RJO Futures eView Newsletter - April 14, 2015 | Market Insight | RJO Futures

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April 14, 2015

Volume 9, Issue 8

Metals - Gold

Nick DeGeorge

In the early morning trade, June gold is currently trading down $3 for the day, but well off the overnight lows due to the third straight worse than expected US retail sales number. Moreover, gold could be gaining a little support off the Russian/Iran arms and fuel swap news.

However, if we take a close look at a daily June gold chart, the next direction it will take is still pretty unclear. Technically, it still looks slightly bearish while trading below the $1,200 an ounce handle, but today's disappointing retail report gives the shiny one a bullish fundamental tilt. For the gold bulls, I would buy aggressively over the $1,225 level and if gold fails to rally above $1,200 this week, look for a retest of the March 17 low of $1142.4.

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.

Jun '15 Gold Daily Chart

Source: RJO Futures PRO

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Metals - Silver

Michael Rataj

No matter how many words I use, the failure of the 1700 level twice in the May silver provides more descriptive words that I could ever try to convey. This is to be used as near-term resistance with 1525 as the next level of support. For a record of note it's been roughly six months since this market has bounced around from 1470/1850range and this market typically only holds its trading range just slightly longer than that. Use the above mentioned support/resistance numbers but keep an eye out if the market breaks 1470, I dare to suggest the next level of support this market could hit.

If you'd like to learn more about futures trading or the silver market specifically, please contact Mike Rataj at 866-536-8601 or mrataj@rjofutures.com.

May '15 Silver Daily Continuation Chart

Source: RJO Futures PRO

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Energies - Crude Oil

Mike-Sabo

Oil appears to be showing signs of a bottom and has aggressively moved higher over the last several weeks (see chart below) after hitting contract lows of near $44 in mid-March, the market has moved up to over $53.50 today.Stock piles have continued to grow and yet prices have risen. The negotiations between the US and Iran to reach a nuclear deal have pretty much concluded. Conflict in Yemen has continued but has been placed on the back burner in terms of news worthiness but could come front and center at any time – some fear premium might be building in the market. In addition, Chinese imports have reached a near record in March. The EIA last week reported a much larger build in the stockpilesthan expected but the market shook that off. Watch for tomorrow's EIA data and don't be surprised if we see yet another build, traders are expecting a build of about 3.3 million barrels.

Short-term technical indicators have turned bullish in my opinion. The market has managed to move higher over several sessions. We have seen higher highs and higher lows,in addition to the 10-day moving average crossing over the 50-day moving average. Watch for the market to test the most recent high of just over $54.00 a barrel. If it breaks and closes above that, look for the market to test $56.00 basis May oil.

I still recommend positioning for a possible upsidemove in oil. 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

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Energies - Natural Gas

Avery Burton

Natural gas continues to be one of the worst performing commodities of the year. With a probable lack of spring demand and weekly EIA inventory reports expected to show moderate builds, there currently does not appear to be a near-term bottom in sight. Although the last few weeks have been quite supportive to the energy sector as a whole, natural gas has not hesitated to press new multi-year lows. In fact, the May contract hit 2.475/mmbtu just yesterday – a level that has not been seen since the summer of 2012.

While it is tempting to look for signs of optimism in such a gloomy market, my non-emotional analysis suggests that natural gas has even further downside to be seen. The RSI has remained out of “oversold” territory, 20/50-day moving averages have failed to cross over for more than four months, and the path of least resistance appears unarguably lower. In order to turn this current trend around, I believe closes above 2.70 are absolutely required. From there, a break above 3.00 would confirm that the trend has changed and only then will I begin to look into bullish strategies.

For now, I advise using rallies as selling opportunities. The next entry level to sell appears suitable around 2.60, with the utilization of a stop just above 2.70. Longer-term downside targets that are derived from 2012's price action are present around 2.17 and 1.90..

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

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Softs - Sugar

Joe Nikruto

This week's sugar futures commentary comes on the heels of almost nine days of positive price action in the May sugar futures contract. Having posted a low of 11.91 on March 31, the May contract jumped up in just two days to 12.75. Since then, the May contract has broken out to the upside of the resulting consolidation twice. This price action speaks to short covering and possibly a change in attitudes regarding the supply of sugar globally.

The May contract seems to be dragging the July contract higher which stands to reason as the fund trader has built a large short position in the May and may be selling the July contract to roll the position. Still, the technical action in both contracts is positive. Even the most bearish sugar trader has to respect the ability of both May and July sugar futures to jump above and maintain position above the shorter-term moving averages (10- and 18-day moving averages come in at 12.69 and 12.66) convincingly.

As with past short covering rallies in this downtrend, the real test is the July contract's ability to surmount and maintain above the 50-day moving average of 13.63. Longtime readers may remember the sugar market's old friend, China. Wire services today were talking about China's increase in oil purchases. And I wouldn't be surprised to find they have been quietly adding to stockpiles of other physical commodities as well.

Trend followers will be stopped out of short positions in the May contract at 13.29 and 13.65. It will take a move back below 12.28 in the July contract for me to abandon my cautious optimism and turn bearish July sugar futures again.

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.

Jul '15 Sugar Daily Chart

Source: RJO Futures PRO

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Softs - Cotton

Erik Tatje

The March 31 USDA World Agricultural Supply Demand report provided some heavy buying pressure in the cotton market as the May futures saw a move up to 67.19, slightly higher than the previous peak on February 26. Technically, this would lend itself to a bullish argument in the cotton market; however, a bearish divergence in momentum seen in the RSI indicator has played out in the form of a vicious pullback from the highs. Cotton futures appear to be finding a bit of near-term support around the 64.50 level on the chart and traders should keep an eye on this level going forward. From a longer-term standpoint, cotton continues to make higher highs and higher lows since bottoming on January 23, which could be seen as long-term bullish for cotton.If you'd like to discuss potential strategies to apply in the cotton market, or any other market, please feel free to 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 t

Source: RJO Futures PRO

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Softs - Cocoa


First quarter grinding stats are due Thursday for Europe and North America. Demand for the soft has been a concern of late as the dollar strengthens. We saw the dollar drop this morning, however, helping July cocoa hit a high of 2852.

This season's Ivory Coast port arrivals through April 12 were ahead of last season's pace. Cocoa production numbers could drop due to the hot and dry weather we saw earlier this year. Technically, July cocoa has crossed the 9- and 20-day moving average which is a bullish move. July cocoa has broken above resistance at 2809 – if the contract can close above 2850, our next upside target will be 2885.

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.

Jul '15Cocoa Daily Chart

Source: RJO Futures PRO

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Softs - Coffee

Adam Tuiaana

May coffee has been trading sideways for the most part, in a well-defined (and wide) range between 148 and 128. This is indicative of prices being influenced by a fundamentally confused market. Exporters sold aggressively last week, while the US dollar rallied, prompting some weakness. We are now approaching the last corrective low of 13380 and a violation should have coffee revisiting the 128 level. If coffee prices are unable to reach the 128 level, I would expect they will continue to be range-bound for the foreseeable future.

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 866-536-8601 or atuiaana@rjofutures.com.

May '15 Coffee Daily Chart

Source: RJO Futures PRO

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Agriculture - Grain

Stephen Davis

Good afternoon traders! There is a bit of a turnaround Tuesday going on with soybeans up 11, corn up four and wheat just about unchanged. The corn market traded mixed yesterday on weakness in the wheat markets and there is a slow planting progress for corn so far. Corn planting progress last night was reported at 2% complete versus 3% last year and 5% on average. Weather conditions are mostly favorable in the western Corn Belt, while the eastern Corn Belt looks to be on the wetter side for a few more days.

The soybean market traded higher overnight on strength in the Chinese soybean market. Both soybean oil and soybean meal are higher. Chinese soybeans were 24 cents higher overnight and palm oil closed up 17.Argentine soybean harvest is nearing 20% complete and Brazil's soy harvest is 85% complete.

There is not that much on the table to change the bearish narrative as we move into what is historically a volatile planting time of year. Corn stock piles as of last month are the biggest in 28 years. Global soybean inventories are expected to grow 34% this year. There is a lot of grain out there and the demand for old crop US is declining. The prospect for a near normal start to Midwest planting is here and the managed fund short positions in wheat and soybeans are both confident and comfortable.

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 Corn Daily Chart

Source: RJO Futures PRO

May '15 Wheat Daily Chart

Source: RJO Futures PRO

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Agriculture - Livestock

Jeff Gilfillan

Cash cattle is trading between $162-$166 with the CME Feeder Index trading at $219.57. RJO's Market Insight is identifying 152.375 in June 2015 LC as a short-term risk parameter that would negate the short-term trend lower and advises a bearish policy against previous support in the 150 to 151 area. Live cattle seasonal bear spreads were temporarily squeezed in mid-March to their 50% contract levels and have recently moved into the lower end of first quarter ranges.

Cash feeder prices continue to hold firm forcing feed lots and packers to tighten their belts and reduce capacity/production to keep margins manageable. This seems to be working recently for the packers as slaughter has been steadily reduced and feedlot prices continue to drop in anticipation of "steadily higher weights coming to market as a result of last fall's larger placements of heavy steers" (Daily Livestock Report).

The short-term trend is lower but sellers should be patient considering the futures discount to cash (about $5.00 basis April). I advise selling October 2015 live cattle and buying February 2016 live cattle at even money.

Please feel free to contact me directly anytime with questions.

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

Weekly Feeder Cattle Futures

Source: GeckoSoftware.com

Long Dec 2015 / Short August 2015 Live Cattle Futures

Source: GeckoSoftware.com

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Currencies

John Caruso

Tuesday's trade was kicked off with a disappointing reading in U.S. Retail Sales figures, which came out at 0.9% vs. consensus of 1.1%. We saw a knee jerk reaction to the downside in the U.S. dollar index, falling back from yesterday's highs to trade back to 98.96 -80+ points on the morning. The euro currency is gaining favor this morning, trading back near the 107.00 level. The euro zone Industrial Production figures edged higher to 1.1% coupled with weak US data creating the catalyst. Yesterday we tested the low end of its trading range (1.0475), and a reactionary bounce may be warranted over the next few trading sessions from oversold levels. All-in-all, the path of least resistance is still very much to the downside in the euro, and rallies should continue to be sold all the way back to 1.100, which represents the high end of its recent trading range.

Another notable move this morning comes from the June Canadian dollar. Over the past few trading sessions, we've seen the Canadian rally from the low end (79.00) of its sideways trading range, and if resistance levels 80.50 can be penetrated, we could certainly be seeing the beginning of a longer shift in market direction. Be sure to keep this currency trade on the radar.

Looking Forward:

  • An active schedule for U.S.Economic Data kicked off Tuesday morning with U.S. Retail Sales (0.9%) and PPI (0.2%)
  • Wed: Industrial Production, Housing Market Index, Fed Beige Book
  • Thurs: Housing Starts, Jobless Claims, Philly Fed Survey
  • Fri: CPI Index, Consumer Sentiment

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 Canadian Dollar Daily Chart

Source: RJO Futures PRO

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Equity Indexes

Jeffrey Friedman

Stock index futures are in a big trading range for the month of March 2015 and part of April after making all-time highs for a five-year bull market. Monetary policy remains in question, with the question being“when will the Fed start to raise short term interest rates?”It's all about the Fed and data. Labor market conditions are still soft despite a lower unemployment rate. Inflation is also low. The Fed is likely to stay loose for some time and be extremely gradual with policy moves.

The economy seems to be slowing modestly but corporate profits are favorable. Soft labor market conditions are seen as keeping Fed policy loose.Stock futures have risen largely in the first quarter of 2015, despite skittish news from overseas which should have weighed on stocks futures in the last 90 days. Overall, favorable economic news (including Fed news) outweighed worries about Europe, Ukraine, China and Iraq.

This coming week highlights a variety of sectors. Both manufacturing and housing have shown sluggish numbers. We move into more normal weather with this week's data and get updates on industrial production and housing starts and permits. The Fed wants firmer inflation and data posted for the PPI and CPI.

Technical outlook for the June S&P futures remain in a long-term bull market. The short-term trend is up, with most chart followers targeting 2060 as a pivot number and then 2110as their target for resistance. The June S&P could go down to 2030 and then 1970 as a downside target. The June S&P is in a big trading range of 2110 on the upside and 2030 on the downside. The market must break out of this trading range to show further direction.

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.

Jun '15 S&P E-Mini Daily Chart

Source: RJO Futures PRO

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