RJO Futures Website
October 14, 2014 Volume 8, Issue 21


Feature Article

Upcoming RJO Futures Webinars

Trading Agricultural Futures

October 15, 2014 at 7pm CDT

Register now! Trading grains and various agricultural products requires knowledge of the underlying asset class and our goal in this webinar is to introduce new agriculture futures traders to the contracts available in this market. Knowing when to be out of the market is just as critical as knowing when to be in the market and we will introduce technical analysis basics to identify potential market entry points in conjunction with our fundamental knowledge of the agricultural markets.

  • Keys to understanding Agricultural Markets
  • Benefits of trading the Grains
  • What to consider before trading this market
  • Basic technical analysis techniques on the Ag's

Trading Currency Futures

October 22, 2014 at 7pm CDT

Register now! Learning about foreign currency futures trading can add a broad range of new products to your trading routine. In this session we'll cover many of the critical elements that you'll need to know regarding currency futures (also known as FX Futures). FX Futures trade 24 hours a day, 5 1/2 days a week. This is a very technical market that traders can potentially utilize to trade the markets outside of normal US stock market hours - with good volume and volatility. Depending on where you live and your work schedule, Forex Futures may be a good fit for your trading enterprise.

  • What makes FX a good market to trade?
  • Benefits of trading foreign currency
  • Typical trends within FX Futures
  • An FX Futures trading strategy

Metals - Gold

Nick DeGeorge

In the early morning trade, December gold has extended its recent rally overnight and is currently trading at $1234.4 a troy ounce. The recent weakness in the US dollar, some dovish commentary from the Fed's Chicago President Charles Evans warning of premature tightening, and worldwide fear of the Ebola disease have all helped lift the shiny one off its yearly lows.

If we take a look at the daily gold chart, you'll clearly see it just broke above its 20-day moving average and a short-tern downtrend. Therefore, suggesting a strong possibility of a further upside momentum rally that could take the shiny one all the way back up to its 200-day moving average currently resting at $1285.7. I highlighted all technical levels below on my December daily 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

In the last issue of eView I suggested an aggressive 1400 support level and then a long-term consolidation in the silver market. Until further notice that will continue to be my end game. The US and Europe continue to putter along with OK growth numbers. Last month's employment number was back above 200k jobs created with revisions to the previous months revised upward. The weekly unemployment claims have been below 300k which continues to set up the monthly employment picture as positive. The reason I mention this is the markets are aware of the slowing in the US and Europe but as you can see from the chart silver hasn't reacted like it's worried. Silver came up for a big gasp of air after the dump down to 1664, the new contract low. The way this market can negate the 1400 support would be a close above 1870 and then a further rise to 2175. It took silver almost a year to break through its 1870 support so use these levels as a traders map to navigate around this market. Things can change quickly, so it's important to stay nimble.

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.

Silver Daily Continuation Chart

Source: RJO Futures PRO


Energies - Crude Oil


Senior Market Strategist Mike Sabo talks about the energy futures. Crude is under pressure with the December contract breaking $85. Overall energy complex is a weaker tone. Short-term technical indicators show market is oversold. OPEC role is questionable.

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

Natural gas this week is in the support section of the range that has bound us since July. Last traded price on the December contract is 3.963 (9:49 am CDT). While the other energies are crumbling under the weight of a rising dollar and a falling stock market, natural gas has maintained its price integrity. Those who have bought the 3800 dip have been rewarded handsomely the past six times that level has been tested. We'll be looking to see if we can sustain this range in the coming weeks as all things eventually come to an end. Cooler weather is on the horizon and the weekly inventory injections have been strong. Last week we were up to 3,205 from 3,100 BCF.

Technical indicators are suggesting a bounce. We are oversold and this support has held up. We closed below the 9-day moving average which is bearish. The key to everything here will be this channel. Look for a move to 3750 or lower, or 4300 or higher to set the tone on the December contract.

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.

Nov '14 Natural Gas Daily Chart

Source: RJO Vantage

Softs - Sugar

Joe Nikruto

This week's comment finds March sugar futures with a changing technical picture while the fundamentals are nothing short of déjà vu all over again. Dryness in Brazil has the trade asking questions about crop impact and possible reduction in output. The trade is focused, and admittedly rightly so, on any supply disruption in Brazil that could turn sugar from a state of surplus to one of deficit or at least less surplus. This concern can be seen on the chart. The sugar market is showing signs of bottoming with moves up through the 10-, 18- and 50-day moving averages in the last 2 weeks. A cup with handle can be seen on the chart. The breakout above the top of the cup, 16.94 in the March contract, took the market above the 50-day moving average to 17.20. This move was met with selling and March sugar futures were driven back below 17. However, we have been able to hold above the 18-day moving average, 16.40, and the chart is still under the influence of the bottoming cup with handle formation.

What do all those numbers and levels mean? Traders have to respect that the chart may be portending a possible change in trend. Trend followers who have been short sugar since July will be stopped out profitably with a close above 17.24. Other trend followers who employ more aggressive profit taking were stopped out last week in the move over 17.00. This fact was highlighted in today's Hightower comment on the fund trader category where almost one third, 16,000 plus contracts, of their 60k plus short position was shown to have been covered in the last reporting period. Without technical weakness, meaning March sugar futures making a move below 16.40 and rapidly heading for 16.00, I would not be surprised to see the funds continue to cover and sellers step back for a moment to see how high the funds could take this market. Astute technicians will note that both open interest and volume have been waning on this move higher which casts suspicion on the idea of trend change. This could change in a moment if the March sugar futures were to move convincingly back into the 17.00 area on the way to 17.50. Bottom line: Chart action has to be respected and the path of least resistance looks to be higher. Funds don't stay flat and they can drive a market for a time. Watch closely for fundamentals in the news flipping back to bearish as China looks to endure further slowing and change in weather pattern in Brazil from dry to wet takes the luster off the bullish argument.

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

Cotton has spent some time consolidating around the "moving average band" comprised of the 20- and 50-day moving averages on the chart. Technical speaking, cotton has produced a very interesting signal in the RSI that should not be ignored by traders. While prices did produce a new low on the chart, this bearish price action failed to be confirmed by a new low in the RSI indicator. This is what is known as a "bullish divergence" signal and often times signals a trend change in the market. In essence, the market is "less oversold" at a lower price point, indicating a potential change in trend. With price now trading above both the 20- and 50-day moving averages, a case could be made for a trend reversal; however, in order to confirm a new trend change, price should trade above the previous swing high at 68.48. Furthermore, there is some technical resistance around 65.30 that the market will need to hold above before it can make a run up to 68.48 and this will likely be the most relevant level to keep an eye on through the remainder of the week.

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

Supply and demand continue to control the cocoa trade. European quarterly grindings were at 337,866–below expectations. The December contract tried to recover, posting a high of 3208, but closed at 3060, giving most of the rally back to the bears. Note, the close was below the 9-day moving average, continuing its negative trend. Long liquidation pressured the market and cocoa is trying to stay above the 200-day moving average. The Ebola fear factor is still present and the market can't decide on a direction, as the bulls and bears both struggle to take control. Over the next few days, look to the technical side for some direction. A close above the 9-day moving average should push the December contract back over 3200. Look for market behavior similar to mid-September; traders have continued to buy on dips as it seems cocoa refuses to let the bears gain control.

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

Poor weather conditions have accumulated significant amounts of premium for coffee prices, and it pretty much doesn't matter where. Brazil (as we have discussed in the past) continues to forecast smaller supplies ahead due to dry and hot weather conditions, while Peru now reports issues with our old buddy, the Roya Fungus. For a little while now, it appears as if coffee prices have have been overbought, but I typically don't believe in overbought or oversold markets. Rather, I would suggest that long liquidation is the main culprit keeping prices from soaring to 250. This 220 area is critical to determining whether or not coffee will reach prices above the 300 area any time soon.

On the technical side, December coffee prices continue to hold above the 200 level with no wane in momentum levels. Coffee prices were able to break above April's high of 22260, and have since consolidated, possibly picking up more steam for a push higher.

There are several strategies that can be applied here in this situation. 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

John Kennedy

Mid-session Tuesday, Chicago grain markets are trading mixed with corn and soybeans slightly higher. There were no overnight USDA sales announcements. Chinese buying continues to influence the futures markets.

Dec '14 Corn - 347 3/4 (+1 3/4), Nov '14 Soybeans - 948 1/2 (+3 1/2), Dec '14 Wheat - 503 1/4 (-2)

Following the government/banking Columbus Day holiday yesterday, the delayed USDA Export Inspections (10am CDT) and Crop Progress (3pm CDT) will be released today. Wheat exports were on the lower end compared to La Salle St. expectations at 15.6 MB. Corn exports, 36.8 MB, were higher than the analyst range, while soybeans were much stronger at 52.5 MB.

Wetness throughout the US Midwest has contributed to slower harvest progress in both corn and beans. Slight chances of precipitation will continue for the coming days, before turning bearish with a period of extended dryness. Heat in South America has contributed to world soybean firmness, but Brazilian rains are forecast for the near-term.

Some upside potential exists in spite of massive spec short positions. US equity weakness and a lower dollar could release investor funds into commodities. From a supply perspective, beans and corn lean lower.

If you'd like to learn more about futures trading or the agricultural market specifically, please contact John Kennedy at 866-397-8194 or jkennedy@rjofutures.com.

Nov '14 Soybeans 60 Minute Chart

Source: RJO Vantage


Agriculture - Livestock

Jeff Gilfillan

It's remarkable how investor/consumer sentiment seems to change day by day and month by month. We live in a world of an estimated 1.7 billion consumers. The immediacy of information is ever present through online mainstream and social media. Media outlets and advertisers use complicated algorithms to increase their exposure and thus their value. If you browse through your average online newspaper, you'll see these algorithms identify horrible local and worldwide stories in order to grab readers' attention and encourage stories to be read. This process is a distraction for many in the workforce and to some degree influences consumer sentiment negatively.

There are some headlines even money managers and non-Twitter, non-Facebook consumers must pay attention. Ebola is still considered a minor issue by many, but the bond and equity market are telling us something different. Uncertainty is bearish.

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

Phillip Streible

Strong upward trends continue to surface after a Fed Vice Chairman said that a U.S. rate increase could be delayed by slowdowns from weak global growth. Currently we are seeing UK inflation data falling to a 5-year low, German ZEW investor confidence showing worse than expected readings and a contraction in euro zone industrial production. This combination of fundamental factors will push investors out of the S&P and stock positions and back into the safety of treasuries and bonds. Non market related factors like Ebola and weak global oil demand are also throwing off investor confidence. Gains in interest rate futures have pushed the 30-year bond down below 3% and 10-year yields to 2.20%.

If you are long, push stops up past breakeven to lock in profits. ADX (strength of the market) continues to have a solid rise showing the upward trend is intact and stochastics are in deep overbought territory. Looking at a weekly chart in 10-year notes, wait for a pull back to the 126'12 to 126'02 range before getting long. This is the top end of weekly consolidation while protecting you with stops below the upward trend line.

If you'd like to learn more about futures trading or the interest rates market specifically, please contact Phillip Streible at 800-438-4805 or pstreible@rjofutures.com.

Dec '14 10-Year T-Notes Weekly Chart

Source: RJO Futures PRO



John Caruso

With "Global Economic Slowdown" in the headlines of seemingly every major financial news rag across the world, what's next for the market? The S&P 500 futures are down roughly 6% from its all-time high price of 2014.50 for the December traded contract, the 10-yr note yielding 2.21%, plunging European bond yields, and higher interest rates nowhere in sight, many investors are left looking for safe haven assets. With global monetary policy most likely getting more "dovish" on the back of an expected global economic slowdown, there isn't one single major currency that looks to be safeguarded from its own central bank. With the US Federal Reserve set to meet later this month, we still see a very "dovish" Janet Yellen moving forward as well as a 2% mandate for inflation projections. We see this as a major deterrent of a higher priced US dollar. We also know that the ECB has cut interest rates and is now on the brink of a Euro-version of QE, creating a plunge in the Euro currency as of late. This all comes on the back of an increasingly slowing German economy, which has seen most every major economic indicator pointing towards recession. Now, we have to ask ourselves, with what seems to be a USD/EURO currency war via central bank activity, what might we see moving forward? Could we possibly see a flight to safety trade back into the gold market? I think it's very possible. We've seen gold prices have a roller-coaster type year. Gold prices marked a bottom on the last trading day of 2013 at 1181oz only to rally to 1392.60 over the next few months. Since the March high, we've seen gold return back to test the lows at 1183.00 earlier this month on deflationary pressure. We've since climbed higher, marking a recent high of 1238.60, on perhaps a short cover rally, but I believe something bigger could be on the horizon for gold. As the global currency trade begins to see-saw from dovish central bank meeting to central bank meeting, I feel investors may look towards gold as the outlet.

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.

Dec '14 Gold Daily Chart

Source: RJO Vantage

Equity Indexes

Greg Perlin

The S&P E-mini rose today amid positive earnings results, rebounding after three days of brutal losses that set the S&P to its lowest levels in months. The S&P on Monday closed at its lowest level since May 20 and fell below its 200-day moving average for the first time in two years. The S&P breach is seen as significant because some market observers see it as a bearish signal that the market may be in store for further declines. That being said, the market is very oversold and is due for a bounce. Early this morning investors welcomed better than expected earnings from Citigroup and Johnson&Johnson which outweighed downbeat German sentiment that hit equities across Europe last night. Technically the market is bearish, showing a short-term secondary target to 1843. Yesterday's weak close favors continues selloffs, but be alert for a bounce near 1843. A close under 1843 gives negative signals for a larger wash. Any corrections will likely show a shift to flagging consolidation for a few days, but a close over 1904 is needed to boost a multi-day correction to 1921.25.

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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