RJO Futures Website

October 13, 2015

Volume 9, Issue 21

Featured Article

Upcoming RJO Futures Webinars

Trading Currency Futures

Wed, Oct. 14, 2015 at 11 a.m. CT

Register now! Learning about foreign currency futures trading can add a broad range of new products to your trading routine. In this session we'll cover many of the critical elements that you'll need to know regarding currency futures (also known as FX futures). FX Futures trade 24 hours a day, 5½ days a week. This is a very technical market that traders can potentially utilize to trade the markets outside of normal US stock market hours - with good volume and volatility. Depending on where you live and your work schedule, Forex futures may be a good fit for your trading enterprise. In this webinar you will learn:

  • What makes FX a good market to trade?
  • Benefits of trading foreign currency
  • Typical trends within FX futures
  • An FX futures trading strategy

Trading Index Futures

Wed, Oct. 21, 2015 at 11 a.m. CT

Register now!
This session will assist you in identifying good technical trade setups on the charts and the key components of your entry and risk in this market. Index futures are very technical in nature and are traded by professionals around the globe. Learn the index futures market and understand what you need to know when trading these instruments. Learn the Gap trade strategy to help build consistency in this market.

In this webinar you will learn:

  • Keys to the index futures market
  • Benefits of trading index futures
  • What you should know about trading these instruments
  • Using the Gap trade strategy to build consistency

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Metals - Gold

Golden Days are in the Future for Precious Metals

Phillip Streible

Most gold traders have been watching the current rally and have been under the assumption the delay in the Fed’s decision to raise interest rates has been the catalyst. Although this may be the case, there is a deeper story. Over the past several months lower futures prices have shaken up the supply/demand picture leaving several important bullet points.

  • Mine production and profitability has fallen drastically
  • Central bank purchases have topped 100 tons over the last two months
  • Wage growth has strained labor tensions to the brink of a strike
  • U.S Investors have no set timetable for a Fed rate hike

These reasons have put a crunch on current gold supply and lead me to believe the 200-day moving average at 1178.2 is easily achievable while the most likely scenario is a push up to the psychological $1200 level. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-438-4805 or pstreible@rjofutures.com.

 

Dec ’15 Gold Daily Chart
Source: RJO Futures PRO

Gold Daily

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Metals - Silver

Silver Begins to Show Signs of Life

In a market that has taken quite a beating over the past few months, it’s nice to see some signs of life again in this market.  However, there are good and bad things to consider with this. Looking at the longer-term trend of the market, silver is in a down trend.  The only suggestion of a bull market is over the last week and a half and that can either be a good or a bad thing, depending on how this market reacts between eViews.

As shown on the chart below, silver is known for slowly trending lower, only to have an aggressive rally, then falter and resume the downtrend.  In order for that continuing trading to happen this time silver would have to fail here at the 16 level and close below 1530.  However, a close above the established 1612 would suggest some higher prices can be in silver’s future.  Just closing above 1612 shouldn’t be enough to put everything into silver on the long, but just one step in the multi-step confirmation needed to see this market get back up to the 20 level.  Being a current bear based on the current technical analysis this seems like a long shot for the near-term.   As always keep your risk parameters tight and please contact me for help with futures and options strategies. 

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.  

 

Dec '15 Silver Daily Chart
Source: RJO Futures PRO

Silver Daily

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Energies - Crude Oil

A Market Making Moves

Since the last eView, November crude oil has started making moves to the upside hitting a most recent high of $50.92. The fundamentals have largely stayed the same but we have seen the U.S. dollar weaken which has given some support to the market.  Last week’s EIA data was largely in line with traders’ expectations as we saw by the price action.  OPEC has committed to maintain current levels of oil production which won’t do much to help lift prices but interestingly has caused a big sell-off.  Economic data both here and especially abroad—mainly China—remains weak.  Traders should look to tonight’s API Data and tomorrow’s EIA report for short-term direction.

Short-term technical indicators appear to be in neutral territory but I continue to remain cautiously bullish with the market pulling back the last couple of days. I would suggest using an option strategy or waiting for an inside day breakout to enter using futures.  The market has shown strong signs of a bottom in my opinion with the recent pullback touching down on the 10-day moving average. 

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.

 

Nov '15 Crude Oil Daily Chart
Source: RJO Futures PRO

Crude Oil Daily

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Energies - Natural Gas

Natural Gas Continues a Healthy Recovery

So far the month of October has been very healthy for natural gas prices. The November contract has pulled beautifully off of its yearly low with seven of the last nine sessions locking in moderate gains. The slow and steady climb of the market is a good indication that support is being built properly and there is strong potential for it to continue on higher. While there has been very little trouble for the fundamental side of natural gas, the recent multi-year lows and positive price action appear to be attracting bargain hunters. Bullish traders may benefit from a mid-Fall shift in weather as above normal temperatures are expected to turn significantly colder over the next five to ten days for the Midwest and Eastern US.

Last week’s Commitment of Traders report showed a whopping 223,000+ non-commercial short positions still in this market. This suggests the market is highly sensitive to short covering and technical resistance levels should be watched very closely. I believe a break of 2.60 and 2.63 in the November contract will trigger a large quantity of stops and could quickly lead the market to the back into the 2.74–2.80 range. Ultimately I’m confident the market can break above this range and revitalize prices north of $3.00, though this should take some time.

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.

 

Nov '15 Natural Gas Daily Chart
Source: RJO Futures PRO

Nat Gas Daily

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Softs - Sugar

Sugar rally to hold 13.30?

Joe Nikruto

This week’s comment on the March sugar futures finds the market down about 33 points at the time of this writing.  This is a small setback considering the monster rally of almost 200 points higher than it was when we last visited.  Bullish perceptions have carried the day as ideas that supply will be negatively impacted by the developing El Niño weather pattern and other challenges in producing nations have remained at the forefront.  It is difficult to see by watching the chart if the daily wire service comments have fueled the rally or the rally has fueled the daily wire service comments.

No matter, as the March sugar futures have been on a one way ride rallying almost every day since gapping higher on September 25.  This rally has forced trend followers on both daily and weekly time frames into long positions between 13.25 and 13.50, currently profitable positions. With stops just above 12.50 and 12.00 respectively the recent rally in March sugar futures will have to give up a good bit of ground on the chart for these positions to be threatened.  Look for March sugar futures to consolidate back toward the bottom of the sideways price action we saw in June and July of this year, 13.10 to 13.20. Are you suspicious of the fundamentals? I am too. But I wouldn’t want to say that out loud to anyone looking at the chart. If March sugar futures consolidate and hold above the 18-day moving average, which should meet price somewhere near 13.30, the next upside target will be 15.00 and then the 50% retracement of the downtrend, 15.90.

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@fjofutures.com.  

 

March '16 Sugar Daily Chart
Source: RJO Futures PRO

Sugar Daily

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Softs - Cotton

Weather Related Rally in Cotton Could Shift Trend

Erik Tatje

Weakness in cotton came to the forefront toward the end of September as price action broke below previous contract lows and ultimately traded as low as 59.70.  News of flooding in South Carolina and parts of North Carolina helped support prices amid fears of a negative impact on the U.S. cotton crop.  Today’s price action has played host to a powerful upside follow through, trading through some key technical levels on the chart.  A close above 62.50 could set the stage for the next leg higher in cotton.  Should the recent strength in cotton persist, all eyes will be on the previous peaks on 9/11 and 8/21.  In the event that the market can surpass these levels, the longer-term trend in cotton may be susceptible to a shift in sentiment.

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

Bull Market Returning?

Peter Mooses

If you have been following cocoa over the past few years, the same story continues to guide the market: supply and demand. No matter how big the pullback, the market seems to recover. Support levels were hit around 3030 today and December cocoa is trading as high as 3143 since those prices were hit. Production level concerns will continue to stick around until at least Q1 of ‘16. El Niño is still predicted to negatively impact the larger growing areas of the world. Technically, a break and hold above 3150 should have cocoa headed back above 3200 and towards September’s highs over 3300.

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

Have Coffee Prices Bottomed Out?

Adam Tuiaana

December coffee continues to see positive gains this morning and now we will see whether this market is overbought or not. Support is coming from supply concerns and a recovering Brazilian currency. We’ve seen a break above the 127 level and now we’re approaching the 140 level. A critical high resistance area will be 14260, which we have been monitoring for quite some time. However, we’re still looking at semi- slow demand for coffee and a weak equities market.

We’re not yet ready to call a bottom on coffee prices, but we will be made stronger bull believers if we are able to reach and break above the aforementioned 14260 area. Failure at this mid-130 area will lead to a large sell off and continuation to falling prices. However, I believe we are likely to see a run to at least 140 before this happens.

As for our position today, we will sound like a broken record and will weigh on the side of the trend, down.

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

Economic News Biggest Factor in the Grains

Stephen Davis

Corn finished Monday’s session lower with little to zero fresh news other than a carryover attitude from Friday’s bearish USDA report. The fundamental hangover from Friday seemed to weigh on the corn market. Harvest is moving quickly and there is nothing new to set the corn market on fire. With a 168 bushel per acre yield, a 13.555 billion bushel crop and a 1.561 billion bushel carryout now on the table, December corn could easily remain in a sideways pattern. Favorable weather for harvest remains in the forecast. The trade is expecting corn harvest to be near 40% complete in tonight’s report.

The soy complex got a boost on Monday from Asian Stock Markets, firm trade in China’s soybean, meal and oil markets, along with palm oil up strong on the Monday overnight session. Today, November soybeans are 9050, up 160 in a very impressive follow through rally. In the short-term, a key will be for this soy market to close above 9000. Brazil is off to a slow start planting with dry weather in Mato Grosso. It is early however, if forecasts do not change in the next couple weeks, issues will arise.

Saudi Arabia most recent purchase of wheat amounted to 740 thousand tonnes and is expected to be comprised mostly of European origin supplies, with Eastern European and German wheat being most likely. Another large wheat tender from Egypt, the largest wheat buyer in the world, will not include any wheat from the U.S.

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 grain market update posted on our website.

 

Dec '15 Daily Corn Chart
Source: RJO Futures PRO

Corn Daily

 

Nov '15 Soybean Daily Chart
Source: RJO Futures PRO

Soybean Daily

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Agriculture - Livestock

Head and Shoulders Target Hit, Lack of Deliverable Fed Cattle?

Jeff Gilfillan

Fed cattle futures fell out of bed in September and quickly hit the weekly head and shoulders target at 125-126 area front month. Technically the live cattle futures tested and breached the 50% level (123) on a monthly dating back to 2006 which is also near the 50% (123.40) level of the Sep. 2011 to Dec. 2013 value range. I can tell it like it is all day long.

The collapse in the beef market came as no surprise if you are a technician. I reserved a paragraph in every blog post since mid-May mentioning the weekly head and shoulders setting up in live cattle. The first time through faked and retraced above neckline but resumed in force alongside stock market selloff.  

While demand and effective marketing kept prices firm this year, the supply side eventually overwhelmed the trade. Competing proteins surely captured market share and that trend may not change unless boxed beef prices continue to move lower and stay lower.

Recently the percentage of cattle traded in the negotiated cash market was only 17.5%. This is well below normal and reflects buyers’ preference for forward or formula based sales. This trend may reverse in 2016 if low prices and increased slaughter based on better demand eat through the heavy front end supply. Placements have been low for some time, so if feedlots regain the edge, more negotiated sales may occur.

The 17.5% percent of cattle negotiated in the cash market in addition to the large amount of cattle too heavy to be in the deliverable class may be contributing to Oct/Dec LC overshooting the bounce.  Consider selling near-term futures and buying deferreds.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-861-0382 or jgilfillan@rjofutures.com

 

Live Cattle Weekly Chart
Source: GeckoSoftware.com

Live Cattle Weekly

 

Weekly Feeder Cattle Futures
Source: GeckoSoftware.com

Feeder Cattle Weekly

 

Long February 2016 / Short December 2015 Live Cattle Futures
Source: GeckoSoftware.com

Live Cattle Spread

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Currencies

Theme for the Global Economy? Deflation

John Caruso

RJO Futures Senior Broker John Caruso discusses currency futures markets. Weak data causing weakness in the British pound. Euro is quiet today and deflation is the theme for the global markets. Feel free to contact John here to leave a question or comment on his video. 

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Equities

S&P Falls on China Trade Data

Greg Perlin

The S&P e-mini fell today after the latest evidence China’s economy is slowing. The e-mini opened lower, tracking losses in Europe and Asia after data showed China’s exports dropped 3.7% from a year earlier in September. Weak economic data from China fueled fears the country’s third quarter growth data, due out next week, would fall below Beijing’s target, helping to stall the global stock rally which kicked off last week.

With an overbought technical condition in place from the stellar run over the last two weeks and energy stocks potentially under pressure because OPEC isn’t planning to reduce production, my hunch is we may get a three or four day pullback in prices for the remainder of the week.  

Looking at technicals, the path of least resistance is down as positive earnings results early on from the U.S. have been discounted and damage on the charts has occurred.  A normal correction of the September and October rally is seen down at 1955.25 with a 50% retracement seen down at 1937.   In order to throw off the negative bias in the e-mini S&P, today might require the a close over the 2012.00 basis in the December contract.

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.

 

Dec '15 E-Mini S&P Daily Chart
Source: RJO Futures PRO  

E-Mini S&P Daily

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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.

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