RJO Futures eView Newsletter March 17, 2015 | Market Insight | RJO Futures

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March 17, 2015

Volume 9, Issue 6

 

Metals - Gold

Nick DeGeorge

In the early morning trade, gold is currently down again for the eleventh straight trading session as the US dollar just made its way back into the green. The US markets made an impressive rally yesterday, the Japanese�s Nikkei closed at a 15-year high and China's Shanghai Composite closed above the 3,500 level for the first time since 2008. Due to all of these world equity markets extending their rally�s and rising Indian gold demand due to its strengthening economy, the shiny one can find no safe haven play. However, pay close attention to the FOMC minutes due out tomorrow at 1pm CDT.

I'm continuing to recommend selling gold under $1190.0 an ounce. Depending on the Fed minutes tomorrow, I would remain short or sell any rally from $1175.0-$1199.

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 continues to fall as it�s butting up against strong support. 1525 is not only psychological, it�s a technical level this market touched and held back in November. Now it�s back. If 1525 can�t hold, the 1470 level is the next to be tested. I fear to suggest what could be next if 1470 doesn�t hold. This market needs a solid close above 1691 to suggest this bear might be dead and above 1855 to know the bull is alive.

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.

May '15 Silver Daily Continuation Chart

Source: RJO Futures PRO

 

Metals - Copper


Copper has held up impressively over the course of 2015 after what started to be a short covering rally over the first few weeks of the year and has transitioned into small speculative long positions out of money managers. Open interest has also started to rise on the LME which is an optimistic sign. Supplies coming out of mines are expected to tighten over the course of the year while demand should pick up in the next quarter. Copper will need to close on the May contract over 271 to forge a complete breakout, while a close under 256 will give the bear camp the edge.

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

May '15 Copper Daily Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

Crude oil appeared to be showing signs of a bottom until last week when oil started to slide lower for several sessions in a row. So far today we have seen further follow through selling, but the market has bounced nicely off the daily lows. The US dollar continues to strengthen, supplies continue to build as producers appear to be storing oil and selling it forward in the futures markets and we continue to see a lack of any new geo-political news threatening supplies.

The ongoing talks between the US and Iran have left many with the idea that if they go well, more oil may flow out of Iran onto the world markets. I think it�s worth saying again Andrew Hall, a noted commodity trader, announced he has exited his bearish position in oil � while this doesn�t mean the market will start to rally, I do believe it is important to consider as many traders do follow him.

According to the most recent Drilling Productivity Report,there appears to be a change in the crude oil production patterns in three of the key oil producing regions: Eagle Ford, Niobrara, and Bakken. After seeing steady growth in these regions since 2009, estimates for March 2015 now suggest regional crude oil production declines in certain areas, thus having the potential to bring down supplies.

Short-term technical indicators are still oversold,in my opinion.The market looked to be basing until Friday�s break down below the contract low which is not exactly bullish. If the market is able to close above $45.50 area today basis May, then the market could still be in store for a small bounce higher.

I still like positioning for a possible upside move in oil but one must consider the downside as well. Using the proper strategy such as a call-fly-spread or bull call spread could help you 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.

May '15 Crude Oil Daily Chart

Source: RJO Futures PRO

 

Energies - Natural Gas

Avery Burton

Natural gas futures are working to solidify a range-bound trade that has been in effect since the beginning of March. Today�s trade has pushed prices higher in the May contract to test the top-end of this range, fueled by an expected late-winter/early-spring blast of cold air to hit the Northeast and parts of the Midwest. A daily chart reveals that the current range exists in between 2.70 and 2.90.

While range trading can certainly provide potential shorter-term opportunities, its strong support and resistance has been disappointing for many longer-term traders and investors looking for more dynamic movement. Given the technical set up of today�s rally, it appears that the resistance of 2.90 has been reconfirmed and a potential 15 cent sell off may be our next move.

With spring officially kicking off this Saturday, March 21, the fundamental outlook for natural gas will likely be quiet for some time. Traders should make strong use of technical analysis and work with the support and resistance levels that have already been confirmed. For those who aren�t interested in trading in this 20 cent range, I�d recommend waiting for a break out on either end. Closes above 2.90 will open the door for a likely push to 3.00, 3.07 and maybe even 3.20. On the other hand, closes below 2.70 would signal a move to retest our yearly low around 2.62, with a further potential downside target around 2.20.

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.

May '15 Natural Gas Daily Chart

Source: RJO Futures PRO

 

Softs - Sugar

Joe Nikruto

This week's comment finds May sugar futures continuing to fall, knife style. And, like the old adage "trying to catch a falling knife," many traders are looking for a bottom to develop in sugar soon. Mostly, news flow leans negative.

Falling Brazilian Real, falling crude oil, good weather in Brazil and absence of aggressive Chinese buying from the narrative combined with the willingness of funds to press the short side as technical support levels have failed to support, all have conspired to push sugar to price levels not seen in years.

With stochastics pushed firmly to the floor and sentiment likely leaning very bearish, it is not surprising that contrarians are looking to take a shot at the long side. With volume trending down in recent days, selling pressure may have run its course for the time being. The 10- and 18-day moving averages, 13.12 and 13.47 respectively, make for good upside targets for short-term traders who are willing to try and catch the knife by taking on long positions. For bearish traders with patience, a move to 13.40 could represent yet another chance to get short May sugar futures.

One would think that sugar must represent a value for the end user at these price levels but the chart is not providing much incentive to buy aggressively. Trend followers with big short positions won�t find their bearish bias tested until the May sugar futures trade back up into the 14�s. 14.36 and 14.44 are the two levels on my chart where funds will be forced to start covering short positions, should the market reverse.

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.

May '15 Sugar Daily Chart

Source: RJO Futures PRO



 

Softs - Cotton

Erik Tatje

February played host to a strong corrective rally in cotton, however, the market was unable to hold the positive momentum and cotton has since fallen back into the previous trading range. The 66.24 level marked the high of the recent rally and will likely serve as the upside objective for the bull campaign. Given the recent pullback, cotton appears to have fallen back into a range-trade environment with trading opportunities on either side of the market. Traders could anticipate a sideways, choppy environment to close out the month of March. 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.

May '15 Cotton Daily Chart

Source: RJO Futures PRO

 

Softs - Cocoa


After May cocoa�s February rally, the bears have taken over in March. Good weather conditions in Ivory Coast have been the main force driving this move lower. Although we have seen the dollar form some consolidation over the past few days, cocoa has continued its attempt at reaching contract lows.

Additionally, there are still plenty of longs, which could cause more liquation and a further drop. Support was at 2750 to start the day and we have already broken that level - the next level lower is at 2725. Thus far, the low of the day is 2726, but the market rallied back up to break above the open price of 2781. We�ll see if the 2725 support can hold. If so, look to see some earlier gaps being filled and the 2800 resistance being tested.

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.

May '15 Cocoa Daily Chart

Source: RJO Futures PRO

 

Softs - Coffee

Adam Tuiaana

Since traders are witnessing a weaker dollar, tight supply and low Vietnam imports, some may be calling an �oversold� bottom to coffee prices. We, however, will not ignore the old saying that continues to serve us well, �the trend is your friend.� We�ve seen some consolidation over the past few trading sessions, but during this consolidation, please note that we have violated the 12880 low (two days ago with 12875). This is a continued bearish signal.Stay short, use put options and bearish strategies to approach this market.

There are severalstrategies 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.

May '15 Coffee Daily Chart

Source: RJO Futures PRO

 

Agriculture - Grain

Stephen Davis

Good afternoon Traders. The grain markets are lower on follow through selling. The US dollar index is seeing profit taking ahead of the Fed meeting results and crude oil continues it slide lower.

It is hard to find any fresh fundamental news. Soybeans are down seven, corn is down six and wheat is down four as there is no price discovery for a turn around Tuesday. I do expect a sideways to mixed trading session with Central US weather playing a key role in price in the weeks ahead. The Plains area needs moisture as Kansas reported that its winter wheat crop ratings fell 5% in good to excellent category to 41% as of Sunday, which compares to 34% last year. Oklahoma wheat was rated 40% good to excellent, down 2 % on the week while Texas wheat was rated 51% good to excellent, up 1%.The dryness did allow Texas to plant 11% of its corn crop versus the 25% five-year average.

China is rumored to have secured eight cargoes of world wheat in recent days. China is buying wheat and the wheat charts look more enticing then the row crop charts do. As we buy some time ahead of the important March 31 Prospective Planting report, the wheat market looks the most attractive as the one market that can rally.

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.

May '15 Soybean Daily Chart

Source: RJO Futures PRO

May '15 Wheat Daily Chart

Source: RJO Futures PRO

May '15 Corn Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

Live cattle futures remain in a sideways to lower pattern. The downside target area was tested just above 145 in the front month live cattle in late February. Feeders sold off but held well above what I measured as a washout area. Outside forces have been playing a large part of the fundamental picture recently as the strong dollar and port issues have significantly slowed exports and increased imports. I do not expect the strong dollar to reverse anytime soon but technically the charts hit intra-month (100.04) and end of month (96.22) consolidated breakout (Oct 2003 to Sept 2014) targets recently.

The weekly live cattle charts have room to build value in a large price range the market has been locked into since Jan 2014 (138-172).

Livestock, like many other commodities, appear to be in a volatile "stop and go" pattern with an overall bearish tone. Spreads continue to be bearish while the cash markets tell the story.

Seasonal spreads are bearish live cattle and hogs through the end of March and slightly bullish feeders.

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

Spread Matrix - Free 100k Simulated Account

Source: RJO Futures PRO

Weekly Feeder Cattle Futures

Source: GeckoSoftware.com

 

Currencies

John Caruso

As we kick off the two-day Federal Reserve Monetary Policy Meeting, we see a slightly different look across the currency markets from what we�ve grown accustomed to over the past several weeks. The USD Index is further extending Monday�s correction, trading as low as 99.58, with solid support at 99.50 and furthermore 99.25. Whether Janet Yellen remains "patient" or not towards a tightening of US interest rates seems to be creating a measure of profit taking in the USD Index vs Euro Currency trade in the early morning of Tuesday�s trade. If the Fed remains "patient" it's widely expected that we will not see a hike in US borrowing rates any time before the end of summer. If "patient" is removed from the Fed dialogue tomorrow afternoon, then the Feds are signaling a 0.25 bps increase scheduled for the June meeting. An increase of .025 bps is a move that is widely expected to create market anxiety across the foreign currency markets and potentially the US equities markets. Another key factor comes from across the Atlantic, and the recent launch of the ECB's 60 Billion Euro QE program.

With the severe divergence in US and European Monetary Policy, this leaves the USD in poll position to attack new highs. The Dollar has extended very quickly and aggressively to the upside, so be on the look-out for pull-backs, some more aggressive than others, but I ultimately believe investors should continue to buy the breaks barring any unforeseen changes to US and global monetary policies.

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.

Jun '15 US Dollar Index Daily Chart

Source: RJO Futures PRO



Equity Indexes

Greg Perlin

The strong start to the week for theE-Mini S&P looks to be fading 24 hours later as a report pointed to slack in new home construction and investor's attention turned squarely to the start of the Federal Open Market Committee today with an announcement on rates coming tomorrow afternoon. Investors focus will clearly be leaning on any clues from the central bank on the timing of interest rate increases, including the possibility that it removes its promise to be "patient" before raising rates.

The E-mini S&P has been in a holding pattern lately where the market is trying to second guess Fed policy. The market has become very focused on data, oil prices, and the very strong dollar.

Technically, the market is now above its 60-day moving average which suggests the longer term trend has turned back up. The daily stochastics have crossed over and up which is a bullish indication. Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above 2085 basis the September contract.

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.

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

Source: RJO Futures PRO

 

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