RJO Futures Website
September 16, 2014 Volume 8, Issue 19


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Metals - Gold

Nick DeGeorge

In the early morning trade, December gold is down slightly, but down about $10 off its overnight high and currently trading at $1233.3 a troy ounce. Gold is trying to makes its way up from an eight month low it made late last week. December gold may be poised for a very short-term rebound a head of the Federal Reserve's two-day policy meeting. In order to get a major bounce, I believe that we will need to hear seriously worse than expected US economic news and hear that more global central banks will start more easing.

If you look at the daily December gold chart, you'll clearly see that it broke out of the symmetrical triangle pattern and is down trending. Also, the 50-day moving average is about to cross below the 200-day moving average, which signals more buying pressure and momentum to the down side. The December gold market is setting up for a retest of the December 31st low of $1185.0 an ounce. For the bears, I would suggest selling any rally from $1275.0 - $1295.0. Also, if you've been following my trade suggestion on RJO Futures TradeRx, I've suggested shorting gold from $1281.0 and now have suggested putting a buy stop in at $1246.0, in order to protect profit. I have highlighted all technical levels below on my daily 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 December silver market continues its drop into the area it hasn't been since the summer. Any technicians, or even anyone that can pull up a chart for that matter, can clearly see this market bouncing every time it hits these lows. Although past performance is not indicative of future results, a drop into the 18 handle is quickly met with buying. If lightning can strike seven times you can buy a full sized December silver at the market (1865) and risk roughly $1300 below the contract low of 18455. If the market rallies to even the 2000 level this is a roughly $6750 profit potential. It's a little early to count the chickens before they hatch but this is the pure risk/reward opportunity presenting itself in this market currently. The non-farm payroll report for August was a fairly big miss with 142,000 jobs created compared to expectations of 212,000. This market however shrugged it off. I would've assumed that might've given this market a bounce but lo and behold, nope. Tomorrow wraps up day two of the FOMC meeting. A change in their stance could be something to propel this market higher. Otherwise the downside is an abyss.

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


Senior Market Strategist Mike Sabo talks about the energy futures in his 9/15/2014 commentary video. These markets are up slightly this week with a firmer tone following last week's pressure. The technicals seem to be oversold with the fundamentals being soft. The COT had a decrease in net-longs by non-commercials. Though there's no expected large upticks Mike has strategies for trading the upside.

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.


Energies - Natural Gas

Bill Moore

Ahoy! October natural gas futures are backing off this morning with a last traded price of 3.875, down .056. As colder temperatures are starting to rear their ugly head, the balance of record supply and possible demand will start to clarify. The historically accurate farmer's almanac is calling for a snowy and bitter cold winter for most of the United States, very similar to last year. Should we have to hear the unfortunate words 'polar vortex' again, we could be in for another volatile environment with natural gas futures. Should you want to explore an upside play, a March 2015 4500 – 5000 bull call spread is going for $950.00. The profit potential on this is $5,000. Please contact me for more details or a different strategy.

But enough about the winter. In more recent news, there were reports this week of a blast in a Henry Hub pipeline providing support. Also adding support will be the looming threat of Hurricane Edouard. While its path is still unclear, this should be viewed as a potential threat for upside in price. Winds of over 110 mph were reported with this storm. Bulls of this market will be challenged by continued supply builds and a very strong inventory. Last week's injection was up to 2,801 after an injection of 92 BCF.

Looking to the charts, we are still stuck in this sideways channel with 3.750 acting as underlying support. We have tested this low on four occasions so it is worth noting. Technicians will point to our close above the 40-day moving average as a bull sign as well as the market trading above the 18-day moving average. Resistance is at 3960 and 4040. Support comes in at 3842 and 3750.

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 Futures PRO

Softs - Sugar

Joe Nikruto

This week's comment finds the March sugar futures racing to find a bottom. In nine trading days sugar broke out to the downside and lost 100 points. Today's price action shows the first day in four where sugar has not made a new low for the move. While obviously oversold technically, the 60 minute chart shows that March sugar futures remain under pressure with any attempt at a rally being met with more selling. Wire services this morning highlight the fact that technicians of every stripe are looking for a bounce soon. The Hightower group posted a few interesting facts that speak to the kind of pressure that sugar futures face. They mentioned that Thailand has unsold sugar and looks to lower prices while at the same time the Thai government is encouraging more sugar production, possibly 5 million tonnes more worth. To me this may mean that even at these lower levels, producers are incentivized to continue to produce. It is likely the same for other producers, both in South America and the emerging markets. With supply likely to remain high or at the very least adequate it falls to demand to save the day. China currently holds significant reserves. Until there is a change or a decision to add to these reserves it will prove difficult to sustain a rally in my opinion. However, sugar futures can post very strong counter trend rallies. Intermediate term trend followers will start to cover near 17.91 but those who are more aggressive at profit taking look to begin covering shorts at 16.44. A short covering rally could feed on itself pretty quick. A move to test the 50-day moving average could find March futures bumping into 17.50 or better. Bottom line, technically oversold but fundamentals are still bearish and the chart looks lower yet.

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.

Mar '15 Sugar Daily Chart

Source: RJO Futures PRO


Softs - Cotton

Erik Tatje

After the recent USDA report showed a slight decrease in domestic ending stocks (Aug 5.60 vs. Sep 5.20), cotton prices caught a quick bounce up to the 68.50 level before pulling back. The broader market didn't seem concerned that the report showed over a million-bale increase in world ending stocks; however, the large world supply may be beginning to weigh on prices as cotton has recently begun to retreat from the 68.00 area. Technically, the near-term momentum does appear to be positive; yet the broader intermediate term directional bias is a bit less clear. The markets inability to trade above previous structure around 68.50 casts a shaddow of doubt over the recent strength in the cotton market and the recent strength in prices will remain suspect until the market can trade (and hold) above the 68.54 level on the chart. There are a few key techncial levels of support below the market here at 65.08, 64.53 and 63.75 which will certainly give more clarity to the underlying strength of this market. If price action fails below 63.75, then the market will likely continue lower and resume the longer term bearish trend.

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 is still a wait and see trade for now. We are still in oversold territory but we have not yet recovered recent losses. Technically, we are forming support around 3030 and are trying to break above the 9-day moving average. Supply and demand news is bearish, causing the selloff that started the month. Cocoa continues to be a bull market, as we've seen over the past year, and has recovered from every dip to create new highs. This morning we traded as high as 3088 and there is strong resistance at 3085; if we can hold above this level look for 3100 as the next target. If traders are still bullish cocoa, consider buying Dec '14 3300 calls at $210 real money plus fees. We were trading at 3300 a few weeks ago and Dec '14 calls have 53 days until expiration.

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.

Dec '14 Cocoa Daily Chart w/Moving Averages

Source: RJO Vantage


Softs - Coffee

Adam Tuiaana

The coffee market still has the promise of a strong bull market on a long-term basis, due to the Brazilian harvest issues and dry and hot weather. However, in the near-term, the trend has been down and excess bumper crops from Columbia and Vietnam have continued to keep pressure on coffee prices. Traders will likely sit tight until the excess short-term supply has worked its way out to satisfy world demand.

On the technical side, December coffee prices have recently violated the 18285 consolidation low from August 20th. This area should have been good support, but we will now likely see a move down to the 175, with little in the way of support. 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 Futures PRO


Agriculture - Grain

Stephen Davis

Good Afternoon Traders! We had an initial rally this morning on lower than expected September FSA planted acreage updates and then a fade in classic turn around Tuesday mentality. The selling comes from stepped up hedge selling and a reestablishment of short positions. The high in SX14 today is 9996.That is a nice high as I do not think we will see $10 SX14 in the next few days and few weeks. I get in a lot of conversations these days about 1 million or 2 million less acres in corn and my commentary is that the weather is so good I do not think it matters. The weather leans bearish with temperatures warming up later this week, a relatively dry last half of September and no sign of frost thru the first part of October. Big crops through time tend to get bigger. In big yield years like this one the lows in the row crops are typically put in during October. Recent lows are unlikely to hold if new crop yield reports continue to exceed expectations.

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


Interest Rates

Eli Tesfaye

Bonds, notes and Eurodollar are all in positive territory trading above their daily pivot prices. After strong performance in equities in late morning and strong economic reports last week and early today, it seems that the market is anticipating friendly FOMC announcement tomorrow.

As I said in the past eView, the strength in equities not only comes from better economic reports in the US, but also the growing sense that a new wave of accommodations 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. The market will be closely watching and analyzing the language for some sort of clue of a possible rate hike in tomorrow's Fed minutes release after the two day meeting ends. As stated previously, it would not surprise me that bonds continue to push higher after the corrective move supported by flight to quality buyers continue to provide mid-term support.

Technical prospective: In the chart below I highlighted areas I think would be opportunity to short the markets - the area I keep referring to as the "box" 50-60% retracement area. It seems that the bonds have stayed in this area more or less for the past 10 weeks. I think 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.

30-Year T-Bonds Weekly Continuation Chart

Source: RJO Futures PRO



John Caruso

In front of the FOMC meeting scheduled for tomorrow, we're seeing the breadth of the currency markets in "wait and see" mode. With the USD staging a major recovery over the past several weeks, it's worth noting that we appear to be in an "overbought" state. Can the USD continue to make new annual highs? Absolutely. But this assumption rests solely in the hands of Janet Yellen and the Feds outlook on interest rate adjustments. It's been well documented as of late that the Feds will alter their language towards interest rate policy, removing the word "considerable" in relation to the time frame as to when the Feds will move on interest rates, to a more "data dependant" outlook. Meaning, if the economic data is strong, they'll tighten rates faster, and if not, the Feds can actually become more dovish on monetary policy. With this type of flexibility, the Feds will no longer be tied down to a specific date as to when rates should be hiked. Our outlook for the USD was to re-test the July 2013 highs of 84.96 by year end; however, we certainly look to be on a faster track to seeing those levels tested in the very near future.

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 fell modestly today, with investors in a risk averse mood, and the Nasdaq in particular is setting up for another weak day as many fretted that the Federal Open Market Committee will deliver hawkish talk on interest rates.

In Economic news, producer prices were flat in August thanks to falling gasoline and food costs in another sign of receding inflationary pressures. It was the lowest reading in the producer price index since December. But most investors will be focused on the start of the two day Federal Open Market Committee policy meeting.

Overnight, we saw a disappointing German economic sentiment survey that put pressure on already weak European stocks. Worries about this week's Scottish referendum is also weighing on the S&P this morning

Technically, the market is still bullish and a punch to new highs alerts for pressing moves to 2016.00 basis Dec '14 contract. However, the shift to corrections last week hurts bull forces and suggests corrective pressures in trade this week. A close under 1971 is negative and could drive selloffs down to 1956 support.

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.

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

Source: RJO Vantage


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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