RJO Futures Website

August 18, 2015

Volume 9, Issue 17

Feature Article

Upcoming RJO Futures Webinars

Futures Trading Strategy

Wed, Aug. 19, 2015 at 7 p.m. CT

Register now! Understand how professionals utilize sound trading strategies to guide them in and out of the markets. What are the key components of a trading strategy, and how can you learn to understand price action to determine precise entries, stops, and profit targets.

  • Key components of a strategy and why you need one
  • How technical analysis differs from trading strategy
  • Why is price action so important?
  • How to implement a trading strategy

Introduction to Options

Wed, Aug. 26, 2015 at 7 p.m. CT

Register now! If you are an active futures trader looking for a new way to engage the markets, or if you are a part-time trader looking to increase your exposure but limit your risk, then trading options could be for you! In this webinar we talk about the basics of options including:

  • The unique risk-limiting features of options
  • How to understand options terminology
  • Discover how options are priced and learn to read option quotes
  • How to profit from rising and falling markets using options

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Metals - Gold

Recent News Causing Sell Off in Gold

In the early morning trade, October gold is currently selling off and down roughly $10 an ounce at $1,111.2. The sell off is probably mostly due to the dollar’s short-term snap back and a lack of bad news from China. However, talks of a delayed U.S. rate hike possibly until December and signs of stronger gold demand from India might keep the shiny one trading above the $1,100.0 handle.

For the gold bears, look for a break under $1,100.0 to $1,190.0 an ounce in order to get a possible sell off to the July 24 low of $1,172.8. For the gold bulls, watch for a retest of last week’s high of $1,126.0 and if breached, look for a momentum rally to $1,142.0 and then possibly all the way up to the 200-day moving average which is currently trading at $1,188.0.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or ndegeorge@rjofutures.com.

Oct ’15 Gold Daily Chart

Source: RJO Futures PRO

Gold Daily

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Metals - Silver

Silver's Range Problem

September silver’s latest bounce is on the verge of confirming it was a short covering rally and retracement of a four month move lower, in a longer-term bear market.  A few levels of interest are first the 1550 level that was long held support since December of last year and the failure at that same level which coincides with the 38.2% retracement from the high in May of 1771.  Although these indicators can sometimes mean nothing just on their own, the confirmation of the two here is to give credence of one to the other. 

With the failure of 1550, the new short-term range is 1445 to 1550.  This is either setting up the market for a stronger move lower or defining its new range between these levels.  Silver tends to trade in a range for extended periods of time and this would be one of the tightest ranges this market has had for years.  It might be too early to suggest that this 100-point range will stay, but it provides good levels to watch should the market break out in either direction.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or mrataj@rjofutures.com

Sep ’15 Silver Daily Chart

Source: RJO Futures PRO

Silver Daily

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Energies - Crude Oil

Crude Oil: A Bear Market for How Long?

Since the last eView, crude oil has made new lows with what appears to be no bottom action in sight.  The fundamentals have not changed much.  Greece is still having problems, the Iranian nuclear deal is not really a deal, oil stock piles have not really been building, China is doing their best to prop up their stock market and our own stock market goes up and down like a bouncy ball.  And yet, oil acts like the only way it can move is lower.  Seriously, the market acts like it can only trade lower and yet not all of the fundamentals are bearish in my opinion.  Demand for RBOB gasoline continues to remain fairly strong and we have seen small drawdowns in oil stockpiles. The last EIA Report showed a drawdown of 1.68 million barrels in the stocks and over the last three reports, all have seen a draw.  We still continue to see stronger than normal refinery demand 96.10 vs. 91.60 a year ago. Total stocks stand at 453.59 million barrels which is about 10 million barrels lower since the last eView.  Traders should continue to pay close attention to the weekly EIA Reports. If we continue to see drawdowns and get a touch of bullish news, the market could enjoy a short cover rally.

Short-term technical indicators are very oversold in my opinion. I still remain cautiously bullish after such a large move to the downside.  The market has not shown strong signs of a bottom in my opinion, but I would look to the long side of the market.  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 possible short put kicker as a way to take advantage of a move higher.  If you are unfamiliar with how to play inside day momentum breakouts, please give me a call so I can explain it to you. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or msabo@rjofutures.com. Also be sure to check out my weekly energy market update posted on our website.

Oct ‘15 Crude Oil Daily Chart

Source: RJO Futures Pro

Crude Oil Daily

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Energies - Natural Gas

Natural Gas Appears Ready to Gain Steam into the End of Summer

As we enter the second half of August and the tail end of summer, natural gas prices may finally start to see prices strengthen for the seasonal shift into fall and winter. Though the weekly Commitment of Traders continues to report a building non-commercial net short position, longer-term bulls may want to consider taking advantage of the recent sharp drop for their positioning. October natural gas has fallen roughly $0.22/mmbtu over the last four sessions to strong support just above $2.70.

Though this summer’s natural gas trade was almost entirely range-bound, the contract lows from months ago at $2.64 have held the entire time. With the impending seasonal shift expected to reignite the demand side of this market, it is hard to make an argument for why these lows can be broken going forward. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-741-0339 or aburton@rjofutures.com.

Oct ’15 Natural Gas Daily Chart

Source: RJO Futures PRO

Nat Gas Daily

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Softs - Sugar

Sugar Pop Smacks of Technical Short Covering

Joe Nikruto

This week’s comment finds October sugar, at the time of this writing, in the midst of what passes for a rally in the commodity, up 23 points.  A weekend article in the financial press highlighted the weakness of the Brazilian real and the impact that currency has on sugar exports and the global supply of sugar.  Sugar exporters are scrambling to move sugar onto the international market where trade takes place in dollars so they can exchange those dollars for more of their weakened home currency, the real.  This situation, combined with the already robust global supply among other factors, has conspired to keep sugar prices on the defensive since last July.  Slowing economic conditions in the emerging Asian markets hasn’t helped sugar prices either.  Fundamentally it is difficult to find any bullish argument that could lead to a sustained rally.  Technically, sugar is oversold and ripe for a pop.  The fund short position is large and the market may be setting up to test recent arrivals to the short side. Look for closes above the 18-day moving average, 10.90, to point the way for a move toward the 50-day moving average, 11.62.   Trend followers begin to cover short positions at 10.98 and again on closes above 11.80.  It remains to be seen if what I view as a technically based correction has enough juice to take this market to the 11.80 level. But if it does that would be a great spot to own March puts from.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-453-4494 or jnikruto@rjofutures.com.

Oct ‘15 Sugar Daily Chart

Source: RJO Futures PRO

Sugar Daily

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Softs - Cotton

WASDE Report Sends Cotton Soaring

After producing a negative technical signal to the tune of a downside breakout from an ascending trend channel, cotton hosted an enormous reversal following a very bullish USD WASDE report on August 12.   The market has yet to close in the “red” since that day and is fast approaching technical structure from highs that were established earlier in May.  The near-term momentum lends itself to a bullish argument with potential resistance being seen at 6700.  Above here, the positive momentum has the potential to bring prices back up for a test of the 6769 – 6811 area of resistance.  

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-397-8195 or etatje@rjofutures.com

 

Dec ’15 Cotton Daily Chart

Source: RJO Futures Pro

Cotton Daily

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Softs - Cocoa

Outside Markets Continue to Pressure Cocoa

Peter Mooses

As cocoa reaches support levels, outside markets continue to pressure December cocoa. Production output is still a concern but is there enough demand for the soft to trigger a recovery? El Niño is also adding to the supply concern. Some of the larger growing areas have been affected. Port arrivals continue to be below last year’s numbers. Since April, arrivals are down more than 10%.

Technically, we need a close above 3085 for the market to regain any bullish momentum. A break above 3100 could help us get back above the 9-day moving and head towards the 20-day. The short-term trend is bearish. A close below 3025 would continue the negative push and could have us headed to 2940 and the 200-day moving average.


Keep an eye on weather and the outside markets, specifically currencies and the ongoing supply and demand story for direction in cocoa.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or pmooses@rjofutures.com.

 

Dec ’15 Cocoa Daily Chart

Source: RJO Futures PRO

Cocoa Daily

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Softs - Coffee

December Coffee under Pressure

Adam Tuiaana

The potential for a tight supply in the future has helped to support December coffee prices. In addition, it appears we’re seeing some short covering to break that 136 level of resistance (of which we’re now comfortably resting above).

This recent strength still does not have me thinking that a full blown reversal of a long-term trend is in the works, rather, I believe this to be a strong correction up to the 150 level before more continued downside.  Consider the fact that this market has been selling off since April of this year. Being a trend follower, we should continue to weigh on the bear side of this trade.

There are several strategies that traders can apply in this situation. If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or atuiaana@rjofutures.com.

Dec ’15 Coffee Daily Chart

Source: RJO Futures PRO

Coffee Daily

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Agriculture - Grains

Grain Markets Seeing Variable Yield, Strong Demand

Stephen Davis

Grain markets are mixed today with corn higher, soybeans and wheat lower. Outside markets are lower today as traders have a risk off mentality.

The weather forecast is being given a bearish slant as there is no extreme heat seen in the Midwest through the end of August, and it is raining!

The crop scouts on day one of the Pro Farmer Midwest crop tour found variable yield potential in Ohio and strong crop prospects in South Dakota. Variable yields are going to be a dominant theme in the Midwest this year. The strong yield potential in the Western Corn Belt will overshadow the weak yields in the Eastern Corn Belt.

We are getting strong competition in the world for our U.S. grain exports. The nearly 23% drop in the value of the Brazilian real has helped make them the cheapest source of corn in the world today. Like in corn, the drop in the Brazilian real has helped increase demand for Brazilian soybeans. With Brazil’s weak currency, they will plant early and also a lot of soybeans starting this fall. The prospects for grain production in South America and North America continue to be robust. The global demand is good and you do not want to see any global recessions in any parts of the world.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7181 or sdavis@rjofutures.com. Also be sure to check out my weekly energy market update posted on our website.

Soybeans Weekly Continuation Chart

Source: RJO Futures PRO

Soybean Weekly Chart

Corn Weekly Continuation Chart

Source: RJO Futures PRO

Corn Weekly Chart

Soybean Meal Weekly Continuation Chart

Source: RJO Futures PRO

Soybean Meal Weekly

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Currencies

Daily Market Update - Currency Futures

John Caruso

RJO Futures Senior Broker John Caruso discusses currency futures markets. It was a massive miss in the Empire State Manufacturing number. The USD is showing bullish trends. Keep an eye on the Australian dollar. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-699-5354 or jcaruso@rjofutures.com

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Equities

E-Mini S&P Update

Greg Perlin

The e-mini S&P is set for a down day despite a very good Housing Starts number this morning that saw its highest reading since before the great recession in 2008.  Despite positive housing numbers, the e-mini is facing another plunge in Chinese stocks overnight with the Shanghai Composite down more than 6 percent in overnight trading.    The declines in Chinese markets came even as the Central Bank injected a large amount of cash into the financial system. 

Currently the e-mini S&P is trading at 2095, down four points, and trading is likely to be range bound until the FOMC minutes that comes out tomorrow at 1 p.m. CT. The market is likely to be choppy until further evidence that the Central Bank follows through on a September rate hike. As of now, it’s about a 43% chance they raise even though problems with Greece and massive drops in the Shanghai continues to be a negative for the U.S. markets.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or gperlin@rjofutures.com.

Sep ’15 E-mini S&P 500 Daily Chart

Source: RJO Futures PRO

E-Mini S&P 500 Daily

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