RJO Futures eView Newsletter February 3, 2015 | Market Insight | RJO Futures

RJO Futures Website

February 3, 2015

Volume 9, Issue 3


Metals - Gold

Nick DeGeorge

In the early morning trade, April gold is currently trading down $11.5 and at $1265.4 per ounce. April gold has roughly pulled back about $43 from its January 22nd high and currently resting at strong support just above the 20-day and 200-day moving averages. Also, there is a strong uptrend line just below where the gold market is trading due to this recent rally and adding to support levels. There isn't any new fundamental news as of late, but the bulls and bears should look towards this Friday's monthly non-farm payroll job numbers for the next big move in the market. Below I have place a daily April 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.

Apr '15 Gold Daily Chart

Source: RJO Futures PRO


Metals - Silver

Silver's latest rise brought it to the yearly high of 18505 for the March contract. Without getting too complicated, this will be the level to close above to continue a potential rise into the 20 handle. The selloff last week seems to keep the silver bulls on their toes and this market won't go straight up. That being said, the low of 1400 is massive support on this market with 1550 near-term support. Aside from the massive bull market silver experienced a few years back the last almost four years have traded in a range. If the 18505 or 1400 can't be broken in either direction this could be the new range for the foreseeable future.

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


March crude oil may have finally bottomed. After watching oil sell off the entire month of December and most of January, oil has been trading higher. More importantly, the last two sessions all of the price action has been above the 10-day moving average�something we haven't seen in over six months.

A couple weeks ago OPEC called a bottom in oil and many analysts have also called a bottom. Are we there yet? I think it's still too early to call, but as many of you know I have turned cautiously bullish.

Last week's EIA data showed another build, bigger than expected, of 8.8 million barrels bringing the total stocks to 406.7 million barrels well ahead of the five-year average of 347.6 and well above the highest recorded stocks for this time of year of 369 million barrels. The market still appears well supplied and demand is still questionable. Europe continues to have significant economic problems which prompted a QE and Greece is back in the news with their debt problems. Commercial interests continue to pick up with refinery capacity currently operating at 88%.

Short term technical indicators are oversold in my opinion, and the push above the 10-day moving average has attracted the bulls. I believe March oil could target the $56 a barrel area � traders should watch for a possible short squeeze.

I recommend playing oil on the upside but with caution as further selling pressure is possible. Using the proper strategy such as a call-fly-spread or bull call spread could help you position to take advantage of a move higher. Futures traders should consider buying puts for downside protection and could consider selling covered calls. 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.

Mar '15 Crude Oil Daily Chart

Source: RJO Futures PRO


Energies - Natural Gas

Avery Burton

While the prospects for a nice winter rally in natural gas have looked promising for some time, the market continues to fail in finding the momentum to do so. Even with two large blizzards hitting much of the central and eastern US over the last two weeks, natural gas prices have continued to trend lower. While I am a firm believer in the long-term potential for this market, current price action warrants abandoning shorter-term bullish strategies.

The three-year range for natural gas prices currently exists between 1.902/mmbtu and 6.493/mmbtu. Clearly today's low of 2.650/mmbtu in the March '15 contract is much closer to the low end of that range and 9 of the past 10 weeks have contributed to bringing us here. The 10-day US weather forecast is mixed but suggests there shouldn't be any significant widespread pressure on demand. Considering how this market behaved through January's weather, this expected lack of demand is likely going to help the market continue towards the low end of this three-year range.

Technical traders should consider the following levels for profit objectives and/or support: 2.575, 2.250, and 1.900. Current resistance exists at 2.800 and 2.970.

If you'd like to learn more about futures trading or the energies market specifically, please contact Avery Burton at 866-741-0339 or aburton@rjofutures.com.

Natural Gas Weekly Continuation Chart

Source: RJO Futures PRO

Softs - Sugar

Joe Nikruto

A Lower low yesterday leaves the bear camp with the near-term edge. The new lows reached yesterday, good weather in Brazil, plus aggressive selling from fund traders are all seen as short-term bearish forces in the market today. The jump in energy prices, higher equity markets and news that Brazil will shift from 25% to 27% gas mix with ethanol were all previously seen as potential supportive forces in the market, but did not seem to provide much support at all. The news that trend-following fund traders had exited most of their large net-short position was seen as bearish force as well with the trade houses turning aggressive sellers during Monday's session.

New Sugar Ideas: News of more ethanol and less sugar production for Brazil ahead was anticipated in the market, therefore those factors failed to provide support. Continuing good weather could spark higher cane productions and put more pressure on the market. May sugar resistance comes in at 1470 and 1495 with the next downside target being 1375.

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 - Cotton

Erik Tatje

As we near the end of the "old crop" in cotton, traders are beginning to look ahead to the 2015 new crop estimates for insight as to the future of cotton prices. Currently, large supplies and a strong US dollar have taken their toll on the March '15 cotton prices, taking them down to as low as 57.05. However, preliminary expectations for upcoming planting acreage could see substantial declines from last year as farmers are seen switching to other products. This decrease in expected planting acreage could serve as a supporting factor in a market that is in desperate need of it. Today's action saw a breakout above the 60.16 level, demonstrating strength not seen in this market for some time. Given the near term positive momentum, traders should be cognizant of the 62.84 � 63.81 area on the chart as a potential upside target for this corrective bounce. In the event that the positive momentum is forceful enough to penetrate the 63.81 level in the March contract, cotton prices could very well be finding a near-term bottom and a change in trend may be on the horizon. 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

We may have reached a bottom yesterday in the March cocoa contract at 2669. The contract attempted to recover today as it rallied to 2732 but failed at that high. Since January 15, we have seen a steady decline in prices. As shown in the chart below, cocoa failed at the nine-day moving average and continues to trade well below the 20- and 200-day moving averages.

Losses in the March contract have been close to 300 points over the past two weeks. The RSI is currently at 17.38, having reached oversold levels. Negative fundamental news continues to pressure the cocoa market and attract sellers. Technically, a break below 2655 could have us headed to 2600. Alternatively, if March cocoa closes above 2780, the market could be headed back over 2800. In the short term, the trend is negative with no help from the supply and demand side of the equation. Look for this to be the pattern over the next week.

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 & RSI

Source: RJO Futures PRO


Softs - Coffee

Adam Tuiaana

Coffee prices continue to reflect the free fall in the March futures price, likely due to the overwhelming supply that is still on the market. However, it is likely that traders will be pumping the bear brakes soon in lieu of the expected tight future supply we will see from the past droughts and dry weather in Brazil. I am however, a technical guy, and since we violated the 180 level, we have seen follow through selling and continued long liquidation, which has subsequently pinned coffee to the 160 floor. The 160 level is critical support. I believe we will see continued selling into the mid 150 level. 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 a turnaround Tuesday today with soybeans up 23, corn up 11 and wheat is up 15. Grain markets are higher as demand interest improves. The end users are buying and the farmer is holding as the basis improves due to ethanol plants and soy crushers nudging basis higher. The agriculture markets have had ample time to digest all the bearish news and one can conclude after today's price discovery that all this bearish news is factored into the price. North America and South America farmers are waiting in the wings to sell strength while end users are in no hurry to extend coverage. These rallies should not be sustained.

The South American weather is ideal with most of the main crop producing areas forecast to get moisture in the next 10 days and near to below normal temperatures.

Next week's USDA Supply and Demand report is likely to not provide much change in US numbers, however, the focus will be on South American adjustments and the Southern Hemisphere seems to be in pretty good shape.

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.

Mar '15 Soybean Daily Chart

Source: RJO Futures PRO

Mar '15 Corn Daily Chart

Source: RJO Futures PRO


Agriculture - Livestock

Jeff Gilfillan

The strong dollar and technical factors led to a washout in the livestock sector. Technical washout areas include 148.70 then 135.25 front month live cattle futures.

Producer hedges on rallies maybe wise going into new supply futures months. Lower grain prices should help weights and margins going into spring.

I do not see any reason to fade ongoing trend of a strong dollar, supported stock market, low rates and cheap feed and smaller beef supplies. Beef industry marketing did well at firm 2014 prices and I see no reason why historically firm prices should not continue as long as production is contained. Look for a strong spring in consumer spending...real estate, autos and stocks.

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


Interest Rates

Phillip Streible

10-Year notes have been in a solid run up since last Christmas rallying five handles from 126-00 to 131-00. The momentum studies have all entered into overbought levels. The MACD is in overbought territory and stochastics are over 80. The market remains above the 9- and 18-day moving averages which still indicated the upward trend is still intact but a sharp correction is likely to occur. Once the heavy selling comes in, keep an eye out for movements in other commodities like crude oil and the S&P 500. By looking at these commodities it will give you a sense of the feeling of the "Risk On" trade and a feeling of rising interest rates. As long as it doesn't look like a 1 or 2 day move you could consider put options to play the downside.

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



John Caruso

RJO Futures Senior Broker John Caruso discusses currency futures markets. Today, the dollar is down and the euro is bouncing inversely to the dollar. A string of poor economic data is coming out of the US. The Australian dollar is down and tomorrow, the unemployment numbers will be announced.

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

Jeffrey Friedman

Stock Index Futures are in a big trading range after December 30, 2014 after making all time highs for a five-year bull market. Monetary policy remains in question, with the ending of US bond buying program. This past week, the Fed continued with a go slow approach to tightening. Meanwhile, economic data were mixed, including a surprise on the downside for manufacturing. 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 2014, despite skittish news from overseas which should have weighed on stocks futures last 30 days. Overall, favorable economic news (including Fed news) outweighed worries about the Europe, Ukraine, China and Iraq.

This coming week's highlights are the consumer sector with the highlight being the employment situation report for January 2015, released on Friday. Payroll jobs for December came in stronger than expected; jobless claims have been low recently, so the question is whether job growth remains relatively strong. On the other hand, wage growth has been sluggish and traders will be looking for stronger growth.

Technical outlook for the March S&P futures remain in a long term bull market. The short-term trend is sideways to down, with most chart followers targeting 2060 and then 2090 as their target for resistance. The S&P could go down to 2000 and then 1965 as a downside target. The market must go under 2000 on a close 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.

Mar '15 E-mini S&P 500 Daily 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.

© 2015 RJO Futures
222 South Riverside Plaza | 9th Floor | Chicago, Illinois 60606
800.441.1616 | 312.373.5478