RJO Futures Website
April 1, 2014 Volume 8, Issue 7

 

Feature Article

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Metals - Gold

Nick DeGeorge

In the early morning trade, June gold made fresh new lows hitting $1,277.4 an ounce. Global stock markets were mostly higher after strong economic readings, tensions easing over in Ukraine, and the Fed. easing stimulus, all factors that are putting the bears in favor of gold. Therefore, gold is down about $110 from its March 17th high of $1392.2. a troy ounce.

If you look at a daily June gold chart, you'll clearly see that gold is below all its major moving averages and the next line of support comes in around $1265.0, which is where a 61% Fibonacci retracement rest. However, it is not out of the question for gold to retest the $1,200.0 an ounce level by the end of April.

If you'd like to learn more about futures trading or the metals market specifically, please contact Nick DeGeorge at 312-373-5316 or ndegeorge@rjofutures.com.

Jun '14 Gold Daily Chart

Source: RJO Vantage

 

Metals - Silver


I would like today's article to have more foolishness behind it, but the fact is the silver market has broken below the 20 level for the past five sessions, possibly six makes me serious. The breather this market has taken over the past three sessions only appears to be setting it up for another leg lower. This puts 19500 as near term support with 20625 as level one resistance and 22215 as level two resistance. A break above either of those levels would be a continuation of the bull trend, where a failure at this level will continue the recent bear trend.

On the physical side, January had the biggest demand for Silver Eagle coin with 4,775,000 sold. February saw a brief drop to 3,750,000, but further demand continued in March with the lower prices bringing 4,476,000 coins sold. In comparison, Gold Eagle coins also had their biggest sales month this year in January, but have dropped off aggressively the following months. With the lower prices physical investors are finding the values to purchase silver more so than gold. The economic picture remains fairly mixed with numbers slightly improving, but the weather has been a significant factor with poor reports recently. As the unseasonably cold stops, if these numbers don't improve it could help provide even more support for these metals, as the economy can be on more unstable footing.

Looking back to the futures, if you'd like to play this market for a bounce or for a further continuation of the recent bear trend, both of these opportunities are setting up for a fairly tight risk/reward. Contact me for details and we can discuss the different opportunities.

If you'd like to learn more about futures trading or the silver market specifically, please contact Mike Rataj at 800-453-4494 or mrataj@rjofutures.com.

May '14 Silver Daily Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

May oil started off this week on a softer tone and has been weaker all morning, currently trading around $100.75 a barrel. Last week's EIA report showed yet another build of 6.6 million barrels, much larger than expected. Current oil stock piles still appear ample standing at 382.4 million barrels, that's only about 3 million barrels off the all time high for this time of year. Tomorrow's EIA report is expected to show yet another build. This would make for the 11th consecutive build.

Economic data still continues to be mixed both here in the US and globally. Chinese manufacturing data came in weak overnight suggesting once again that China is continuing a slowdown. The growing unrest between Russia and Ukraine and the rest of the world has slid to the back burner. Russia has withdrawn much of their troops from the border and any further military action by anyone appears to have completely subsided – not much of a surprise.

Short-term technical indicators appear mostly overbought to me. With the last two sessions showing lower highs and lower lows I think the market will look to press on to the all important physiological $100 level. A break and close below that could send the market to the 200 MA around $97.25 a barrel basis May oil. I am still recommending playing oil on the downside, BUT one must approach the market with caution as one major geo-political event could send the market much higher. One strategy one might consider is a bear put ratio spread - specifically buying one near the money put and selling three deeper out of the money puts –using this type of strategy traders have limited risk if the market should rally.

If you'd like to learn more about futures trading or the energies market specifically, please contact Mike Sabo at 312-373-5248 or msabo@rjofutures.com.

May '14 Crude Oil Daily Chart

Source: RJO Vantage

 

Energies - Natural Gas

Bill Moore

Greetings! Picking up from the previous eView, we were discussing the downside in natural gas prices after the historically cold and snowy winter. The market has been consistently choppy with a downward slant for the month of March with a last traded price (11:24 CST) is $4.284 on the May Globex contract. Moderate weather is on the horizon and a lightened volume could indicate further downside. Natural gas in storage only fell 95 BCF last week. The prior week's draw was 250 BCF. As always, we will look to the technicals to guide us.

Three straight days of weakness has coincided with the choppy channel I had mentioned earlier and can be seen on the chart below. If we take out the 4256 low from March 24th, we could have a good chance of testing the 100-day moving average at 4012. Strong selling pressure should arise if we do break that low. Pricing out 4100/4150 GNGK14 puts could be profitable. For now we remain in a bear position. Support today is at 4260 and resistance is at 4440 and 4539.

If you'd like to learn more about futures trading or the energies market specifically, please contact Bill Moore at 800-422-6610 or wmoore@rjofutures.com.

May '14 Natural Gas Daily Chart with Moving Averages, RSI and MACD

Source: RJO Vantage


Softs - Sugar

Joe Nikruto

This week's commentary finds May sugar futures consolidating. After the run up from the 16.80 area last week sugar may be gathering steam for a move back over 18.00. With many traders looking for a correction back to 16.50 or lower, the failure of May sugar futures to reach below the 50-day moving average was a key signal. 16.50 also coincides with the neckline from the head and shoulders pattern evident on the chart as well. Rain in Brazil is arriving in a timely fashion and alleviating dryness that could have caused damage. As it stands the trade looks for only single digit reduction in this year's output. Globally, there are plenty of sources for sugar as we have highlighted in the past. This won't be the first year where fundamentals and price action had a hard time matching up in sugar futures. And as I write the May sugar futures contract has dropped from down 20 to down 47 taking out both the 10- and 18-day moving average. Price action in this area should be treated as a trading affair, but the trend is up. Recent comments from a large bank and hedge funds have highlighted that commodities are all of a sudden "good" again, moves in coffee, grains, energies and the entire meat complex notwithstanding. Money flow has to be respected in sugar as many traders and institutions view it as almost an investment more than a trading vehicle. The 50-day moving and the 16.50 level are still adequate risk levels for traders who are looking to get long on this pull back or add to positions.

If you'd like to learn more about futures trading or the sugar market specifically, please contact Joe Nikruto at 800-453-4494 or jnikruto@rjofutures.com.

May '14 Sugar Futures Daily Chart

Source: RJO Vantage



 

Softs - Cotton

Erik Tatje

Monday's USDA Report showed prospective planting at 11.1 million, which does come in relatively higher than last year's 10.4 million number. With higher intentions for 2014, focus now shifts on the sustainability of the current rally. The daily candlestick on 3/26 does give the impression of a "blow-off top"; however, the market remains firm until a structural break below the 8984 changes the technical landscape of the market. Until price breaks below technical support, both the intermediate trend, as well as short-term momentum appear to favor a bullish stance on cotton.

If you'd like to learn more about futures trading or the cotton market specifically, please contact me directly at 800-826-1120 or etatje@rjofutures.com.

May '14 Cotton Daily Chart

Source: RJO Vantage

 

Softs - Cocoa


Cocoa finished the first quarter of the year up almost 9%-unfortunately most of that came in January. May cocoa fell to long liquidation and profit taking during March. Trading has also been choppy of late with lack of new bullish news. Positive weather forecasts coming out of West Africa has added pressure to prices. Port arrivals are 8,000 tonnes above the comparable timeframe last year. A stronger than anticipated crop may continue the sideways trading trend. Technically, we are in oversold levels. We have support at 2931 and resistance at 2992-which would need to be broken in order to reaffirm the bullish trend above 3000.

If you'd like to learn more about futures trading or the cocoa market specifically, please contact Peter Mooses at 800-826-4124 or pmooses@rjofutures.com.

May '14 Cocoa ICCK14 Daily Chart w/ Moving Averages

Source: RJO Vantage

 

Agriculture - Grain

Stephen Davis

Good Day Traders! The overnight grain trade has been mixed with corn and soybeans futures firmer following the new high seasonal closes that were reached on Monday. CBOT wheat is lower on Monday's post report market slowing and its slightly bearish technical set up.

An inflow of new fund money was noted in the last half of Monday's trading session as the USDA Stocks and Acreage report failed to offer any big statistical surprises. The managed funds were willing to add new long positions as window dressing came at the end of the quarter and month. Many times these funds go in days of three so there can be additional fund money flowing into the agricultural markets in the next 48 hours as the grain markets remain in a bull trend. Some type of technical exhaustion of this spring rally is needed to confirm a technical top. Many commercials will argue that these prices are overvalued, however, this is all about money flow and the stock market is about flat for the first quarter so money is looking for the highest returns and right now the grain markets meet that criteria

Between the 100 million bushel less corn stocks that the trade expected and the 1.2 million fewer intended corn acres it added up to a 300 million bushel downward reduction in corn supply which is worth some price discovery upward response. On top of this the trade was looking for a bearish corn report and the report caught the trade leaning the wrong way. In order to extend the gains in the corn market further there will likely have to be some spring planting delays to early planting.

If you'd like to learn more about futures trading or the agricultural market specifically, please contact Stephen Davis at 800-367-7181 or sdavis@rjofutures.com.

May '14 Corn Daily Chart

Source: RJO Futures PRO

May '14 Soybeans Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

Live cattle futures this week are in a minor liquidation mode partly as a result of bearish hogs/pigs report on Friday and COT data showing non-commercials at a new net record long of 155,837 contracts as of March 25th. The large discount futures are trading relative to cash and stable spreads are not giving sellers any clues for a major reversal. However, seasonals generally are sideways to lower in April and markets are aggressively discounting summer prices.

Prices across the board need to remain high to rebuild supply, and packers need to adjust their capacity to reflect lower numbers. Live cattle supply concerns will not go away soon as heifer retention has gone up and beef cattle producers have more incentive to build weights.

Look for the markets to keep a strong underlying bid. The weekly front-month charts show value at 138.00 - 143.30. Continue to follow RJOF research or contact us at 888-861-0382 for spec and hedge recommendations.

If you'd like to learn more about futures trading or the agricultural market specifically, please contact Jeff Gilfillan at 888-861-0382 or jgilfillan@rjofutures.com.

Live Cattle LT Daily Front Month Chart

Source: GeckoSoftware.com

 

Interest Rates

Eli Tesfaye

March bonds, notes and Eurodollar are all trading lower this morning with downtick in safe- haven demands as tensions with Kremlin and the West subsides, at least for now. Monday's remark by Fed Charmin Yellen that the economy still needs support for quite some time sent equities higher and treasuries closed lower on the session followed by follow through weakness today. The Fed is cognizant of inflation reading that is for now below target 2%. Early this morning, the ISM report came in a bit positive and I would expect that ADP will be positive as well. The economy should start to firm up as we are coming out of one of the worst winters in more than 40 years. If that is the case, I expect additional near-term weakness in bonds.

Outside factors include, the European Central Bank, the Bank of Japan and the People's Bank of China are all leaning toward more accommodations, which could result in weaker Treasury futures prices.

Technical prospective: If the 30-year Treasury bonds break 132 monthly supports, weaker prices of 130 and 127 are in the cards. Bonds will remain weak unless close above 134, signaling a reversal to higher price levels. Give me a call or email me to discuss specific trading strategies.

If you'd like to learn more about futures trading or the interest rates market specifically, please contact Eli Tesfaye at 800-367-7290 or etesfaye@rjofutures.com.

June '14 30-Year T-Bonds Monthly Chart

Source: RJO Futures PRO

 

Currencies

John Caruso

US Dollar Index remains vulnerable on the charts this morning. A drop back below 80.11 could serve to be a near-term pivot for the USD and further set-backs should not be counted out. The wild-card for the USD vs. EUR trade will be Thursday's ECB meeting. Will the ECB provide fresh stimulus measures via interest rate cuts to combat it's recent bout with deflation or will they stay the course, is the question traders are asking themselves. Yesterday we also encountered a very dovish speech from Fed President Janet Yellen, preaching that the Fed "must remain supportive to the economy." We saw a steep set-back in the USD from the morning highs of 80.57 to as low as 80.11, and closed out the session 80.27 for the June contract. It's still in my opinion that Euro currency will hold a bullish bias thru the 2nd QT of 2014, but will become vulnerable as the Federal Reserve continues to cut back on its bond purchasing program and growth picks up in the US throughout the year.

If you'd like to learn more about futures trading or the currencies market specifically, please contact John Caruso at 312-373-5286 or jcaruso@rjofutures.com.

June '14 Euro Daily Chart

Source: RJO Vantage



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