery also anticipates another double digit year in the stock market.
Related: Dennis Gartman On The Bull Market, Gold And Why The Market Is Not Rigged
“I would be negative to gold at this point,” he said. However, silver prices are definitely on Seery's radar. Silver prices are cheap compared to the rest of the commodity market. Unlike gold, he said, silver actually has a usage in electronics.
“If you are a longer term investor, and you have some deep pockets, on any significant dip in silver, it should be bought,” Seery said.
Check out the full interview here:
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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