RJO FuturesCast

January 8, 2021 | Volume 15, Issue 01

The Markets

Metals - Gold Stuck in a Big Sideways Range

Once again gold futures most actively traded contract fails to break out above $1,950! I’m surprised that all the talk about additional stimulus checks going out isn’t more supportive. So now if $1,850 support fails to hold, the 200 DMA comes in at $1,852, then you should look for a test of $1,825 range. Buyers should get more aggressive in that range. I remain bullish metals. A bounce in the Dollar contributes a bit to the weakness, but I’m also aware of what’s going on in Bitcoin. It certainly looks like funds are reallocating from gold to BTC.  I don’t want to get off subject here, but we must watch outside markets and right now BTC is on fire. When, not if, the Bitcoin bubble burst you’re going to see a flight to safety in gold. Bitcoin will not replace gold.

Buying the low end of this current trading range should continue to work. The new administration will continue to print money and hand out checks and devalue the Dollar. Nothing changes. Maybe only gets more aggressive, so therefore gold prices will be well supported and eventually breakout above $2,000. There’s just too much cash out there and people like things that they can touch…like gold.

Gold Feb '21 Daily Chart
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.
Metals - Silver Market Starting to See Pressure

After seeing a continuation of last week’s trend higher to start the week, the silver market is starting to see some pressure with lower days on Wednesday, Thursday, and to start Friday. Wednesday’s trading session got to a high of 28.105 on the March contract before closing lower on the day. The US dollar up off its lows with looks of strengthening and the stock market shaking off the lower trade on the first day of the year is pressuring the silver market. Better than expected jobs numbers and a calming of political tensions also give the bears an edge. The bears are watching for a stimulus package to be passed and more signs of inflation to provide support. It looks like there has been a change in the short-term trend with support being broken at 26.70. Right now the bears are in control with the next levels of support being 25.25 and then 24.25. The bulls are needing to see a close up of the low today and then trade above 26.90 next week to turn the trend back to the upside.

Silver Mar '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or therrmann@rjofutures.com.
Energy - Oil Continues Inflation Higher

Oil prices have continued to ramp higher taking its inflation to +42% since November and rising to its highest price since February after Saudi Arabia committed to supporting prices with voluntary production cuts earlier in the week. This includes a cut of 1 million bpd, which followed a meeting of OPEC+ with producers agreeing to steady output in February and March while allowing Russia and Kazakhstan to moderately increase output by 75k bpd for those two consecutive months. This comes amidst a much larger than expected draw of oil stocks along with a reported increase in fuel inventories, according to the EIA. This drop in stocks was supported by strong export numbers as well as refinery utilization. The market remains bullish trend but is signaling immediate term overbought with today’s range seen between 47.37 – 51.34.

Crude Oil Feb '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-438-4805 or aturro@rjofutures.com.
Softs - Coffee Holding Support

March coffee futures have breached the 1.29 level, not seen since September of 2020. This level of past consolidation is largely due to the vaccine rollout, prompting optimism that more coffee shops and restaurants will ultimately return, with coffee-drinking customers. However, the rollout has been slow, with new shutdowns looming through the UK and the potential for others to follow suit.  March coffee prices continue to hold support above the 25-day MA, with high levels of volume and open interest.

From a technical perspective, strong support should be held at the 50-day MA, resting at 1.17. In addition, a break above the key resistance level of 1.29 is also very bullish, and the subsequent selloff back to the 1.22 level should be a great opportunity for bulls to step back in.

For more frequent commentary, please check out and subscribe to my daily futures market videos on coffee and other commodities.

Coffee Mar '21 Daily Chart
Agricultural - Bullish Canola Count Intact Above Minimum 851.5

Posted on Oct 14, 2022, 07:42 by Dave Toth

On the heels of mid-Sep-to-early-Oct's steeper, accelerated, 3rd-wave-looking recovery, the past week-and-a-half's boringly lateral chop is first considered a corrective/consolidative event that warns of a continuation of the uptrend that preceded it to new highs above 04-Oct's 891.0 high.  This count remains consistent with our broader base/correction/recovery count introduced in 13-Sep's Technical Blog following that day's bullish divergence in short-term momentum above 07-Sep's 809.5 minor corrective high detailed in the hourly chart below.

The important takeaway from this month's lateral, sleepy price action is the definition of Wed's 851.5 low as the end or lower boundary of a suspected 4th-Wave correction.  A failure below 851.5 will confirm a bearish divergence in daily momentum and defer or threaten a bullish count enough to warrant non-bullish decisions like long-covers.  A failure below 851.5 will not necessarily negate a broader bullish count, but it will threaten it enough to warrant defensive measures as the next pertinent technical levels below 851.5 are 13-Sep's prospective minor 1st-Wave high at 813.8 and obviously 08-Sep's 766.0 low.  And making non-bullish decisions "down there" is sub-optimal to say the least.  Per such, both short- and longer-term commercial traders are advised to pare or neutralize bullish exposure on a failure below 851.5, acknowledging and accepting whipsaw risk- back above 04-Oct's 891.0 high- in exchange for much deeper and sub-optimal nominal risk below 766.0.

On a broader scale, the daily log scale chart above shows the developing potential for a bearish divergence in daily momentum that will be considered confirmed below 851.5.  This chart also shows the past month's recovery thus far stalling in the immediate neighborhood of the (888.0) Fibonacci minimum 38.2% retrace of Apr-Sep's entire 1128 - 766 decline).  COMBINED with a failure below 851.5, traders would then need to be concerned with at least a larger-degree correction pf the past month's rally and possibly a resumption of Apr-Sep's major downtrend.

Until and unless the market fails below 851.5 however, we would remind longer-term players of the key elements on which our bullish count is predicated:

  • a confirmed bullish divergence in WEEKLY momentum (below) amidst
  • an historically low 11% reading in out RJO Bullish Sentiment Index and
  • a textbook complete and major 5-wave Elliott sequence down from 29-Apr's 1128 high to 08-Sep's 766.0 low.

Thus far, the market is only a month into correcting a 4-MONTH, 32% drawdown, so further and possibly protracted gains remain well within the bounds of a major (suspected 2nd-Wave) correction of Apr-Sep's decline within an even more massive PEAK/reversal process from 17-May's 1219 high on an active continuation basis below.

These issues considered, a bullish policy and exposure remain advised with a failure below 851.5 required to defer or threaten this call enough to warrant moving to a neutral/sideline position.  In lieu of such weakness, we anticipate a continuation of the past month's rally to new highs and potentially significant gains above 891.0.

Agricultural - Grain Futures Update w/Stephen Davis - 01/08/2021
Stephen Davis discusses the latest news moving the grain markets this morning. China is looking to keep purchasing U.S. corn along with purchasing U.S. soy.
Currency - USD Should Continue to Bounce, but No Trend Reversal Yet

The USD has found a way to make another higher high for the move early today and this suggests we may see even more short covering ahead. However, we would not discount the potential for a flare higher off jobs data and potentially from the elevation of daily infections in the headlines. Apparently disgust and embarrassment of the US system is not a deterrent to strength in the USD, with the index apparently retaining some measure of flight to quality interest. In the end, we do not expect the downtrend to end and suggest a rally today could be a potential short entry point for more aggressive traders. Technically speaking, stochastics are rising from oversold levels, which is bullish and should support the market moving higher. Resistance is around 9007 and support hits today at 8945.

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@rjofutures.com.
Interest Rates - Interest Rates Up as it Looks Like Democrats Will Gain Control of Senate

Big news overnight in the treasury complex overnight as the 10-year breached 1% on a yield basis. This is significant as it’s the first time we have been at these levels since early 2020 when the pandemic started. There are a few reasons we are at these levels as investors believe once President Biden is sworn in we will see a major stimulus package before the end of the month which will put money in people’s pocket and hopefully increase consumer spending which should help in all aspects of the recovery. Another reason we are seeing a big jump in yields this morning is the because of the runoff elections in Georgia. It looks as if the Democrats will oversee all aspects of the government. As the Dems control taxes will most likely increase across the board which will result in higher inflation. Economic numbers this week will also be on trader’s minds as this morning we saw the ADP come in much lower than expected with a negative reading of 123k. The job outlook currently looks grim. Later this afternoon we will get the FOMC minutes which is a report that reviews economic and financial conditions in all four regions of the US. On Friday, we see the US monthly employment numbers which is expected to come in at 100K.  

10-yr Note Mar '21 Daily Chart
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.
Equity - Jobs Number Misses

Today’s jobs data was expecting to see another 50k jobs added.  Unfortunately, the number came out as having lost 140k jobs.  The market initially reacted negatively to the news, but quickly recouped the losses.  The Nasdaq has even printed a new, all-time high. Very little seems to be able to shake this market for more than a day or so.  New record in positive coronavirus tests?  Meh. We’ve got multiple vaccines.  Political unrest/violence? Who cares? Not to mention businesses closing at an incredible rate, tax hikes a near certainty, etc.  This market is on, and has been on, a tear. I’ve listed plenty of reasons (there are plenty that went unmentioned) for investors to be concerned, but the market seems to believe they too shall pass. Each and every dip is getting bought, and those participants continue to get paid. Until that stops working, why change it up? 

E-mini S&P 500 Mar '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5354 or bdixon@rjofutures.com.
Economy - S-T Mo Failure Insufficient to End RBOB Correction, But Beware

Posted on Nov 08, 2022, 07:51 by Dave Toth

In Fri's Technical Webcast we identified a minor corrective low at 2.6328 from Thur as a mini risk parameter the market needed to sustain gains above to maintain a more immediate bullish count.  The 240-min chart below shows the market's failure overnight below this level, confirming a bearish divergence in very short-term momentum.  This mo failure defines Fri's 2.8172 high as one of developing importance and a parameter from which very short-term traders can objectively base non-bullish decisions like long-covers.

Given the magnitude of the past three weeks' broader recovery however, this short-term momentum failure is of an insufficient scale to conclude anything more than another correction within this broader recovery from 26-Sep's 2.1877 low.  Indeed, overnights failure below 2.6328 only allows us to conclude the end of the portion of the month-and-a-half rally from 31-Oct's 2.4822 next larger-degree corrective low.  2.4822 is the risk parameter this market still needs to fail below to break the uptrend from 18-Oct's 2.3526 low while this 2.3526 low remains intact as the risk parameter this market needs to fail below to break the month-and-a-half uptrend.  From an intermediate-to-longer-term perspective, this week's setback falls well within the bounds of another correction ahead of further gains.  This is another excellent example of the importance of technical and trading SCALE and understanding and matching directional risk exposure to one's personal risk profile.

The reason overnight's admittedly minor mo failure might have longer-term importance is the 2.8172-area from which it stemmed.  In Fri's Technical Blog we also noted the market's engagement of the 2.8076-to-2.8159-area marked by the 61.8% retrace of Jun0-Sewp's 3.2758 -2.1877 decline and the 1.000 progression of Sep-Oct's initial 2.1877 - 2.6185 (suspected a-Wave) rally from 18-Oct's 2.3526 (suspected b-Wave) low.  We remind longer-term players that because of the unique and compelling confluence of:

  • early-Aug's bearish divergence in WEEKLY momentum amidst
  • historically extreme bullish sentiment/contrary opinion levels in our RJO Bullish Sentiment Index
  • an arguably complete and massive 5-wave Elliott sequence from Mar'20's 0.4605 low to Jun's 4.3260 high (as labeled in the weekly log active-continuation chart below) and
  • the 5-wave impulsive sub-division of Jun-Sep's (suspected initial 1st-Wave) decline

The recovery attempt from 26-Sep's 2.1877 low is arguably only a 3-wave (Wave-2) corrective rebuttal to Jun-Sep's decline within a massive, multi-quarter PEAK/reversal process.  Now granted, due to the magnitude of 2020 -2022's secular bull market, we discussed the prospect for this (2nd-Wave corrective) recovery to be "extensive" in terms of both price and time.  A "more extensive" correction is typified by a retracement of 61.8% or more and spanning weeks or even months following a 3-month decline.  Per such, the (suspected corrective) recovery from 26-Sep's 2.1877 low could easily have further to go, with commensurately larger-degree weakness than that exhibited this week (i.e., a failure below at least 2.4822) required to consider the correction complete.  Indeed, the daily log chart above shows the market thus far respecting former 2.6185-area resistance from 10-Oct as a new support candidate.

These issues considered, very shorter-term traders have been advised to move to a neutral/sideline position following overnight's momentum failure below 2.6328, with a recovery above 2.8172 required to negate this call, reaffirm the recovery and re-expose potentially significant gains thereafter.  For intermediate- and longer-term players, a bullish policy and exposure remain advised with a failure below 2.4822 required to threaten this call enough to warrant neutralizing exposure.  We will be watchful for another bearish divergence in momentum following a recovery attempt that falls short of Fri's 2.8172 high that would be considered the next reinforcing factor to a count calling that 2.8172 high the prospective end to the month-and-a-half 2nd-Wave correction.  In lieu of such, a resumption of the current rally to eventual new highs above 2.8172 should not surprise.

Economy - Futures Market Outlook w/John Caruso - 01/08/2021

“Remember when I asked for your opinion? Yeah me neither.” – The stock market to every political narrative

Good morning,

The rundown:

Stocks: that’s right, fresh All-time high’s yesterday, and of course “all-time is a long time”.  Stocks don’t care about hooligans storming the capitol, just like they didn’t care when our major cities were being torched by ingrates this summer.  Hello! McFly…It’s the cycle! It's always about the cycle!  Growth accelerating/inflation accelerating through the first half of 2021 as y/y comps of macro data and corporate earnings and profits may perhaps express the greatest rate of change acceleration since post WW2 – Scenario 2 in the model remains our call until further notice. On that note, stocks are now immediate OB within our range analysis – scale some back. 

Yields: the 10yr yield is up again overnight to 1.09% ahead of the US Unemployment report due out at 7:30am CST. Perhaps the most significant development this week was surpassing the 1.00% level in 10yr yields as growth and inflation is set to continue their acceleration through Q1/Q2 2021. We’re trade immediate OS this morning in the 30yr and 10yrs, trim some, so we can replant (get bigger) when yields move back to the low end of our range. 

US Dollar: No coincidence that the dollar has ceased its decline this week as yields pressed through 1.00%. But recognize that this trade isn’t likely to get too far on the upside in the near-term. We do believe the Dollar has entered a secular bear market that may last for many years to come.  We’re still sellers of USD AT the top end of our range within the longer bear market cycle. BONUS: gold and silver got hit overnight. Gold is now at the low end of the range, remains bullish trend, but not one of our favorite places to be at the moment in a rising yields environment. Remember up yields = up dollar = down gold, and this is precisely the action we’re seeing today. Ultimately we expect gold to remain range bound for the near-term. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5354 or jcaruso@rjofutures.com.

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