RJO Futures Website
July 8, 2014 Volume 8, Issue 14

 

Feature Article

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Metals - Gold

Nick DeGeorge

In the early morning trade, August gold started the morning session strong, but since has pulled back and currently trading around $1317.8, which is basically unchanged for the day. Throughout the year demand has been reported up for the precious metal and money managers increased net-long positions for the fourth straight week. Furthermore, investors are increasing their holdings in exchange-traded products at the fastest pace since 2012. Also, gold derivative holdings yesterday increased by 60,167 ounces.

However, with all that bullish news out there, August gold will have to break last week's high of $1,334.9 in order to get further aggressive momentum buying. Furthermore, as I'm writing this article, August gold is having a hard time holding onto its overnight rally. If gold doesn't extend its rally soon, look for a pull back to $1300.0-$1275.0 a troy ounce. I have highlighted all technical levels below on my daily August gold chart.

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.

Aug '14 Gold Daily Chart

Source: RJO Vantage

 

Metals - Silver


Since we just passed the halfway point for 2014 we may as well review what's happened so far in the silver market. According to the RJOF PRO chart below the silver market opened the year at 20220. Silver had an explosive month in February rallying to what has become the yearly high so far of 22160. Shortly after the rally this market took out the lows from 2013 before having the second explosive month of the year, rallying 100 points in a day and getting this market back into the 20 handle. However, as my last eView stated and I'll repeat into this commentary, the overall trend has been down for more than a year. These rallies are great to see in the interim but they're mostly met with selling. In the two weeks since the explosive rally however the market has actually been holding its 20600 support. If those lows can be held the next level of resistance is 22150. If the market can break above there the bull can be showing its head, instead of just a pop to bring some excitement into the market.

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.

Sep '14 Silver Daily Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

Well things have appeared to have quieted down in Iraq (at least from a news standpoint) and Libya's government officials claim to have things somewhat under control, which has helped to start pulling some of the recent fear premium out of the market. September oil has moved from a high of $106.64 on June 25 to a low of $102.52 today and it appears it may have more downside action in store. Current oil stock piles are still running high for this time of year even with the recent draw last week. Currently we stand just shy of the record for amount of oil for this time of year, about 3 million barrels away. Expectations for tomorrow's EIA report have been mixed so far but some traders are expecting to see a small build.

Short-term technical indicators appear overbought. Long liquidation appears to be in full force and the bears have grabbed control of the market for the time being. We have seen many sessions with lower highs and lower lows – price action of a bear market. Currently I recommend targeting the 50-day moving average which is right around $101.50 September oil.

I still recommend looking to play oil on the downside. Using the proper strategy such as a put option ratio spread could help you position to take advantage of it. Please call me for more details if you would like to discuss some strategies.

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.

Sep '14 Crude Oil Daily Chart

Source: RJO Vantage

 

Energies - Natural Gas

Bill Moore

Lining up with the aforementioned seasonal tendencies, natural gas broke out to the downside recording its lowest price since mid-January. The August contract is currently trading at 4188 (8:04 CT) We are certainly in the midst of a mild summer here in the Midwest and key demand for natural gas is low. We are entering into the eighth straight week of a triple digit injection of inventory and Atlantic storm action is fairly non-existent. Needless to say, and as the market is indicating, there is very little in the news to encourage higher prices.

Looking at the chart below, we are showing a clear breakout from the sideways channel that the market has been bouncing between for the last six months. The 4300 level could not hold for a triple bottom and momentum took off yesterday once the 4290 level was hit. This was also important because we passed through the 200-day moving average in the process. While all of these factors may be screaming sell, the market is oversold and a technical bounce may occur on profit taking. The key level of support will be 4000. Look for 4120 as more immediate support. Resistance is at 4300 and above there at 4460.

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.

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

Source: RJO Vantage


Softs - Cotton

Erik Tatje

After drought conditions gave way to plentiful rainfall in the southern half of the United States, concerns over cotton supplies have subsided and the focus is back on the increasing global supply of cotton. As a result, the market has seen drastic decline in price over the past two weeks and near-term momentum is firmly negative. At the time being, the RSI does seem to be diverging slightly with price as the momentum indicator has failed to confirm the recent low in price; however, this signal alone is not nearly enough evidence to warrant a long position in cotton. The underlying trend remains negative and any positive follow-through off this divergence signal will likely be purely corrective in nature. Until price can begin holding a higher-low higher-high price pattern, further losses could be anticipated in 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.

Dec '14 Cotton Daily Chart

Source: RJO Vantage

 

Softs - Cocoa

Dan Walsh

The September '14 cocoa is nearing a major psychological level.The month of June saw cocoa develop a toppish pattern. Shorts ran into trouble at the end of the month when near time highs were tested on a very bullish day. Prices since have eased back near $3100. Supply at Ivory Coast ports is running 42% above last year. This is very bearish data. Market participants should watch the $3000 level. We came about 40 points away from this level in June before the market headed higher. Aggressive selling in the last two sessions below $3100 puts $3000 back in play. This is a large round number trade as markets tend to be pulled towards major psychological levels when fundamentals lean in that direction.

If you'd like to learn more about futures trading or the cocoa market specifically, please contact Dan Walsh at 800-438-4805 or dwalsh@rjofutures.com.

Sep '14 Cocoa ( ICCU14) Daily Chart

Source: RJO Vantage

 

Softs - Coffee

Adam Tuiaana

September coffee is seeing some choppy, boring, sideways movement due to the lack of fresh Brazilian harvest news and potential crop damage (or lack thereof). We've seen less new shorts entering the market, but at the same time the market continues to lack new bull activity. Technically, the 170 level at which the September coffee is currently at would be a good level for new bulls to enter the market. Keep in mind that the downfall to coffee prices was likely precipitated by producers hedging their prices at the 200 level, but now we've seen follow-through selling on what may be abundant near-term supplies. If the Brazil harvest numbers turn out to be positive in anyway, we're likely to see a continued selloff.

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.

Sep '14 Coffee Daily Chart

Source: RJO Vantage

 

Agriculture - Grain

Stephen Davis

Good Afternoon Traders! We are looking for a turnaround Tuesday bounce and it is just not happening. Following the market's heavy selling the past week the grains markets are trying to stabilize with the bulls hoping for some kind of turnaround. Technical momentum indicators are oversold .However,the Central US weather forecast is very favorable for any kind of sustained recovery. Sunday night Dec '14 corn (CZ4) and Nov '14 soybeans (SX4) gapped lower and these highs from July 7 are good selling points to consider. Corn is one of the best markets at going back and filling gaps on the chart. The SX4 price discovery today has already gone above yesterday's high briefly and slightly filled the gap above the July 7th high of 11284.Today's high in SX4 so far is 11294.

CME grain markets will run into selling from the funds and the farmer.CFTC data reflects that commercial short soybean and corn positions are at one of their lowest levels in years which argues that the US and world farmer did not do a good job in marketing their 2014 soybean and corn crops. With record large yields now in the making, I would expect that farmers will be heavy sellers on any rallies as the producer better understands the supply bear market that is in the making.

Can this be the summer where we do not have a weather rally? It is intense heat that can harm the corn crop and there is none of that in the forecast. The one positive I can write today is that most everyone is bearish. Typically, when everyone is one way the market has a way of surprising everyone. These are weather markets and right now there does not appear to be any surprises. If the weather changes the price of soybeans and corn will change. Friday July 11th is a supply and demand report and that is supposed to be bearish as well.

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.

Dec '14 Corn Daily Chart

Source: RJO Futures PRO

Nov '14 Soybeans Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

August live cattle futures touched new highs (156.475) yesterday and the August / October spread touched -1.2250 (chart below). Technically the spread's key pivot is -3.55 on a close which will be a good measure to the market's front month strength. The strong cash trade is still driving the market but with the holiday weekend behind us, Commitment of Traders data showing a heft fund long, spreads backing off (AUG/OCT trading -2.300 last) and earnings season approaching on the heels of poor GDP numbers, some back and fill might be expected. Any sell-offs should find support at 153.00 then 148.00 in August live cattle futures. A break of new highs targets 162.50.

Demand is strong and supply is weak, so look for higher prices across the board to continue along with increased volatility. Summer trading can be thin and will only contribute to larger than expected ranges.

See today's Daily Livestock report within RJOF research to view recent demand numbers across the protein sector.Contact me with questions about entry points for the AUG/OCT spread.

See RJO Futures 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. Our current research page includes a recommendation on the Aug/Oct live cattle futures spread and an outright lean hog futures short.

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.

Aug '14 / Oct '14 Live Cattle Futures Daily spread

RJO Futures PRO

Feeder Cattle FuturesMonthly Chart

Source: GeckoSoftware.com

 

Interest Rates

Eli Tesfaye

September bonds, notes and Eurodollar are all trading higher in the early morning hours. The strength in interest rates comes from what appears to be weak global equities. Additional support comes from a weaker May German account balance reading having the smallest surplus in 9 months. Other outside support comes from an unexpected weak UK May manufacturing production with the largest decline in 16 months.

On the economic calendar today is the Consumer credit reports and a pair of Fed members scheduled to speakmid-day. Richmond Fed, Jeffery Lacker will be discussing the US economic outlook followed by Minneapolis Fed, Narayana Kocherlakota on Monetary Policy.

My view remains in the long run; upbeat to stable economic news will ultimately invite inflationary risk resulting in higher rates.

Technical prospective: Last issue, I mention that a close above 136.00 could trigger higher price actions. For now, 138.00 is a near-term target. The market at the moment is trading above pivot of 135.00. I'm not convinced that there is a lot more upside potential that exist in near-term.

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.

Sep '14 30-Year T-Bonds Monthly Chart

Source: RJO Futures PRO

 

Currencies

John Caruso

The Sep '14 USD contract caught some bullish attention after the US Unemployment Data came in much higher than expectations (288K Payrolls/6.1%). But the market has since been in a bit of a lull, as traders recognize that the Federal Reserve is still very much in the picture, with their overly dovish policy for low interest rates. On the other side, the Sep '14 Euro has been firm as of late. We saw a pause by the ECB in their last monetary policy meeting, and therefore the Euro currency is caught between a rock and a hard place. The ECB needs its currency to slow its pace and even reverse its course of gains against the USD to stave off Europe's recent bout with deflation. However, the US Fed's monetary policy of low interest rates and hawkish on inflation seemingly trumps all. Look for further weakness into and post the Feds July meeting on July 30th.

The British pound remains the world's "recovery currency" of choice. However, we're a bit overbought at these present levels, coming off of some disappointing UK factory output data, which fell by -1.3% from the previous month. The pound should find some support perhaps around 1.7050. We remain bullish on the UK and its currency.

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.

Sep '14 British Pound Daily Chart

Source: RJO Vantage



Equity Indexes

Jeffrey Friedman

Stock index futures were up this past week and made all time highs in the S&P and Dow. But, stocks futures fell from record these highs for the second day this week. Some traders have started expressing concern that economic growth may not be strong enough to support stocks futures near record highs.

The economy continues to improve with this past week's highlight of a healthy employment report. Monetary policy remains loose, boosting stock index futures. Fed policy is encouraging and still leaves other investment options as largely unattractive. Economic news has mostly been supportive. Stocks futures rose largely in the month of June, despite skittish news from overseas which should have weighed on stocks futures. Overall, favorable economic news (including Fed news) outweighed worries about the Ukraine and Iraq.

Technical outlook for the September S&P Futures remain in a long-term bull market. In the short-term the S&P futures are in a uptrend, with most chart followers targeting 1971 and then 1993 as their target for resistance. The S&P could go down to 1922 and then 1885 as a far target. The market must stay above1922 if the uptrend is going to stay alive.

If you'd like to learn more about futures trading or the equity indices market specifically, please contact Jeffrey Friedman at 800-826-4124 or jfriedman@rjofutures.com.

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

Source: RJO Futures PRO

 

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