RJO Futures Website
September 02, 2014 Volume 8, Issue 18


Feature Article

Let the RJOF Brokers Keep You Abreast of the Markets

RJO Futures understands that traders are not omnipresent. The markets are ever-evolving and it can be hard to keep up with new data coming in daily. Fortunately, our brokers devote themselves to staying in the know and they enjoy imparting their knowledge onto their clients. The quickest and simplest way to stay in contact with what the RJO Futures brokers know is to follow Futurescast , which consists of daily articles and videos composed by our brokers. These articles and videos can be found on the website as well as on the RJO Futures Facebook, Twitter, and YouTube pages. For those clients that are looking for something more educational, our Learning Center is also updated with resources written by our brokers that have a little more depth. These articles, trading resources, guides, and webinars explain the basic components of trading, while also delving into specific sectors and teaching advanced trading techniques. No matter the commodity market material you're searching for, RJO Futures has you covered.


Metals - Gold

Nick DeGeorge

In the early morning trade, and to start the new trading week, December gold is trading at $1265.5, which is currently down $22.0 from Friday's close. This could be off of global equity markets as they tick higher and China closed nearly at its highest level in nearly a year. Also, which added a boost to global equity markets, the UK construction PMI figures registered the strongest number since January. The US ISM manufacturing came in stronger than expected which could be another factor weighing on gold prices.

If you take a look at the daily December gold chart, you'll clearly see that gold has broken all the previous support lows and now looks prone to retest the June 3rd low of $1241.7 a troy ounce. Furthermore, if that doesn't hold, December gold could retest the $1,200.0 an ounce handle. On our RJOF website Trade Recommendation I have a short December gold trade that I suggested from $1,281.0 with a protected buy stop at $1,311.0. My first profit objective is at $1,221.0 an ounce.

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

Every bit of optimism that shows up in the silver market is quickly met with selling. Last Tuesday and Thursday's price action had this market selling off almost 40 points from the high to the close. The more significant of these was Thursday's price action, decimating all near-term resistance to close on the lows and today breaking August's support. Today's low is 1915 with yearly support of 1870 within swinging distance. Until something significant changes, the near-term trend is down and has been since the middle of July. The market needs to close above 1995 and 2025 for a near-term uptrend to form. Continued breaks of 2100 and 2167 would help add fuel to the bull story. In the meantime, this week in the US we'll receive the FOMC Beige Book on Wednesday, with ADP and the BLS non-farm payroll report Thursday and Friday. Employment numbers in line or better than expected could show this market heading lower.

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


Since the last eView, October crude oil has continued on its downtrend except for a bounce last week. October oil hit a low of $92.50 on August 21 and up to a high of $96.00 on August 29 – back to a low today of $93.05. Current oil stockpiles appear more than ample and demand continues to be lackluster. In addition, economic data out of Europe has also been weaker. Expectations for this week's EIA report are looking like we could see a small draw. Last week's EIA data showed a small draw BUT we are ending the summer with the highest stock piles on record since 1990. The situation in Russia continues to escalate with Europe and the US increasing economic sanctions against Russia – this is also believed to help keep oil prices under pressure. The US equity market continues to make moves to the upside - it hasn't been much help to oil prices. The US dollar continues on its upward move which has helped keep pressure on oil, as well as many other commodities.

Short-term technical indicators continue to be in oversold territory. The market has had some small bounces but nothing of any real significance. The bears still have control of the market and unless we see some type of supply side issue (doesn't seem likely) I believe they will remain in control for the near future.

I still like oil on the downside. Using the proper strategy such as a put option ratio spread could help you position to take advantage of it while watching the risk to the upside in case of a pop. 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


Softs - Cotton

Erik Tatje

Following a prolonged negative trend in the cotton market fueled by bearish fundamentals, prices in the December contract saw a bounce off the 8/1 low around 62.00 likely fueled by traders covering their short positions. Relatively dry weather last week added to the strength of the correction; however, the price of cotton was unable to penetrate the descending trendline originating from the 5/8 peak. This technical failure serves as confirmation of the underlying negative trend, and the market looks poised to continue lower from here. With cotton opening the week lower following the holiday weekend and the fundamentals remaining unchanged, the cotton market looks poised to continue lower. The next significant number will be the USDA WASDE report, scheduled for September 11th at 11 am CT.

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

Hector Galvan

The short trading week has begun and cocoa futures are on a tear lower. As of 10:35am this morning the market is at 3168 down 61 points from Friday's close. The question on many people's minds is just what is going on to a market that looked to be making a new contract high just last week? Simply put, the trade is pulling money out of the cocoa market. The market has had no productive retracement since the 21st of August and this bull market needed a quick rest. Furthermore, news on Friday of a 75K deficit turning into a 40K cocoa surplus has also raised many eyebrows and lead to much of the selloff we are seeing today. However, I would not close the door on this bull market just yet. Even with the news of the surplus, one must also continue to look at the consistent increase in chocolate consumption. Prices for products like cocoa butter and cocoa powder remain high which is indicative of the demand for cocoa. Until this demand wanes, the bull market is not likely to subside. Levels to watch in my opinion are 3258 to the upside and 3165 to the downside.

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

Adam Tuiaana

The coffee market is seeing a huge move today as more traders begin to realize the results of a poor harvest in Brazil. This is something we've written on over the past few months and now it looks as if coffee prices are beginning to reflect a sub-45 million bag expectation from the Brazilian crop, along with a poor quality. In addition, strong stocks may result in stronger demand for coffee on a world-wide basis.

On the technical side, December coffee prices continue to stabilize above the 200 area (last 20740). We'll now consider the old resistance area of 200 to be critical support, and a potential for a pullback to 205 is most likely in the near future, before another leg higher. 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.

Dec '14 Coffee Daily Chart

Source: RJO Vantage


Agriculture - Grain

Stephen Davis

Good afternoon traders! It has been a mixed start to the week with a lower opening failing to produce new contract lows in corn and soybeans. The inability of the market to make new lows sparked a modest volume short covering rally. Corn, soybean and wheat futures continue to be in a narrow sideways trade.

It has been normal for the overnight CBOT trade to bounce, while day session trade activity has been more bearish. The record US yield talk is not available during the overnight trade, however the chorus of early and big US corn and soy yields cannot be ignored as the early harvest inches northward.

With the US harvest set to gain speed in the weeks ahead I doubt that any rallies can be sustained with the Central US weather forecast being void of any frost threat. With competing South American soybeans being cheaper and US corn and wheat not competitive in world grain markets, the markets cannot afford to sustain a rally, which would further distance US export competitiveness. The market needs to find a lower price that rids itself of the excessive supply.

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 recent cattle on feed report continued to show tight supplies across the board. Marketings were not as bullish given the higher weights attributable to favorable feeding conditions.

Commitment of Traders as of 08/26 showed non-commercials net long in live cattle at 111,405 vs. record net long of 156k in April. This is considered neutral to bearish.

If you are a speculator consider 2015 calls. Last newsletter, 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 may be considered alongside feed price protection at current levels in corn/wheat. Specs may also consider Hightower's recent option spread recommendation (call us for access).

Absent a global bearish demand set of events, I suspect live cattle futures will hold well above 144-147 support as noted in previous newsletters. All parts of the supply chain seem to be keeping output in check to keep prices firm and retail buyers seem to have absorbed the steady price increases. Going into the fall, I would speculate hog/beef price differentials will narrow and there are late September seasonals to support this idea.

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 equities and strong economic reports last week and early today, some profit taking action seems to be playing out this morning.

The strength in equities not only comes from better economic reports in the US, but also the growing sense that a new wave of accommodation are in the cards for the European Central Bank, the Bank of Japan and the People's Bank of China.

The financial markets are anticipating the Federal Reserve to increase its Fed funds rate mid-2015. It is possible that it could happen sooner than later. It would not surprise me if interest rates continue to push higher after some corrective moves as flight to quality buyers provide mid-term support.

Technical prospective: The attached weekly chart of Bonds shows support around 138s. For those who like to trade the short end the curve comes in around 125.11. This range provides trading opportunities implementing options or a 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.

30-Year T-Bonds Weekly Continuation Chart

Source: RJO Futures PRO


Equity Indexes

Jeffrey Friedman

Stock index futures were up big this past month of August with the S&P making all-time highs. Some traders continue to express concerns that economic growth may not be strong enough to support stocks futures near record highs.

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 have risen largely in the month of August, despite skittish news from overseas that should have weighed on stocks futures last month. Overall, favorable economic news (including Fed news) outweighed worries about the Europe, Ukraine and Iraq. The thought that the FOMC could tighten sooner than later if we get great economic news, could send stocks index futures lower in price. No one really knows!

Stock index futures were up in August. The Dow futures were up 3.0 percent; the S&P 500 futures, up 3.6 percent; and the NASDAQ futures, up 4.7 percent.

For the year-to-date, major stock index futures are up as follows: the Dow, up 3.0 percent; the S&P 500, up 8.3 percent; and the NASDAQ, up 9.6 percent.

The week's highlight can be considered the Monday Labor Day holiday or Friday's employment situation report for August—depending on whether one is on vacation or not. The Fed's chairman has recently emphasized that the labor market is not where it needs to be. Traders will be studying the employment numbers and reviewing whether she is right or not. The employment report likely will play a key role in the next round of Fed forecasts for the economy, posted with the September 17 FOMC statement.

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 an uptrend as well, with most chart followers targeting 2011 and then 2024 as their target for resistance. The S&P could go down to 1970 and then 1943 as a downside target. The market must go under 1943 for the short-term trend to change.

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.

E-mini S&P 500 Weekly Continuation Chart

Source: RJO Futures PRO


This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.


The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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