RJO Futures Website

December 8, 2015

Volume 9, Issue 25

Featured Article

Compete in a Futures Challenge

Compete in a Futures Challenge

 

Test your knowledge, practice your skills and learn while you trade. Win up to $1000!

Presented by CME Group, the Futures Challenge is a 6-day program that combines, interactive training modules and simulated trading.

The Challenge begins on Sunday afternoon at 5:00 PM CST — right when the futures markets open. On your first night you will begin working to complete your eligibility requirements. You will be able to monitor your progress on your home dashboard while keeping an eye on your trading activity and reading messages about what’s ahead.

The Challenge Simulator will be made available to you on the day your Challenge begins. Until then, you can get familiar with trading on the Practice Simulator in the Trading Tools section of the site.

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Metals - Gold

Gold Falls after Positive Nonfarm Payroll Number

In the early morning trade, February gold is currently down slightly and extending it’s sell off from its high from last Friday after the positive monthly Nonfarm Payroll number. Due to the strong dollar and crude oil prices falling to a seven year low yesterday, February gold has since fallen around $20 an ounce on speculation of deflationary pressures. As long as the U.S. dollar is strong and global macro-economic views don’t improve, look for a sell off under a $1,000 an ounce in gold.

February gold is currently trading below all its major moving averages and looks prone to retest the December 3rd low of $1,045.4. If this support area is broken, then look for a selloff down to $1,000 an ounce.

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

 

Feb '16 Gold Daily Chart
Source: RJO Futures PRO

Gold Daily

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Metals - Silver

Silver Walking the Line

The titles of my last couple eView’s were “is silver bottoming?” or “is silver going to pop?”  If you say something enough times it’ll hopefully, eventually be right.  Silver had a nice pop on Friday on the November Nonfarm Payrolls, falling off on Monday and is essentially unchanged today.  It doesn’t look like silver is officially ready for this pop.

Where does this leave silver?  Well, technically, the market needs to close above 14610 to have a shot of rallying back up to 1550. Getting above 1624 (that previous rally then failure we discussed at the beginning of November) is a more significant number to close above, but the latest action signifies this market might have an easier time trading lower than rallying almost two full bucks.

To hedge a middle of the road call, this market continues to provide decent risk/reward opportunities for whatever your overall bias may be. 

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.  

 

Silver Daily Continuation Chart
Source: RJO Futures PRO

Silver Daily

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Energies - Crude Oil

OPEC not Limiting Production

RJO Futures Senior Market Strategist Mike Sabo discusses the crude oil futures market. Crude oil slightly weaker. OPEC not limiting production. A rate hike still in question. Feel free to contact Mike here to leave a question or comment on his video.

 

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Energies - Natural Gas

Warm Winter Temperatures Continue to Weigh on Natural Gas Prices

So far December marks the sixth month in a row where natural gas prices have slid lower. The January contract is just pennies away from the major psychological $2.00 mark and traders continue to be cautious of unusually warm weather affecting most of the U.S. over the next few weeks. While the EIA’s weekly storage reports have suggested that supplies are no longer growing, the lack of weather demand may be creating a very significant long-term problem. If supplies are not being utilized this winter, how can prices recover before next spring when supplies should be building again? 

Aside from slacking demand, another major problem for natural gas is the current strength of the U.S. dollar. While most commodities are weaker this year in part due to this climbing dollar, natural gas and energies in general have fared the worst. When coupling the strength of the U.S. dollar with the enormous gas supplies and unseasonable U.S. winter, the argument to be a buyer of this market remains unsupported. Although $2.00/mmbtu seems to be supportive for now, I believe it is likely this level will be broken.

Those who have interest to sell natural gas but feel they have “missed the boat” shouldn’t give up. For now, any rallies have a potential to be sold off. Consider waiting for a retest of the 2.16 – 2.22 area before entering short positions. However, keep in mind, risk management is incredibly important in selling such an oversold market; if the fundamentals dramatically turn, this market is susceptible to a vicious short covering rally.

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.

 

Jan '16 Natural Gas Daily Chart
Source: RJO Futures PRO

Nat Gas Daily

 

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Softs - Sugar

Sugar Trends Continue with Stronger Dollar, Weaker Crude

Tony Cholly

Choppy to higher trade is expected to continue in the sugar market.  With fresh new fundamentals for the market to digest, sugar was particularly vulnerable to the negative tone from outside markets.  Sugar closed moderately lower on Monday, with overbought conditions sparking a long liquidation sell off.  A stronger dollar mixed with extremely weaker crude oil really helped and continues to help push sugar prices lower.  As you know, if crude oil is cheaper it makes ethanol less attractive.  If there is less demand for ethanol there is less demand for sugar (used in the making of ethanol) causing prices to move lower.  There is still a large deficit expected for global supply in sugar, and once the outside markets begin to level out, I expect sugar to resume its uptrend.

While slumping energy prices will provide a serious headwind for prices to overcome, there has been enough bullish supply side developments to keep prices well-supported on near-term pullbacks.  Support comes in at 1506 today (which was temporarily violated) and 1473.  Upside targets are 1565 and then 1675 if the bull trend can resume.

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

 

Mar '16 Sugar Daily Chart
Source: RJO Futures PRO

Sugar Daily

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Softs - Cotton

Strong Exports and Severe Weather Seen as Supportive

Southern India has recently been hit with devastating rainfall causing flooding and a staggering number of civilian casualties.  How big of an impact the recent wetness will have on their cotton crop remains to be seen. However, the news does appear to be offering a bit of support to the underlying futures markets.  Additionally, strong export figures could also add further conviction to a bullish argument, which could explain the recent strength in March futures.  The previous high of around 64.50 was surpassed on Friday and, in the event that the market can hold this rally, there could be additional upside potential following the recent breakout from the 10/22 peak.  The next significant level of resistance from a technical standpoint appears to come into play around 66.50, which could be an important level to watch heading into the end of the year. 

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

 

Mar ’16 Cotton Daily Chart
Source: RJO Futures PRO

Cotton Daily

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Softs - Cocoa

The Highs and Lows of Trading Cocoa

Peter Mooses

Profit taking, long liquidation and an overall down day in commodities has cocoa racing back to 3300. After hitting a high of 3429 on Dec. 7, today’s trading has seen a 133 point range. Technically, 3340 was broken, as was 3000, but 3280 held and the market has recovered back above 3320. If the March contract can find support levels at these prices, a range of 3320 to 3385 may settle in this week.

As we come to the end of the fourth quarter, Ivory Coast port arrivals will be a key indicator of supply levels. Equity markets and the euro will continue to affect the demand side of the cocoa equation as we are in the middle of the holiday season. 

After a big down day, we’ll see how the cocoa market recovers – will longs reposition themselves?

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.  

 

March ’16 Cocoa Daily Chart
Source: RJO Futures PRO

Cocoa Daily

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Softs - Coffee

Intermediate Coffee Strength

Adam Tuiaana

March coffee is slowly but surely fighting its way to the October highs, but it will take some serious bullish news to make that happen. So far, this last rally is likely due to some short covering and the fact that key Brazilian producers are expecting a much lower forecast on their upcoming 2016/17 crop.

Although we saw some strength over the last couple of days, yesterday’s strength was met by a prompt selloff and a close on the lows. Let’s not forget that last month we saw a violation of the 11780 level from September. Subsequent to this, we are now likely witnessing an upside correction, which may result in a continuation of the downtrend.  I believe this correction will shortly come to an end, which should make for a good opportunity for traders to step in the on the short side, yet again.

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.   

 

Mar '16 Coffee Daily Chart
Source: RJO Futures PRO

Coffee Daily

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Agriculture - Grains

Soybeans Overbought, Corn Market Rallies

Grain markets have a seasonal tendency to move higher this time of year. The recent, roughly 8% rally in soybean futures from $8.44 ¼ to $9.09 ¾, actually began in the soybean oil futures while soybean meal still continues to trend lower. The soybean market has quickly gone from oversold conditions to overbought conditions. The corn market also appears to have based a bottom and has staged a 15 cent rally. Some of the recent strength in the soybeans and corn has come from a slow start to the Brazilian crops (due to weather) and fund buying. However, as I mentioned already, the market has become overbought and the “real” fundamentals of supply and demand do not support a continuation of the recent rally. The market will need more demand and adverse South American weather to continue moving higher. Yesterday, soybeans and corn both had a reversal on the daily chart. This rally in beans and corn may not have been anything more than a “bear market rally”. The global economy remains weak and global supplies are adequate…for the time being.

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

 

Jan ’16 Soybean Daily Chart
Source: RJO Futures PRO

Soybean Daily

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Agriculture - Livestock

Race to the Bottom Gains Ground: Proteins under Pressure

Front month fed cattle futures reflect the poor near-term financial incentives of increasing sales and slaughter between the feedlots and packers. The likely result is a stubborn trade working through the 2011-2013 futures value area (117-129) until summer seasonals kick in. This is where the monthly charts may test the long-term support levels just over 100 (not including Dec ‘15).

Hog spreads reflect the continued large slaughter rates taking place and the trade is rewarding these sales with some price stability despite an overall bearish commodity environment and regulatory/trade issues. Industry producers maybe better healed vs. the beef trade to absorb losses due to better integration and should continue to capture market share, consolidate and soon begin to limit output.

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. You may also follow me on Twitter @RJOJeffGil.

 

Live Cattle Weekly Chart
Source: GeckoSoftware.com

Live Cattle Weekly

 

Lean Hog Monthly Chart
Source: GeckoSoftware.com

Lean Hogs Monthly

 

Long Apr '16/Short Mar '16 Feeder Cattle Futures
Source: GeckoSoftware.com

Live Cattle Spread

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Currencies

Dollar Dropped, Euro Rallied

John Caruso

RJO Futures Senior Market Strategist John Caruso discusses currency futures markets. Economic data, other markets putting strain on currencies. Dollar dropped, euro rallied. Feel free to contact John here to leave a question or comment on his video.

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Equities

S&P E-mini Continues to Decline

Greg Perlin

The S&P E-mini is heading for another day of declines today with stock index futures extending losses after oil futures turned sharply lower and headed toward fresh multi-year lows. Weak Chinese trade data also weighed on the trading mood, reigniting concerns about global growth. Disappointing data out of China showed exports fell for a fifth straight month in November.

While investors remain concerned over the imminent U.S. rate hike and weakness from China, there appears to be little to persuade them back into equities. Furthermore, with this weighing on commodity prices, equities should remain under pressure over the near-term. That can all change on a dime if we see OPEC cut production. If that should happen, and there are whispers in the market place that it may, one should see the energy sector firm up quickly and traders should look for bottoming action in the S&P. The Federal Reserve meets on December 15 and 16 and is widely expected to raise interest rates for the first time in nearly a decade. The anticipation of higher interest rates pushed the dollar to a 13-year high last week.

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

E-Mini S&P Daily

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