RJO Futures Website
April 29, 2014 Volume 8, Issue 9

 

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Metals - Gold

Bob Haberkorn

Gold appears mixed this week despite the CFTC data last Friday showing a modest increase in net-long positions and fresh US economic data starting tomorrow. Today is the start of the two-day FOMC meeting and traders are expecting another $10 billion cut bringing the asset purchase program down to $45 billion as well as the release of first quarter GDP, expected at +1.2% . Look for today's price action to remain under pressure and for Gold to trade lower ahead of tomorrow's numbers, pending the absence of any fresh news out of the Ukraine. As of today, the 1300 level does appear to be major resistance for the bulls and looks to be a good short with stops at 1305, but the down side does appear limited to 1285. If the 1285 level is breached expect a move to last week's low of 1265; however, this looks unlikely and I expect this market to trade higher after the FED meeting tomorrow, potentially targeting the 1315 area. If you have any questions or would like to discuss the precious metals markets further please feel free to give me a call.

If you'd like to learn more about futures trading or the metals market specifically, please contact Bob Haberkorn at 800-826-1120 or rhaberkorn@rjofutures.com.

Jun '14 Gold Daily Chart

Source: DTN

 

Metals - Silver


After last week's move of almost 100 points from the lows to the highs, on Thursday the silver market showed signs of renewed strength. However, the subsequent trading sessions show more potential trouble up ahead. The July silver market broke below its recent support and almost touched the 18915 support from December 31st before closing positive on the day. As shown on the daily chart below this market has been in a downward trend channel since February with the close higher on Thursday showing optimism, the two following days traded lower. Today's price action is somewhat supportive for a continuing bull but the downside of the channel looks to be the path of least resistance. A close above Thursday's high of 19930 provides some bullish support with a close above 20535 to hopefully re-establish a longer term bull.

The economic information this week and an FOMC meeting tomorrow should help provide some market guidance. The ADP employment report tomorrow is expecting 203,000 jobs created with a GDP growth estimate of 1.2% compared to 2.6% the previous quarter. Lastly, Friday will be the Bureau of Labor Statistics Non-Farm Payroll report with expectations of 216,000 jobs created. The employment numbers are fairly optimistic so a big miss plus any potential negative revisions could be the fuel this market needs to rally. However a big increase above expectations could see this market trade lower as the economy continues to improve.

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.

Jul '14 Silver Daily Chart

Source: RJO Vantage

 

Energies - Crude Oil

Mike-Sabo

June crude oil has been in a slight consolidation mode after its recent selloff last week. On April 21 June oil hit a high of $103.83 (an inside day) and then a low of $103.48 April 28. Current oil stock piles are running at record highs for this time of year. This has been confirmed by several consecutive weeks of builds. Last week the EIA reported a build of 3.524 million barrels and the week before a build of 10.013 million barrels, putting our total stocks at 397.659 million barrels. We have seen only one draw down in the last 12 weeks. Current refinery capacity still continues to run above year ago levels, currently at 91.0% vs. 83.5% for same time last year. It also seems more pressure is being put on the current administration, this time by unions, to push the votes necessary to approve and start the Keystone Pipeline. This means jobs and more oil flowing into the US – a win, win situation viewed by most. The current situation in Russia and Ukraine continues but appears to have little to no effect on oil supplies. It has caused some fear premium to flow into the price of oil but I believe unwarranted at this time.

Short-term technical indicators appear slightly oversold to me after last week's selloff. It's no surprise to me to see oil making a small retracement to the upside. In the last eView I mentioned oil could possibly trade down to the 50-day moving average – we saw that happen yesterday (see chart below, pink line is the 50-day moving average). I still look for June oil to eventually break down and head for the 200-moving average.

With the current supply and demand situation - I still believe oil will head lower over time. One way to play oil to the downside may be through a bear put ratio spread specifically buying one near the money put and selling three deeper out of the money puts - please call me for more details regarding strike prices.

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.

Jun '14 Crude Oil Daily Chart

Source: RJO Vantage

 

Energies - Natural Gas

Nick Delarosa

If you only looked at the June'14 natural gas contract you would assume that we are probably mid-way through February. That is when the natural gas contract hit the high of $4.893, a price we have not seen since October of 2011. As we approach those highs (NGN14 $4.84) at 10:30 am CDT. We have to wonder what is supporting this market and when will we see some relief?

Although it says spring on my calendar the forecasts is showing temps in the lower 30's to the northeast stretching down to Virginia where natural gas is the dominate heat source. Below normal temps across most of the Midwest is adding support as well. Another reason for the late season rally in natural gas is news that the tight supplies will be harder to replenish than originally expected. The winter vortex caused the consumption to double or even triple in some areas. Analysts believe tight supply worries will stretch into the summer trading months limiting the seasonal market pull backs.

For the short-term, I am going with the bull trend. At least until the forecast sees real spring/summer temps. All while keeping an eye on the weekly inventory numbers. Look for support at $4.50 and resistance at $4.90. The chart below illustrates a strong April cold weather uptrend following a weaker warmer month of March.

If you'd like to learn more about futures trading or the energies market specifically, please contact Nick Delarosa at 877-963-6484 or ndelarosa@rjofutures.com.

Jun '14 Natural Gas Daily Chart

Source: RJO Futures PRO


Softs - Sugar

Joe Nikruto

This week's comment on July sugar futures finds the market in the midst of what appears to be a technical breakdown and a continuation of the longer term downtrend. With reversal action taking place over the last four sessions culminating in today's break below the 10-, 18- and 50-day moving averages the July contract looks poised for a move below 17.00. With a classic triangle formation on the chart and volume waning commodity trading, funds with long positions entered above 18.00 are now under pressure. Intermediate-term trend followers have stops at or near 17.12 which could be the fuel for a break below 17.00. Fundamentally, the trade has given up on the idea of widespread drought damage to sugar cane in Brazil as highlighted by the Hightower Group this morning. Also from Hightower is a mention of Chinese stockpiling of sugar that traders should keep in mind as they cast an eye to the short side of July sugar futures. Funds are caught long, Brazil supply is okay, China will be happy to buy it lower, India and other producers are quiet. Fundamentally, I can't see what will keep the July sugar futures from heading lower which of course makes me suspicious of the short side. But the chart looks too good to pass up. Aggressive traders can get short below 17.20 - 17.15, a level that represents the bottom of the triangle. More conservative futures traders can use a break down below 17.05 -17.00 as an entry point for new short trades.

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.

July Sugar Daily Chart

Source: RJO Vantage



 

Softs - Cotton

Erik Tatje

The cotton market has spent the majority of April trading sideways as prices have been consolidating between 90.00 and 93.50. Despite the relatively sideways price action, the intermediate term bullish structure of this market remains in play above the 89.71 low. Furthermore, the "band" produced by the 20- and 50-period moving average has also provided additional support to weakness in price. Given the recent digestive action in the cotton market, traders could utilize momentum indicators to highlight opportunities in the market. Given the bullish environment that Cotton has embodied over the past few months, the RSI has spent a majority of the time oscillating between the 80-40 range. Traders could use these levels, instead of the traditional 70 -30 levels, to identify potentially overbought and oversold signals in the market.

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.

Jul '14 Cotton Daily Chart

Source: RJO Vantage

 

Softs - Cocoa


July cocoa continues to trade sideways. Looking at the attached chart you can see the trend dates back to January 28th. The bull market we have witnessed in cocoa since June of 2013 seems to be on hold for now. If we break below current support levels we could be headed back to 2800. Support at 2940 could be broken today as we have hit a low of 2945. Technically we are below the 9-day and 20-day moving averages which are bearish signals in the short-term. Resistance at 2970 has held and refuses to let the bulls have a break out up towards 2900. There's very little fundamental news other than on the supply side of things. Weather forecasts in West Africa continue to produce favorable growing conditions which should add to the downward momentum.

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.

Jul '14 Cocoa ICCN14 Daily Chart w/ Moving Averages

Source: RJO Vantage

 

Softs - Coffee

Adam Tuiaana

Traders eagerly await next month's beginning harvest efforts in order to better gauge the supply situation in Brazil. Have the bullish numbers been exaggerated? July coffee prices continue to see some major profit taking this week, with firm resistance held at last week's high of 219900. This strategist believes that now, more than ever is a great time to become long and initiate buying positions in July coffee. We won't ignore the fact that coffee prices have continued to make higher highs and higher lows over the past two months, indicative of an uptrend. The time for standing aside during this most recent correction should be just about expired. In my last eView article I stated, "I believe we will begin to see, at least in the near term, a slightly large correction to answer a very aggressive, large price explosion very soon." My outlook remains the same. Higher coffee prices, on a long-term basis.

Traders should consider long calls to allow time in the trade.

If you'd like to learn more about futures trading or the coffee market specifically, please contact RJO Futures Senior Trading Broker Adam Tuiaana at 800-453-4494 or atuiaana@rjofutures.com.

Jul '14 Coffee Daily Chart

Source: RJO Vantage

 

Agriculture - Grain

Stephen Davis

Good afternoon traders. The overnight grain trade has been dominated by the slower than expected US corn seeding rate of 19%, which has rallied corn futures and also rallied soybeans and wheat. Due to this week's cold and wet weather, US corn seeding will likely be no better than 5% more on next Monday's planting progress. This raises the importance of Midwest weather during the first week of May.

The upcoming weather pattern will allow improved weather conditions which should encourage planting gains. This is not a bone-dry forecast; however the next set of heavy rain looks to occur after May 10th and this will be centered more on the southern Midwest/Delta, allowing for needed planting progress across the north. The central US weather forecast is negative this morning. The spring weather outlook into mid-May is looking more threatening today than yesterday. The soy import flow may lower analyst balance table concerns, however it will not take away tightening US cash soy markets until July. On top of this the slow planting pace is keeping the top – picking selling on the sidelines. Our futures market is struggling with whether Brazil soybean imports arrive soon enough here is the US and in enough quantity to ease the firm domestic cash markets. The US soybean meal buyers are buying hand-to-mouth and are nervous, which is reflected in yesterdays new contract highs in soybean meal.

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.

Jul '14 Soybeans Daily Chart

Source: RJO Futures PRO

Jul '14 Corn Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

Cash cattle has been seasonally drifting lower as expected and the discount futures to cash is beginning to tighten closer to historical levels. Both June and August cattle have built strong, long-term value over 130-132. Look for choppy, range-bound trade as fundamentals are soft on the demand front and strong on the supply front. RJOF publishes comprehensive livestock research daily through several sources. I very much encourage clients and prospective traders to register for direct access.

See RJOF research to access daily reports on the livestock sector available in report and audio format with speculative and hedging recommendations alongside both fundamental and technical research.

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 Futures Monthly Continuation Chart

Source: GeckoSoftware.com

 

Interest Rates

Eli Tesfaye

June bonds, notes and Eurodollar are all trading lower this morning. Monday's bullish pending home sales pressured Bonds and it appears that we are seeing follow-through action today. As I said in a previous eview, the warmer weather is having a positive impact on the economy. The upbeat Consumer Confidence along with bullish Goldman Store sales report earlier in the day lifts the stock market and pushes bonds lower as expected. Downward pressure on bonds also comes from the possible announcement from the two day FOMC meeting of further tapering of its quantitative easing program.

Outside influence of selling in bonds also comes from encouraging German consumer confidence this morning. The only factor that can push bonds higher would be a growing problem in Ukraine. I personally don't think it's in Russia's best interest to fuel this conflict. So an upside from Ukraine conflict could be limited. From a technical perspective, the long end of the curve is set to advance lower. Unless the 30-year Treasury bond closes over 135, in my view, bonds will continue to trade sideways to lower. 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

The June Canadian Dollar extended higher this morning, perhaps in anticipation of Canadian GDP and a policy shift by the Bank of Canada this week. The June Canadian futures contract posted a 5-year low back in March with a drop back to 88.45, a level not seen since July '09. The June contract did post a sizable rally off of that extreme low, back upwards to 91.95. Since that high, we've seen the market consolidate sideways to lower, and now appears to be regaining momentum for a possible retest of the early April high. Better than expected economic data, particularly GDP, will be the deciding force for more follow-thru extension in the June CAD. We're expecting an action packed week for macro-market movement, kicking off with the April ADP employment figures for the US tomorrow at 7:15am CT, followed by US GDP and the FOMC Monetary Policy due out at 1:00pm CT.

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.

Jun '14 Canadian Dollar Daily Chart

Source: RJO Vantage



Equity Indexes

Greg Perlin

Global equity markets have taken on a higher track the past two days due to two main factors. First, strength in the dollar Yen, which is a good indicator for a risk-on type of environment. And the second factor in stock strength has been the resilience of the Russia stock market. The RSK, the main ETF for the market, was higher by 3% yesterday as tensions have eased a bit in the ongoing Russia/Ukraine situation. The US Fed begins their two day FOMC meeting today with announcement on rates due out tomorrow afternoon. Another very important economic number that comes out tomorrow is GDP which is estimated for a gain of 1.1%. I am hearing whispers that we might see a number closer to 1.8-2.0%. The market is trading like we should see a blockbuster number, and if that's the case, new highs in the S&P could be seen rather quickly. On Friday the monthly employment comes out. A number above 200K should have bulls continuing to push forward toward the contract high of 1892.50. Continue to buy dips and enjoy the trip. I am currently bringing on new cliental at this time and if you are interested in working with a senior market strategist with over 20 years experience in the futures please feel free to contact me.

If you'd like to learn more about futures trading or the Equity Indexes market specifically, please contact Greg Perlin at 800-826-2270 or gperlin@rjofutures.com.

Jun '14 E-mini S&P 500 Daily Chart

Source: RJO Vantage

 

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