RJO Futures Website
November 25, 2014 Volume 8, Issue 24

 

Metals - Gold

Nick DeGeorge

In the early morning trade, February gold is currently trading up $3 at $1,200.1 a troy ounce. The shiny one has enjoyed a very short-term rally recently due to the pull back in the US dollar, talks of Chinese interest rate cuts, and reports of solid Chinese gold demand, which news suggest that China's central bank will boost its gold reserve up to 8,500 tons. Furthermore, news that Russia has been purchasing gold at a record pace has also helped to lift this market off its recent lows of $1,132.0 on November 7th.

As we look at a daily February gold chart, let's keep it simple. If gold breaks last week's high of $1,208.2 and holds it, then the shiny one can gets some more buying momentum to bring the market up to $1,235.0-$1255.0. However, if this level fails to hold, then look for a retest of $1,132.0, which is the monthly low.

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.

Feb '15 Gold Daily Chart

Source: RJO Futures PRO

 

Metals - Silver


A market that was showing no signs of life a few weeks ago is showing a renewed zest for life. Zest could be a somewhat strong word but it's sticking its head out from the dumps. As you can see on the chart below the snorkel is slightly out of the water, with a wick breaking above near-term resistance. This is step 1. Step 2 would be a close above this level. Step 3 would be a continuation of this trend. For the bulls, the risk at this level is below 15870. A more aggressive stop would be below the low of 15040. That's roughly 150 points or about $7500 est in risk. For the bears, the risk/reward is more favorable. If a trader could find themselves selling at the market (1665) with a stop above the recent highs of 1673 the risk is roughly $450 with a nice sized potential if this market trades back to the lows of 15045. It could be a big IF but that's what makes a 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.

Silver Daily Continuation Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

Recent events in oil, or lack of, have helped keep oil prices under pressure. Over the last two months oil has moved from highs of around $94 a barrel to lows of just under $74 a barrel. The question remains where do we go from here? Can oil go even lower? The short answer is yes, BUT I think we first need to look at the bigger picture where we can see we might actually be near a bottom. The five year average of oil stocks stand at 358.07 million barrels and the total stocks at 381.08 million. Total stocks are running just under all time highs of 388.46 million barrels. Interesting to note though is that over the last three weeks refinery demand has been stronger than usual for this time of year. Traders are currently focused on this week's OPEC meeting – it's believed OPEC may announce cuts in oil production, at some point they are going to "scream uncle" and start cutting back on production. This could be exactly what the market needs in order for the bulls to get a hold of the market. In tomorrow's EIA Report most traders are looking for a small increase.

Short-term technical indicators appear somewhat oversold in my opinion. Yesterday, August oil appeared to fail with a breakout to the upside and the market had followed selling thru most of this morning. If we see a close today below yesterday's low, it's possible to see additional selling pressure.

I currently recommend looking to play oil on the upside but with caution as further selling pressure is possible. Using the proper strategy such as a call-fly-spread with a short put kicker (if you're comfortable with the risk) could help you position to take advantage of a move higher. 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.

Jan '15 Crude Oil Daily Chart

Source: RJO Futures PRO

 

Softs - Sugar

Joe Nikruto

This week's comment finds March sugar futures attempting to quietly carve out a bottom. Or, is March sugar on the verge of falling out of the double bottom we see on the charts near 15.40 and diving to new lows for the move? In the last four sessions the March contract has bumped into the 50-day moving average three times. Still, no closes over this longer-term moving average can be seen on the chart since July. In my opinion, any talk of a bottom or sustained rally is premature without at least a few closes above the 50-day moving average. After rather dramatic declines in demand from China, import demand there is beginning to stabilize. Wire services are reporting Chinese deals with Thai sugar exporters and there is talk of further Chinese business with Brazil. The chart of March sugar futures may be showing this increase in interest in the sugar market by the Chinese. Much like closes over the 50-day, I have a hard time seeing a sustained rally without continued demand from China.

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

Large World Supplies of Cotton continue to move prices lower as cotton is now trading below the psycholigcal 60.00 level. The longer-term outlook continues to favor a bearish argument as the 20-day SMA is below the 50-day and the market remains below the longer-term descending trendline on the chart. There does appear to be some near-term support forming around the 58.50 level; however, given the longer-term bearish tone of the market, traders should not rely on this level as a valid candidate for a longer-term bottom. All things considered, it would appear as though the bearish trend in cotton will likley persist as we head into the holiday season. If you'd like to discuss potential strategies to apply in the cotton market, or any other market, please contact me.

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.

Mar '15 Cotton Daily Chart

Source: RJO Futures PRO

 

Softs - Cocoa


March cocoa has given back all its gains from yesterday this morning. A break above the 9-day moving average and slightly positive port arrivals from Ivory Coast helped the March contract reach almost a two-week high yesterday. A stronger dollar and technical buying helped build some support. There appears to be some supply concerns which have also helped the market. For now, keep an eye on the technicals. A break above 2870 will lead us back over 2900; a rejection will lead us back down to 2800. If we break lower, support is at 2785. Look to buy on follow-through if resistance is broken and we can close above the 9- and 20-day moving averages.

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.

Mar '15 Cocoa Daily Chart w/Moving Averages

Source: RJO Vantage

 

Softs - Coffee

Adam Tuiaana

We've seen some sideways consolidation over the past week or so in coffee, but the swings have been large enough to keep things interesting. Something to consider is that we should begin to see some of Brazil's 2015 harvest numbers slowly reveal themselves over the next month. Ultimately, I believe the numbers will be tight enough to begin pushing coffee prices back up to the 225 level seen in October of this year. In fact, that market does look poised for a bounce over the next month, back to the 200 level.

On the technical side, when we last corrected earlier this month, we failed to violate the 18060 critical low from September 14th. Although we've made "bullish baby steps," we have continued to hold support at the 190 level and follow an uptrend line that has been in place since July of this year. Look for a test of that 200 level, get bullish when we break and hold a close above it.

There are several strategies that traders can apply 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.

Mar '15 Coffee Daily Chart

Source: RJO Futures PRO

 

Agriculture - Grain

Stephen Davis

Good afternoon traders. The overnight grain trade has been mixed and now the strength in soybeans is making wheat and corn trade higher. Soybeans are up 15, wheat is up 7 and corn is up 5.The volume of trade has been average and soybeans have a strong seasonal tendency to be higher on Friday, the day after Thanksgiving. There is no Thursday night grain trade this week and we will open at 8:30am CST and trade until noon CST on Friday.

For the technical picture it appears that a Head and Shoulders topping pattern is forming in December corn and January soybeans. What has happened is January soybeans have poked above $10.50 (right shoulder) and can now trade lower. Most grain analysts will argue that post-harvest rally seasonal tops were formed in the days after the November USDA crop report (See chart below).

Happy Thanksgiving to everyone.

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

Jan '15 Soybeans Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

Cattle on Feed on Friday reported bearish figures across the board (see RJOF Research COF recap). The seasonals and competitive meats have slowed down retail demand recently but heifer retention and low feed prices kept fed cattle prices high. These trends are starting to show in the number of heads and weight in the lots and on the ranch as placement weights are high and marketings are low. The market reaction is telling us feeders better capture some margin while prices are high and packers may need to demand lower prices as wholesale prices cannot compete with competitive meats. Fed cattle prices have yet to adjust lower as we are seeing with the feeders. This may not last long post-holiday.

The market has moved $3.00 higher the past couple of weeks, but lacked the blow-off top type move that is more attractive to sell and is now testing support around the highs of that previous range around 169-170. Cash cattle will tell the story the next few weeks. I believe there are quite a bit of feeders in the non-reportable class that will move sooner than later and cause some additional weight on feeder prices through EOY.

All this being said, overall fundamentals are strong so I would expect good support in feeders at 225 and fed cattle at 162.75. Bearish spread traders may consider fading the Feb 2015 / April 2015 at a $2.00 premium February through end of year.

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

Bond futures and 10-year notes continue their back and forth action widely unclear as to the next direction. Part of the complication on the clear direction remains the dovish comments by both the ECB and the Bank of England. This should keep a bid under the S&P and interest rate futures driving yields lower. Also the OECD provided growth outlooks that were subpar to earlier 2015 forecasts. Now once we get this heavy week's data behind us then a clearer picture maybe present.

Traders will want to shift focus to the March '15 contract as volume is shifting over. Keep an eye on 126'11.5 which would conclude a break out or a move back below 125'04.5 indicating a bear market.

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.

Mar '15 10-Year T-Notes Daily Chart

Source: RJO Futures PRO

 

Equity Indexes

Jeffrey Friedman

Stock index futures were up big this past 30 days of October 15 / November after making a 9.0 % correction off of all time highs. Monetary policy remains in question with the ending of US bond buying program. Fed policy is encouraging and still leaves other investment options as largely unattractive. Economic news has mostly been good. Stocks futures have risen largely in the last part of October, despite skittish news from overseas which should have weighed on stocks futures the last 30 days. Overall, favorable economic news (including Fed news) outweighed worries about the Europe, Ukraine, China and Iraq. The thought that the FOMC could tighten sooner than later if we get great news on economic news could send Stocks Index Futures lower in price. No one really knows!

For the year-to-date, major stock index futures are up as follows: the Dow, up 7.2 percent; the S&P 500, up 11.4 percent; and the Nasdaq, up 12.5 percent.

This week's highlights are third quarter GDP revisions, which were better than expected. Housing and manufacturing are two of the big issues. For housing, home prices will likely indicate strength of demand with the FHFA and Case-Shiller reports. For manufacturing, the key news will be durables orders. The consumer sector has been holding up moderately strong and is not as suspect. But notable releases are personal income, consumer confidence, and consumer sentiment

Technical outlook for the December 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 2075 and then 2100 as their target for resistance. The S&P could go down to 2040 and then 2000 as a downside target. The market must go under 2000 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.

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

Source: RJO Futures PRO

 

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