RJO Futures Website
December 9, 2014 Volume 8, Issue 25

 

Feature Article

Upcoming RJO Futures Webinars

Join RJO Futures and TraderPlanet for an exclusive webinar: The Most Important Things I've Learned in 50 Years of Trading - Larry Williams. You don't want to miss this insightful presentation from this renowned trader!

50 Years of Trading - Larry Williams

Thu, Dec 11, 2014, 4pm CT / 5pm ET

Register now! Futures and commodities trading veteran, Larry Williams highlights his favorite technical indicators and market setups during a special 45-minute live presentation. Specifically tailored for today's short term traders (not day trading timeframes), he'll be discussing cycles and his current overall market outlook as well as the money management concepts that have aided in his 50-year legendary career. Topics to be featured in this live online session include:

  • Current projections of what will happen in the equities, precious metals, and interest rates markets and why
  • How to identify professional accumulation in futures markets
  • Why the COT data does not work for stock indices and what to do about it
  • Potential trade setups in select markets

Although specific markets will be featured, the tips presented by Larry are applicable to all markets and he'll be taking questions from the audience.

Using the Trade Navigator Platform

Thu, December 18, 2014 at 4pm CT

Register now! Whether you are a discretionary or systematic trader or a combination of both, join this webinar to learn how traders use software to automate trades or visualize and place orders off the chart. Manage results and your strategies by performing Monte Carlo reporting. This live webinar will conclude with a helpful question and answer session.

  • Trading from the Chart
  • Analyzing your trading strategies and account with Monte Carlo Analysis
  • Semi Automated Trading tools


Metals - Gold

Nick DeGeorge

In the early morning trade, Feb '15 gold is currently extending its impressive late season Xmas rally, trading at $1,228.8 (+$34.6 for the day). Current items affecting gold are the Fed maintaining its low interest rate policy for at least another meeting, global equity markets sliding, and a shifting upward bias in Indian policy views of allowing Indian banks to hold more gold reserves.

If we look at the daily February gold chart, you'll clearly see that the shiny one has broke major support by breaching last week's high on December 1st of $1221.0. For the gold bulls, gold should now test the October 21st high of $1256.2 or even test the 200-day moving average which currently lays at $1272.1. However, if this current rally falls to extend its rally, then look for a retest of the low of $1141.7, which is the start of this recent rally. I've placed a daily Feb '15 gold chart from the RJO Futures PRO platform below for your review.

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


The March silver contract suffered some of the worst losses in a while dropping 1160 points on the Friday after Thanksgiving, and then again selling off to 14155 on the Sunday night session as trading resumed for the week. However, that day the market ended positive at 16410. Since that action the market has held the 1600 level.

As of mid-morning today this market continues to show strength, with silver up almost 800. The 1700 level has been broken and it's possible that a near-term bottom could be in place, 1455 being that near-term bottom. To speak about this market fundamentally, Friday saw the biggest increase of jobs created, 321,000, in almost five years. The general consensus has been towards a rosier picture of the economy so with the recent strength in this market one has to wonder what else has been going on for this increase. Keep an eye on the 17825 level because that's the next level to breach for a continuation of this starting uptrend.

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.

Mar '15 Silver Daily Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

The Jan '15 crude oil has continued on its path lower – with major fallout happening on Thanksgiving Day and into the Friday afterwards. After OPEC met on Thanksgiving and decided not to reduce its current output levels the market responded with an $8 selloff. It was expected that OPEC would announce a production cutback, clearly they did not. Current stocks of oil to continue to run just under all time highs. Total stocks currently stand at 379.3 million barrels, just under the all time high for this time of year at 385.8 million barrels. Commercial interests have picked up at these prices and refinery capacity is currently operating at 93.4%. Traders seemed to be focused on economic data out of China and Europe of which both have been weaker suggesting weak demand. Ahead of tomorrow's EIA Report traders appear mixed but I think are looking for a small increase in the stocks. At these prices high break-even producers may start to cut back on production and rethink their marketing plan for 2015.

Short-term technical indicators still appear oversold in my opinion but January oil made a 5-year contract low yesterday, but so far had no follow thru selling today. If we see a close today below yesterday's low, it's possible to see additional selling pressure come into play. A break back above $69.70 could trigger a short-term rally.

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

 

Energies - Natural Gas

Bill Moore

The Jan '15 natural gas futures are rebounding today off of yesterday's 3.585 low in this incredibly volatile environment. This is still more than a dollar off of the 11/21/14 high of 4.689. The continued story here continues to be the tug of war between weather and supply in this market. Earlier in November, colder weather sent this market into a complete chop of a headwind as we saw 20+ cent moves in both directions. This sort of activity was a mimic of last season's 'polar vortex' price action and should be expected with any sort of extreme weather scare. Now, we are still looking at a very ample supply of natural gas and the weather outlook is warm leading up into Christmas. Until that changes, we should have a pretty standard supply and demand scenario in natural gas. It should be noted, that other energies have seen extreme dips in price in the past few months. Most notably are crude oil prices trading at 63.00 a barrel. (5 year lows.) Last week's inventory number saw a draw of 22 BCF.

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.

Jan '15 Natural Gas Daily Chart

Source: RJO Futures PRO


Softs - Sugar

Joe Nikruto

If the $3.00 drop in crude oil and an over a 100 point break in the Dow Jones could not produce new sellers in sugar, that means to me that sugar is extremely oversold. In the United States we use corn to produce our ethanol, in countries where sugar is grown, they use sugar for ethanol. The drop in crude should take away from the demand in ethanol. If less ethanol is needed, then less sugar is needed and should cause the sugar to move lower. This has not been the case, which is my reasoning for saying sugar is oversold. Key technical levels from Thursday's reversal were reached and helped support sugar yesterday. Although energy prices were lower on Monday, word that the Brazilian currency is stabilizing might slow speculative selling. As far as weather in Brazil, it is leaning bearish. Brazils dry areas look to receive good rain totals over the next 10 days which should help next year's crop.

I believe in the short-term, we will see some short-covering from fund traders large net-short position. I would look to sell the potential short-covering rally @1551-1575 range. I think anywhere in that range is worth selling, and possibly building a position.

If you'd like to learn more about futures trading or the sugar market specifically, please contact Tony Cholly at 800-826-2270 or tcholly@rjobrien.com.

Mar '15 Sugar Daily Chart

Source: RJO Futures PRO



 

Softs - Cocoa


The Mar '15 cocoa continues to try and push up as the morning high reached 2958. As we enter the last two weeks of trading for the year, the overall market conditions are very volatile. Energies and equities continue their move lower, metals are breaking higher and the US dollar has possibly broken down as global concerns strengthen. Recent lower supply numbers have provided support in cocoa for now. Concerns that production was affected by El Niño have surfaced as well. Technically we have broken levels of resistance; the 200-day moving average should be tested this week. Next upside target will be 3100.

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 seven consecutive days to the downside in coffee, with very little in the way of support. Most of this selloff is due to decent rains in key producing areas of Brazil, along with substantial harvest numbers in Vietnam. We still must consider that Brazil's 2015 harvest numbers will ultimately reveal a longer-term bullish picture, but not before we see some of the levels not visited since July of this year. 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. For the time being, it looks like the bear camp holds the reigns.

On the technical side, a violation of the critical 18060 area has prompted a major selloff to the 178 area pretty quickly. It looks as if very little is in the way of support, all the way down to 166. 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. We have mixed agriculture markets with soybeans up 2, corn up 3 and wheat down 10. The USDA will issue their December WASDE report (World Agriculture Supply and Demand Estimates) tomorrow at 11:00am CST. This report will not carry the market fireworks of either the November or the January reports. The big number to watch will be soybean exports. The trade is looking for an increase in US soy exports which will lower 2014-2015 US soybean stocks

News stories continue to run about a Chinese State soybean delegation coming to Chicago next week. The rumor is they will be looking to sign another contract for beans which has been providing support this week. The last time they visited the US the Chinese signed one of these agreements and it was for 4.8 million metric tons of soybeans and the USDA announced over 2 million metric tons in sales on the daily announcements over the next couple of days. Be on the lookout for more details on this visit.

South American weather forecasts remain nearly ideal with cool and wet weather slated for all of Brazil and Argentina.

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.

Jan '15 Soybeans Daily Chart

Source: RJO Futures PRO

Mar '15 Corn Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

Live cattle futures dumped around $10 since turkey dinner. Today, Feb 2015 cattle touched just above end of day 50% retracement at 161.05 and the October low 161.00. Last month's bearish COF report and weaker cash cattle trade were the catalysts of the late November sell-off. The futures market should begin to find support today as cash cattle is still trading in the mid 160s this week. Cash cattle needs to hold over 164 technically to avoid another move lower. If this area does not hold, look for front-month live cattle futures to target 152 value area support on a weekly and 147 as a washout area.

There is still room for non-commercial liquidation to continue to push the market lower and packer margins continue to be in the red as wholesale beef prices cannot compete and demand will wane into the EOY. Feeder supplies are still tight going into the spring but demand and cash will be the focus and any global demand event may quickly test feeder cattle at 225 and live cattle at 147.00.

You don't need to be an expert technician to look at a monthly feeder chart and see the room for price depreciation, as supply will catch-up.

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 Chart

Source: GeckoSoftware.com

Feeder Cattle Monthly Chart

Source: GeckoSoftware.com

 

Interest Rates

Phillip Streible

Treasuries have received a boost this morning after posting a reversal on last Friday's key nonfarm payroll number. This is driven by a lot of chatter that a top in equities may have been posted, but being so close to a seasonal move higher I anticipate that a top in equities won't come until after the first week of the New Year. Fears of slowing and deflation in China especially in their housing sector along with falling crude oil prices are causing a bid for safety. Russia continues to linger in the back drop and no one is talking about Russia's aggression towards a takeover of Mongolia.

Watch out for a turn up in technical like stochastics and MACD that may show momentum turning bullish. A push through 127 will most likely cause an acceleration to power up to the contract highs.

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

 

Currencies

John Caruso

The USD underwent a round of profit taking this morning, followed by ideas that Feds may be very cautious in their language and actions towards interest rate policy at the Dec 17 meeting. The Mar '15 dollar contract peaked Sunday evening at 89.785, which was steadfastly approaching upside channel resistance at 89.92. Ideas of global growth concerns followed by slower than expected early US Holiday Sales, have placed some unwanted anxiety on the Federal Reserve and the pace at which they look to raise US interest rates. However, it's evident that US monetary policy vs many other major Central Banks around the world are headed in opposite directions. With Mario Draghi of the ECB, all but promising a round of European-style Bond and Asset purchases (QE), and further deterioration in the price of the euro currency and British pound sterling, still very much instills further US dollar strength moving forward. Look for dips in the US dollar to hold the 87.00 level barring any unforeseen fundamental change in the market (slower growth and unemployment outlook). Good luck and feel free to call in for further strategies and commentary.

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

The S&P E-mini futures fell on oil and Fed rate hike talk. The Dec '14 e-Mini pointed to a rough start this morning amid fresh speculation that the Fed may be close to pulling back its pledge to keep rates low and as global markets tumbled on weak oil prices. Yesterday the S&P suffered its biggest one day slide in seven weeks caused by a selloff in energy companies.

In an article published late yesterday in the Wall Street Journal written by John Hilsenrath who covers the Fed for the newspaper said officials meeting next week will likely affirm a plan to start raising short-term interest rates in 2015 and are debating losing the phrase that rates will stay low for a "considerable time." This report comes on the heels of Friday's jobs report that showed with wages along with 300K+ new jobs that the US economy is returning to some sort of normalcy

Technically, the Dec '14 E-mini is bullish and a punch to new highs calls for a pressing run to seek an extreme high. Yesterday's back off leaves a failed breakout, but trade contained within last week's range will keep bull forces and likely bull flag. A close under 2045 alerts for a peaking turnover and multi-day/weekly drop off that could slide support to near 2004.00 basis Dec.

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 Futures PRO

 

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