RJO Futures eView Newsletter - June 23, 2015 | Market Insight | RJO Futures

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June 23, 2015

Volume 9, Issue 13

Metals - Gold

Greek Debt, U.S. Dollar has Gold Trading Down

Nick DeGeorge

August gold is down $5 and currently trading at $1178 an ounce. With more Greek debt concerns and a surging U.S. dollar, gold has sold off to the bottom of its trading range. Also, with concerns of U.S. rates and India’s plans for a goldbacked bond means more volatility ahead for the shiny one.

If we take a look at the August gold daily chart, you’ll see that gold is trading below all the major moving averages and looks like it is heading back down to test the June 5 low of $1162.1 and if broken, look for a retest of the March 17 low of $1143.8. For the gold bulls, I believe the key level is $1207 an ounce. If broken, the gold bulls could finally get a rally up to $1300 an ounce.

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.

Aug ’15 Gold Daily Chart

Source: RJO Futures PRO

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Energies - Crude Oil

Crude Oil: A Market Still in Consolidation


Since the last eView on June 9, oil has managed to edge up a bit higher. The EIA report continues to show draw downs and we expect to see another draw in tomorrow’s report. Current stock pilesstand at 467.93 million barrels-well above the record high for this time of year of 394.12 million barrels and above the five-year average of 379.35.

The U.S. dollar has weakened a bit, although today has seemed to enjoy a small rally. Interestingly enough, so far today it has not put any pressure on oil. Demand for RBOB has continued to remain strong. Refinery capacity utilization is currently running at 93.1% vs. year ago of 87.1% and has been running higher than normal over the last several weeks of EIA Reports. I believe this is the main reason oil has enjoyed so much support. Traders should watch tomorrows EIA data for possible short-term direction. Most traders anticipate seeing another draw in the stock piles and with today’s breakout; I would recommend the long side.

Short-term technical indicators are indicating, a buy in my opinion. I am cautiously bullish with the breakout today after yesterday’s inside day set-up. August oil has traded back up over the 10-day moving average and is showing signs of market strength.

For futures traders, the recommended buy came in at $60.65 (today’s breakout) basis August oil with a stop at $59.1 and a target objective of $63.00. For option traders I would recommend using a call-fly-spread in August options or bull call spread possibly with a short put kicker as a way to take advantage of a move higher - for a bigger range use September options. Please call me for more details and to discuss some strategies.

Please feel free to call me for more details and to discuss some strategies. Also, be sure to check out my once a week energy market update posted on our website.

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.

Aug '15 Crude Oil Daily Chart

Source: RJO Futures PRO

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Energies - Natural Gas

Natural Gas Prices Continue to Struggle with Holding onto Gains

Avery Burton

Natural gas futures have been quite choppy following the aggressive run up at the beginning of the month. Traders appear to be using a technical range as they wait for more finite data regarding a potentially warm July. If the expected heat does arrive to the Midwest and East Coast next month, commercial air conditioners will likely ramp up and put pressure on the modestly building inventories.

The EIA will announce their next storage report on Thursday, June 25, and there is chatter of builds around 80 bcf. If this estimate is correct, it will be the third week in a row the build has been lower than the week prior. Considering demand hasn’t been unusually strong in this same period, this could signal weaker production. I believe that regardless of production, the market will remain mostly bearish until the demand can pick up.

As traders wait for confirmation on the expected temperatures next month, the market should be mostly technically driven. Despite the sharp rallies in early May and early June, the overall trend of this market has been down and I would suggest sticking with that trend. The market has built-in very strong resistance just below the $3 mark. Some good technical levels to consider short entry exist at 2.84 and 2.89 in the August contract. I believe the appropriate area to place stops would be just above the monthly high of 2.977. If fundamentals don’t turn bullish in July, I don’t see any reason why prices couldn’t slide back towards the yearly low in the mid 2.50's.

If you'd like to learn more about futures trading or the energies market specifically, please feel free to contact me.

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.

Aug '15 Natural Gas Daily Chart

Source: RJO Futures PRO

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Softs - Sugar

Chinese interest, Short Covering Conspire to Lift October Sugar Futures

Joe Nikruto

This week’s commentary finds October sugar futures in the midst of a short covering bounce. Rare positive price action in what has been another month of mostly downside price movement has traders and commentators alike scrambling for bullish fundamentals to fit chart developments. A 29 point rally from 11.67 to 11.96 yesterday, June 22, has the October sugar futures contract peeking out over the 10-day moving average which comes in at 11.88. The 18-day moving average, which comes in at 12.14, still looms overhead potentially providing both resistance and an area of attraction as short covering by the currently profitable fund trader could cause price to accelerate through this level.

While trendfollowing funds will cover short positions as the market violates these technical levels, discretionary traders will require more than a close or two over 12.14 to temper their bearish bias.Wire services were reaching, in my opinion, to find bullish fundamentals to fit the bullish price action. Interesting, however, was the fact that Chinese imports of sugar are three times what they were last year, according to the Hightower Group. This caught me by surprise. The Chinese have had domestic production challenges and sugar at these levels likely represents a good value as they continue to rebuild stockpiles. But that number likely caught traders off guard and made for a nice fundamental fit with the one day rally we saw. Interesting to note though that even with the increased and continuing interest from the Chinese, sugar has had tremendous difficulty maintaining any rally for more than a week at a time.

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.

Oct '15 Sugar Daily Chart

Source: RJO Futures PRO

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Softs - Cotton

Cotton Continues to Trade Sideways

Erik Tatje

Despite continuing to hold positive technical structure, the cotton market remains, for the most part, neutral at this point in time. Futures have been trading within a relatively well-defined range since bottoming in early 2015. Despite the markets' ability to maintain higher swing lows, future prices have not been able to produce a noteworthy positive breakout to confirm the potential longer-term bottoming formation. The recent swing lows around the 6300 - 6015 range will likely serve as local support in the coming days for the December contract. A downside penetration from this area could allude to underlying weakness in the market, thus setting up nicely for a potential retest of the 6195 and 6128 swing lows. Given the sideways nature of the market, short-term traders may consider utilizing momentum indicators, such as the RSI, to identify potential trading opportunities as they become available. For more information on this strategy or if you’d like to discuss other strategies to apply in the cotton market, please feel free to contact me directly.

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.

Dec '15 Cotton Daily Chart

Source: RJO Futures PRO

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Softs - Cocoa

Greece's Domino Effect on the Markets

Cocoa's supply news still remains bullish but September futures prices hit 3299 and failed. Heavy rains in Ivory Coast have left crops susceptible to disease. Arrivals have also come in below 2014's totals for the tenth straight week. The market has since consolidated due to profit taking and an overbought market. Greek debt concerns have also created inconstancies in the outside markets. A weaker euro could hurt the demand for cocoa. With support at 3234; look for a recovery and a push back up to 3300. Resistance is at 3320, a push above that should have cocoa test 3350.

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.

Sep '15 Cocoa Daily Chart

Source: RJO Futures PRO

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Softs - Coffee

July Coffee under Pressure

Adam Tuiaana

Harvest weather in Brazil looks favorable, with some light showers due later this week. Weather looks even better in India as the Hightower Group reports "good pre-monsoon rains in their coffee production areas". In addition, we’re also seeing a very strong U.S. dollar this morning, which should keep July coffee under pressure.

On the technical side, we cannot ignore that on May 15, July coffee violated the critical low of 12915from May 6. We have subsequently seen some consolidation, and there is not much in the way of support to keep July coffee from falling to the 12355 level.

There are several strategies that traders can apply in this situation. Please feel free to call or email me 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.

Jul '15 Coffee Daily Chart

Source: RJO Futures PRO

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Agriculture - Grain

Grain Planting Falling Slightly Behind Schedule

Stephen Davis

It is quite a volatile session today as the range between the low and the high in SX15 is 20 cents. Grain markets were higher last night supported by poorer than expected crop conditions. The theme has been short covering in soybeans going into the important June 30 Acreage and Grain Stocks report. Fuel for this short covering rally is the 3 to 4 million acres of soybeans yet to be planted in Kansas and Missouri.

Soybean planting advances only 3% to 90% planted versus the 95% average. The trade was expecting 92%. Kansas advanced from 57% to 73% planted in soybeans, however that is 18% below average. Missouri farmers were able to only plant 9 % more soybeans than previously completed which put them at 51% or 37% behind average.

The timing of this USDA report on June 30 is relative. Farmers in Missouri and Kansas will be planting soybeans on July 1 so the USDA will do the best they can on the acreage report. The most important 60 days lie ahead in North American corn and soybean production. Will one million acres of prevented soybean be a bullish surprise on this June 30 acreage report? I do not know, however this report is taking on more and more attention.

Each passing day the demand for our grain from around the world is growing. This is fueled by the middle class of developing nations whose diets are becoming more like ours. Hence, the demand for our grains.

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 '15 Corn Daily Chart

Source: RJO Futures PRO

Nov '15 Soybeans Daily Chart

Source: RJO Futures PRO

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Agriculture - Livestock

Beef Holding Despite Ample Front End Supply

Jeff Gilfillan

Cattle on feed last Friday showed little surprises as marketing and placements are down YOY and COF is slightly higher. Deferred should benefit from the lower placements, however front month/cash product in the feedlots are literally weighing down prices. Weekly charts look susceptible but lower slaughter and effective retail marketing are keeping prices stable.

Momentum funds are holding out for higher prices and will likely maintain a hefty long over 148 and then 144. That said, the live cattle weekly chart is setting up for a potential head and shoulders. If the neckline is broken, a potential move to $130 is in the cards. I am not sold on this "yet" based on the strength of the cash fed cattle and the feeder futures. I am not sure what the catalyst maybe to roll over the live cattle futures into a head and shoulders sell-off but we'll keep a close eye on the charts and spreads for signs.

Feeders may test the 225 to 235 area as competition remains high. Feeder cattle and live cattle are becoming two different animals on the charts.

Like many commodity markets, live cattle has fallen into a trading range with a lower tilt. Spreads are widening but choppy. Seasonal spread traders will benefit by trading with patience and selling rallies.

Hightower recommends selling August cattle calls at slightly higher outright prices. I think if August LC tests 155-156, selling outrights,calls or long puts maybe worth a look.

Please feel free to contact me directly 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 Monthly Chart

Source: GeckoSoftware.com

Weekly Feeder Cattle Futures

Source: GeckoSoftware.com

Long February 2016 / Short October 2015 Live Cattle Futures

Source: GeckoSoftware.com

Long February 2016 / Short October 2015 Live Cattle Futures

Source: GeckoSoftware.com

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Equity Indexes

Are the Stock Index Futures Making a Double Top?

Jeffrey Friedman

Stock index futures are still trading the big trading range for the month of April, May and June 2015.Monetary policy remains in question, with the question when will the Fed start to raise short term interest rates. At the latest FOMC meeting, the FOMC was more dovish, which would make one believe the first rate move might not come till after September.It's all about the Fed and data. Labor market conditions are improving but are not great,and inflation is still low. Consumer spending has slowed, business investments have gone into reverse, and exports, which have been hit hard by the strong dollar, are a heavy drag on the economy right now.

Stocks futures have risen largely in the first quarter and second quarter of 2015, despite skittish news from overseas which should have weighed on stocks futures in the last 180 days. Overall, favorable economic news (including the Fed news) outweighed worries about Europe (Greek concerns), Ukraine, China and Iraq.

This week's economic news has and will consist of the following: the first part of the week offered a major update on housing which showed signs of strength in Monday's existing home sales report and Tuesday's new home sales report. Manufacturing, which has been getting hit by weak exports, is also a theme of the week with durable goods orders on Tuesday, which was weak. The consumer gets new indications on Thursday with personal income and outlays and on Friday with consumer sentiment.

Technical outlook for the September S&P futures remains in a long-term bull market. The short-term trend is sideways to up, with most chart followers targeting 2082 as a pivot number to turn the short-term up trend to sideways or down. TheSeptember S&P could go down to 2064 and then 2035 as a downside target. The September S&P is in a big trading range of 2110 on the upside and 2040 on the downside. Are the stock index futures making a double top, which was made in May and June of this year?

Looking at the e-mini on a technical basis, the overall market remains in a bull trend, but yesterday's break signals a short-term turnover calling for an extension to the low 2060's. A breakout below 2060 implies declines to 2040. Any corrections contained within Monday’s range will keep pressing bear forces. A climb over 2094-2096 could motivate rebounds, but a close over 2112 is needed for a turn to higher levels.

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.

Sep '15 E-Mini S&P 500 Daily Chart

Source: RJO Futures PRO

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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.

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