RJO Futures Website
August 19, 2014 Volume 8, Issue 17

 

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Metals - Gold

Nick DeGeorge

In the early morning trade, December gold is currently trading down slightly at $1297.7 a troy ounce. Around the world, global equity markets traded higher. Tensions are easing around the world as Russian/Ukraine tensions dampen, Israel and Gaza extend their ceasefire, and the Kurds regain control of Mosul Dam. Furthermore, strong gains in the market and solid US economic data are some more reasons which are probably keeping the shiny one at bay.

Technically, there is a very important symmetrical triangle pattern developing. This has been developing over the last couple of months due to the choppy trade range of the gold market. I have no idea which direction that gold will choose, but I'm expecting a big move either way in the coming weeks. If gold breaks $1324.3, which will be roughly where the top trend line of the triangle will be, then I see December gold rallying to the contract yearly high of $1390.8 made back on March 17th. For the bears, if gold breaks $1281.0 then look for around a $100 sell-off back to the December 31st low of $1185. a troy ounce. I have highlighted all the technical levels below on my December 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.

Dec '14 Gold Daily Chart

Source: RJO Vantage

 

Metals - Silver


The chart below tells a better story of silver than anything I can piece together. Back in February and then again in June this market showed the most aggressive signs of strength in almost a year, only to consolidate for a few weeks and then give back the gains. As continues to be the case, the 1870 support of this market continues to be the steel door holding this market above the teens. The charts are setting up to test the level again which would be the seventh time in 2014 this market has tested the multi-year lows.

The labor market continues to improve so keep an eye on the weekly unemployment claims until the monthly non-farm and ADP employment reports show a fuller picture. I think if the unemployment claims continue to remain around 300,000 and lower the employment situation is getting better. The FOMC will give their in-depth update on the economy Wednesday with the release of the July meeting minutes, and further discussion at their Jackson Hole Symposium Thursday, Friday and Saturday. A change in their stance regarding interest rates could help fuel this market higher, or if they see further weakness.

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.

Dec '14 Silver Daily Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

Let's start with a quick recap of my last article on August 5th: September crude oil was trading near a low of $97.00 on August 5, then to a high of $98.58 on August 11 and back to today's low of $95.60 (so far). September oil goes off the board tomorrow so we are now focusing on October crude oil with a last of $93.30. (See chart below). Current oil stockpiles appear more than ample and demand according to the EIA is expected to ease into the remainder of the year. Expectations for tomorrow's EIA report are looking like we could see a draw of about 1.6 million barrels. Fear premium has continued to wane a bit and news has been quiet on Libya, Ukraine and Iraq. I continue to keep a watchful eye on the major geopolitical hotspots as this has the potential to cause a short-term spike if things heat up. Even with the US equity market making moves to the upside, it hasn't been much help to oil prices. The US dollar continues on its upward move which has also helped keep pressure on oil.

Short-term technical indicators have been in oversold territory for some time now. The market has had some small bounces but nothing of any real significance. The bears still have control of the market and until we see some type of supply side issue, I think they will remain in control.

I still like oil on the downside, but I think oil could be in store for a small bounce up. 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 or ideas.

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.

Oct '14 Crude Oil Daily Chart

Source: RJO Futures PRO

 

Energies - Natural Gas


October natural gas futures this morning are up 10.2 cents to 3930 on the day session. Most of this bounce is technical in nature as we were unable to break the July 28th low of 3740. Look for a period of choppiness ahead as the supply/demand factors sort out heading into the end of summer. There was talk of increase in air conditioning use with cooler temperatures on the horizon. This will likely be overshadowed by strong injections and massive production in the coming weeks. Last week's storage injection was 78 BCF, down from 82 BCF the week prior.

While today is a positive day, look for resistance to take over on these charts. We closed below the pivot swing and we just crossed the 10-day moving average to the upside. Key support is at 3740 and below there at 3670. Resistance is at 3860 and 3909.

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.

Oct '14 Natural Gas Daily Chart

Source: RJO Vantage


Softs - Sugar

Joe Nikruto

This week's comment finds October sugar futures continuing the slide that began back in June. Sugar futures churned from February to June in a range between 17.50 up to almost 19.00. This recent break began in earnest early in July as the October sugar futures contract chewed through support at 17.50 on it's way to 16.50, 16.00 and ulitmately, at the time of this writing, to almost 15.50. Today's price action finds October sugar futures at a contract low. Wire services today were highlighting the fact that the spread between October and March futures, again at the time of this writing 191 points, shows an October contract auctioning lower to incentivize buyers to dispose of ample and aging nearby supply. A quick look at the COT data shows the commercial category less short than they have been in some time. This can be a leading indicator that a change in trend is brewing. However, many trading ships have been smashed upon the market rocks as individual traders attempt to ride with the commericial trader before a clear reversal is in place on the chart. The commercial trader category has much deeper pockets and different motives than we mere mortals. Speaking of deep pockets, a recent financial press article I found interesting highlighted the bullish bets being placed by big fund managers as sugar finds its way back into vogue as a commodity investment. The fund traders quoted for the article all believed that sugar will swing from a burdensome supply to rather tight supply much quicker than the market is anticipating. I find it difficult to see that on the chart but it is helpful to remember sugar futures are not only great at trending but also posting some gargantuan moves at trend reversals. On the technical side, trend followers have been short sugar futures for the last two months and will need a move to at least 17.00 to be chased out of profitable positions. At this point, it is difficult to guess where the bottom is in sugar and likely an unprofitable exercise.

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.

Oct '14 Sugar Daily Chart

Source: RJO Futures PRO



 

Softs - Cotton

Erik Tatje

Last night's crop progress report showed a bit of a decrease in the percentage of good/excellent crop reported in cotton; however, the figure still comes in well above both the 10 and 20 year averages for this time. The previous crop progress report that was released earlier in August confirmed the ample supply of cotton, both Domestic and Global, with the only figure falling slightly from the previous month being Global ending stocks. With gain in the schedule for the Southern states toward the end of this week, expect growing conditions to continue to be favorable. Despite the relatively sideways price action as of late, there is no reason to suspect a potential trend change, especially considering the magnitude of the recent move in cotton. The market will likely continue to favor a negative bias below 68.54 on the chart. Ideally, price action should respect the 65.00 resistance pivot on the chart and remain below this figure. Any sustained weakness below 63.75 will open the door to a new wave of selling pressure that could potentially target the 62.00 low.

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


Cocoa prices in the last 24-hours have been brutality disappointing. After reaching prices not seen since 2011 the cocoa market has rapidly lost much of the gains posted over the last four sessions. However, this sell off should not be confused as a reversal or the end of a trend that has pushed cocoa higher since the start of this year. Rather, it should be looked at as a pause, a quick break for the market to catch its breath. I would direct the trade to consider the considerably high prices that are still prevalent in the cocoa by-products like cocoa butter and powder. The considerable demand for these products continues to arguably be supportive for the price of cocoa. In addition, as we continue to anticipate the growth of demand and the slow influx of new cocoa from West Africa one should keep an open mind to where prices can eventually test. Support on the December contract is at 3200 and 3185. A sell-off and close under these numbers should signal a larger retracement in the market.

If you'd like to learn more about futures trading or the cocoa market specifically, please contact Hector Galvan at 877-963-6484 or hgalvan@rjofutures.com.

Dec '14 Cocoa Daily Chart

Source: ProphetX

 

Softs - Coffee


The coffee market has been very choppy and has consolidated this month. It appears that many larger producers had put pressure on coffee prices by initiating hedges and selling coffee futures once coffee had reached the $2 per pound level at the beginning of this month, and since then we can see a market that is essentially waiting on any new- news. The perceived promise of a global supply deficit (reported by the Hightower Group to be "8-10 million bags"), and continued stable demand in the coming months has helped to support coffee prices.

On the technical side, September coffee prices continue to stabilize above the 185 area. This area should be critical support, and a race back to the $2 should be in the foreseeable future for those interested in joining the bull camp. Call or email for specific strategies.

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! Very good, solid seasonal crop condition ratings, high yield counts from the Pro farmer Crop tour for Nebraska, South Dakota and Ohio, along with favorable Central US weather forecasts has pressured corn, soybeans and wheat prices overnight. The volume of trade has been moderate with grain markets watching to see if strong domestic cash soy markets can offer a supportive tone to new crop soybeans for a second day in a row. So far today there is no sign of this with SX14 at 1045, down 12 cents. A close under 1055 is bearish and this looks like what is going to happen today. The tightness of old crop soybeans has been offering support to the soy complex ,but at some point the abundance of supply should topple November soybeans below $10.00.

There is a global supply glut around the world in corn, soy, wheat and cotton. Here in the US the cool summer has not resulted in an immature crop. There is no apparent risk of an early frost at this time. The full moon is September 8th and that is too early for frost. Big crops get bigger and look for that to happen as we move into harvest.

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.

Nov '14 Soybeans Daily Chart

Source: RJO Futures PRO

Dec '14 Corn Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

The cash live cattle market retreated over the last few weeks as buyers may have been reluctant going into a seasonal decline in demand. Households will be paying off August vacations and shopping for books and paying tuitions.

Non-Commercials were net long 132,549 contracts as of August 12th and charts are a bit heavy. Weekly charts show value between 144-147, which is the recent range of the sell-off in October. August cattle may trade as its own animal reflecting the unusual steep discount to cash. In addition to seasonals, the October/December futures seem to be pricing in the backlog of 120+ feeders in the lots but prices going into early 2015 build back some premium reflective of the overall trend of lower placements and herd rebuilding.

If you are a speculator and prefer buying vs. selling consider 2015 calls. Last month, I once again suggested put protection for producers in the feeders over 220 and again over 230. I believe live cattle still has the potential going into 2015 to see 180 at which point hedge protection for feedlots may be considered alongside post harvest feed price protection.

Cattle on Feed report as of August 1st will be published Friday afternoon. RJO research will publish pre-report estimates this week. Hightower Research also recommended a live cattle play this week.

Login to RJO Futures research (trials available) 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 and cash market a.m. updates. Open an account online to set-up complete access with the ability to set-up auto email subscriptions per sector.

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 Weekly Monthly Chart

Source: GeckoSoftware.com

 

Interest Rates

Eli Tesfaye

Eurodollar, bonds, and notes are all trading on the lower end this morning. After strong performance in the past two weeks, it seems that profit taking action is in the cards. The market is using the bearish housing data to take some profit off the table.

Equities are pushing higher with the Nasdaq 100, pushing to the highest level since September 2000. Flight to quality type of buying should continue to support the interest rate market. It would not surprise me if interest rates continue to push higher as the appetite for flight to quality buyers are coming in to support it.

The Fed will release its lag minutes tomorrow and we shall see what they will communicate. The market will be looking at clues as to what type of tightness is around the corner. Today's CPI reading would probably get the more hawkish Fed members sharpening their pencil to take some tightening actions sooner rather than later.

Technical prospective: The attached weekly chart shows that the market is coming to a weekly Fibonacci 50-60% retracement box 140-143 range. This range provides a great deal of trading opportunity implementing options or combination of futures and options. Give me a call or email me to discuss some 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.

Sep '14 30-Year T-Bonds Weekly Chart

Source: RJO Futures PRO

 

Currencies

John Caruso

Senior Market Strategist John Caruso discusses this week's fundamental data effecting the currency markets. Better than expected housing numbers and an inline CPI could be helping boost today's US dollar move upward. Lower than expected inflation ratings out of the UK seem to have investors running to the dollar and away from the euro and pound.

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.



Equity Indexes

Greg Perlin

S&P futures rallied 6 points to 1974.50 after a much stronger than expected jump in July housing starts, adding to upside momentum sparked by a stronger tone in Europe overnight and positive earnings.

The Commerce Department on Tuesday said construction on new US new homes rose 15.7% in July to an annual rate of 1.09 million versus 973,000 in June. Economists that were surveyed had predicted 975,000 in July starts.

This week we will see the release of the Fed minutes on Wednesday, and a speech from Federal Reserve Chair Janet Yellen at Jackson Hole, Wyoming on Friday.

Technical outlook for the S&P E-mini futures is up, with the climb higher last week triggering a return to the bull trend and targeting secondary rallies to challenge the last swing high. A close over 1974.25 calls for rallies into Wednesday. It will take a drop under 1936.25 to reverse the upswing and start a sustained selloff. Most likely any corrective dips will hold Monday's gap to keep strong bull forces.

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.

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

Source: RJO Vantage

 

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