RJO Futures eView Newsletter - July 21, 2015 | Market Insight | RJO Futures

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July 21, 2015

Volume 9, Issue 15

Metals - Gold

Major Support Broken in Gold

Nick DeGeorge

In the early morning trade, August gold is slightly down and currently trading at $1104.0 an ounce. Yesterday, gold hit its lowest level in just over five years and broke the very important $1,140.0 handle, which has been the floor for this market. Once August gold broke this important support level, the gold bears enjoyed roughly a $60 sell off. This chart is technically bearish and technically broken. However, with that said markets love to retest significant support and resistance levels, so I believe we should get a pop back up to at least the $1140 handle, but would be a seller anywhere from $1140 to $1175. Traders and investors alike should be keying in on the $1,000 an ounce level, which is a very significant psychological level. Below is a daily August gold chart from our RJO Pro platform. in resistance.

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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Metals - Silver

Silver Needs Some Love and Support

Michael Rataj

With silver touching just below 1450 in Sunday's overnight sessions it's hard not to be cynical about its outlook. Each bit of negative fundamental news, which should be positive for silver, is sold. Each bit of positive price movement, after a stretch of rising, is sold. This last stretch of range trading lasted for nine months, starting with the selloff at the end of October. The next bit of support now sees silver gunning for the low of 1410 made in the beginning of December; although the next area of support could see silver a hair above 10. I know, I know, it's difficult for me to write but this is just based on the charts. If that’s not going to happen silver has 70 points to make up its mind and find its strength, otherwise look out below.

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.

Sep '15 Silver Daily Chart

Source: RJO Futures PRO

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Energies - Crude Oil

Crude Oil - A Market Near Its Bottom?

Mike-Sabo

Since the last eView crude oil has slowed its decline quite a bit and may have lost its downside momentum as we approach the lows seen back in March. The Greece situation has moved to the back burner, the Iranian Nuclear Deal is somewhat old news and weak Chinese, eh who cares after all Apple is getting ready to report earnings. Seriously though the market appears to have absorbed most of the bearish news and yet hasn't made new contract lows. The last EIA Report showed a drawdown of 4.35 million barrels in the stocks and stronger than normal refinery demand once again 95.30 vs 93.8 a year ago – how much stronger can the demand get? Total stocks stand at 461.42 million barrels well abovethe highest amount for this time of year set back in 1990 at 389.52 million barrels hence the reason for being cautiously bullish but still bullish. The refineries continue to enjoy good margins with low oil prices and strong RBOB demand. Traders should watch tomorrow’s EIA data for possible short-term market direction and look for another drawdown. With all this short-term bearish news on the table coupled with the oversold technical indicators, you have a recipe for a possible short cover rally.

Short-term technical indicators are still indicating a strong buy in my opinion - I am cautiously bullish after such a large sell-off but do like the long side. For futures traders I would wait for an inside day and position accordingly. For option traders, I would recommend using a bull call spread or ratio spread possibly with a short put kicker as a way to take advantage of a move higher. Please 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 under RJO Futurescast.

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.

Sep '15 Crude Oil Daily Chart

Source: RJO Futures PRO

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Energies - Natural Gas

Natural Gas Prices Continue to Struggle withHolding Gains

Avery Burton

After an impressive run up in natural gas prices over the first half of July, momentum has once again begun to struggle. While the market appears ready to move higher, the overall weakness in the energy sector and the recovering US dollar are likely culprits for the lack of any upside continuation. Ultimately there is no problem with the available supply of this commodity, and demand hasn’t been anything special. With prices holding below $3.00/mmbtu all summer, it’s hard to argue that bulls have much control here. I believe that this will remain the case until late August or early September when traders prepare their seasonal positions for a demand play over the winter.

Even though the market hasn’t had much help from fundamentals this summer, technical price action has offered some quality volatility that may appeal to certain traders. I believe that rallies will continue to be sold for the time being. Sustained closes above $3.00 would suggest the market is ready to move higher and are required to signal a longer-term reversal. It may be hopeful to expect prices to slip further than the lows we’ve already seen this year. I believe the 2.75 area is an appropriate objective to trade towards.

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.

Sep '15 Natural Gas Daily Chart

Source: RJO Futures PRO

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Softs - Sugar

Big Technical Failure May Mean More Downside for October Sugar

Joe Nikruto

This week's comment finds the October sugar futures contract attempting to stabilize after four days of dramatic price action. 14 days of work carving out a head and shoulders bottom pattern was laid to waste in just 4 trading sessions. The October sugar futures contract went from break out, trading up to 12.80 to fake out, falling back below the 10- and 18-day moving averages and then full-on break down posting new lows for the move taking out the previous low at 11.52. In four days! Head and shoulders patterns are often watched not only for their ability to help traders navigate markets that are turning or changing trend but they can also point to the continuation of a trend when they fail. So far on the October sugar futures chart we have a fine example of a well formed head and shoulders bottom pattern failing. It will be more than passing interest to see if the price action from Monday, July 20 with 90,000 contracts trading hands has erased the entire fund long position. As of Friday, July 14 the fund trader category was long almost 74,000 contracts according the Hightower Group's reading of the Commitment of Traders report, a widely watched barometer of how traders are positioned in the futures markets.

Fundamentally, the near-term supply of sugar does not seem to be impacted by long-term projections of a possible production deficit next year. Favorable weather for cane harvest in Brazil and aggressive marketing of sugar by Thailand are weighing on prices as is a general bearish tilt to commodities. Volatility within an established range is a hallmark of summer trading but on its face the failure of October sugar futures to extend the upside breakout and the subsequent new low speaks to lower, maybe much lower, prices for sugar futures.

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 Creates a Bullish Channel

Erik Tatje

Technical structure in the December futures continue to point to higher prices as each subsequent pullback in prices fails to retest previous lows on the chart. This pattern of relatively higher lows may present valid trading opportunities as cotton is in the midst of pullback which originated at the start of July. At this point, there does appear to be further downside before price action tests the lower trendline of the bullish channel; however, 6360 - 6380 will likely serve as the potential area of support stemming from the bullish trend channel. Below here, previous price action may offer additional support at 6340 and 6300 respectively. With that being said, a sustained breach of lower trendline of the previously mentioned trend channel could negate the current bullish sentiment in cotton. Contact me for more information on potential trading strategies in cotton.

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

Cocoa's Continued Trend


Supply concerns continue to support cocoa prices. Weather concerns in West Africa with poor growing conditions have negatively impacted production. El Nino weather could be the worst since the late 90’s as well. As it has been for months - supply and demand is the lead story for cocoa.

Outside markets have pressured the bullish cocoa market of late and has created some consolidation. A close above the 9-day moving average is a positive signal. Holding above 3317 will keep the long-term trend intact. A break above 3375 will help the market test 3400.

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

September Coffee Still Under Pressure

Adam Tuiaana

A recent violation of the 12645 level has seen an expected correction, followed by a continued sell off down to the 12365 area. It still looks as if there is much supply, and demand is weak on a global scale. The US Dollar continues to strengthen, adding additional pressure to commodities.

As an extremely large new crop from Brazil and Columbia make their way to the world market,along with a lack of urgency in fresh buying from end users, I would expect continued additional pressure on September coffee prices. Look for a visit back down to the 12350 level over the next couple of trading sessions.

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

Sep '15 Coffee Daily Chart

Source: RJO Futures PRO

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Agriculture - Grain

Daily Market Update - Grain Futures - 07/21/2015

John Kennedy

Exports slightly above expectations. Spring and Winter Wheat slightly below expectations. The dollar is weak. Upcoming warm and dry weather in the forecast. Feel free to contact John here to leave a question or comment on his video.

If you'd like to learn more about futures trading or the agricultural market specifically, please contact John Kennedy at 866-397-8194 or jkennedy@rjofutures.com.

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Agriculture - Livestock

Cash Cattle Grinds Lower as Weights Build

Jeff Gilfillan

Seasonal weakness, feed grain price uncertainty, fund longs and technical weakness are contributing to a softer livestock futures market. Feeders had more to give back but live cattle may have more % downside risk. As noted last issue and again below, 144 is in eyesight in August live cattle.

Technically the live cattle futures market appear vulnerable on the daily, weekly and monthly charts. If the funds continue to liquidate a test of 144 area which is a minor value area is in the cards. This would turn current support at 148 into resistance and a sell candidate for an overall bearish test of longer term support at 130. If global demand forces take a back seat and fall supply drives the market this move could be in the cards come pigskin season.

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.

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

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Interest Rates

Looking at Forward Rates and the US Yield Curve

Joe Kobel

Back in October of last year, the Federal Reserve ended its latest round of bond purchases – most commonly known as QE3 or Quantitative Easing round 3- in their latest struggle to maximize employment and tame inflation here in the United States. This,in combination withresurfacing European contagion stemming from fear out of a Greek default has added to this $USD strength, putting immense downward pressure on the Euro currency. To revisit the past, I visited Europe back in January of 2010 where I was paying over $1.45 per every Euro that I spent; right now the Euro is currently trading $108.7 – a dramatic change in just a few short years.

The overnight lending rate in the U.S has remained at 0-25 basis points for the past six years and there is much debate about whether 2015 is going to mark the first rate hikes since the Fed first responded to the financial crises that surfaces in 2007 and 2008. Last week we heard lots of balanced dialog out of FED Chairwoman Janet Yellen when asked about the probability of raising interest rates in the United States this year. There is much debate around this topic as global macro-economic data remains puzzling at the very least and investors juggle between record high equity values, record low interest rates and falling commodity prices. Regardless of what side of the fence we land on, the fact remains:

The Federal Funds forward curve remains inverted in tandem with the Eurodollar futures curve and markets are still pricing in a 0-25 basis point Federal Funds Rate. The week prior to last, Mrs. Yellen spoke very hawkishly and seamed adamant about raising rates with certainty by the end of the year which put a steepening effect of the yield curve (downward pressure on short-term rates with strength gaining in longer term rates).We have backed off a bit on this with Mrs. Yellen’s balanced dialogue from last week but in my opinion this was the beginning phase for the markets perception that it’s time to start preparing for the first rate hike.

As rates rise, the dollar will gain further strength and long-term rates (which are perceived as more risky and therefore deserve a higher yield) will gain even further strength, drawing more interest for investors in search of yield. It's important to remain on the balls of your feet with this as there are many more outside factors influencing this move in monetary policy so it is important that you are well prepared with a wide stance for when reality comes to fruition.

Please feel free to contact me if you would like to discuss this topic further or would like help creating and implementing a strategy to brace yourself for the economic changes ahead.

If you'd like to learn more about futures trading or the Interest Rates market specifically, please contact RJO Futures Market Strategist Joe Kobel at jkobel@rjofutures.com.

Eurodollar Futures Forward Curve


Source: RJO Futures PRO

Sep '15 US 10-Year T-Note


Source: RJO Futures PRO

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Currencies

Daily Market Update - Currency Futures - 07/21/2015

John Caruso

It has been a light week after a big rally in U.S. dollar last week. U.S. dollar could potentially reverse with Apple earnings. BOJ experiences slight uptick in inflation. Bullish on dollar. Feel free to contact John here to leave a question or comment on his video.

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.

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Equity Indexes

Will Existing Home Sales Undermine S&P?

Greg Perlin

After a round of new highs earlier this week the S&P has become short-term overdone and in need of some back and fill action on the charts. One has to wonder if the trade will be slightly undermined in the event that data today on existing home sales comes in positive, as that news will come on the heels of comments from the Fed's Bullard yesterday that there is a 50% chance of a September rate hike. The failure to hold 2119 could shift short-term technical readings back to favor of the bear camp, particularly after the E-mini has forges a 50+point run in just seven trading sessions. In order to turn the tide decidedly to the bear camp probably requires a series of highs below the 2125 level and it might also require a disappointment in Apple earning after the close.

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.

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

Source: RJO Futures PRO

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