RJO FuturesCast

January 22, 2021 | Volume 15, Issue 3

The Markets

Metals - Gold Continues to Consolidate

Gold futures continue to consolidate, but for how long? Clearly, we begin today with risk off. We are still facing significant risk of additional global economic slowdown. All physical commodities start the day trading lower. Gold is not, at least currently, catching any safe-haven support. For now, gold is trading against a Dollar bounce.

While I remain long term bullish on gold, I am beginning to see signs on the chart that would indicate a tendency to move closer to $1,800 and possibly test $1,775. Look for support in the $1,830 range to continue to hold. If that area fails to find support, then expect a test of $1,800 to $1,775 range. Watch for the 50 DMA to cross below the 200 DMA. “The Death Cross.” That will be a strong sell signal!

Gold Apr '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 in Holding Pattern

March silver started the last day of the week trading lower after trading up from Tuesday’s low of 24.04 to a high for the week of 26.13 yesterday. Despite the stock market being lower, the risk off aspect hasn’t translated into the silver market yet. Talks of the virus worsening and causing more shutdowns around the world are pressuring the metals markets. Despite the US dollar showing weakness this week, trading down from Monday’s high of 90.94, the bulls couldn’t get a rally extended to the recent highs from earlier this month. Bulls are wanting to see a steady reduction in virus numbers continue as an opening of the economy would increase demand and e much more likely to kickstart inflation, driving the price higher. If there is an uptick in the virus numbers and restraints remain on the economy more pressure on the metals markets is expected. Also, a bearish close to end the week would suggest follow through selling to start next week. Resistance for the March contract comes in at 26.13 and a close above this level would need to re establish the trend higher and make a move up to the 27.50 level. March silver will need to hold $25 or a move down to 24.40 could be seen.

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 Corrects as Demand Recovery in Focus

Oil prices are under pressure and have continued to correct from 11-month highs set earlier in the week as reports of renewed restrictions in China ahead of the Lunar holiday have dampened the optimism surrounding the recovery in fuel demand. In addition, a record jump in Iranian exports despite US sanctions as well as softer demand from Indian have weighed on the market.  This was coupled with a surprise build in EIA oil stocks. The market remains bullish trend with today’s range seen between 51.26 – 53.90.

Crude Oil Mar '21 Daily Chart
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Softs - Coffee Bulls on a Run

As we await the inauguration of President-Elect Joe Biden, the markets have been quite friendly as the promise of continued influx of cash should prompt more buying of commodities and equities. The efforts initiated by the Trump Administration to distribute vaccines across the world at unprecedented speeds, coupled with whopping stimulus measures have created optimism through the promise of a slow but sure to return level of normalcy. How the Biden Administration accelerates or slows this moving train remains to be seen. The new administration promises increased corporate tax hikes, weighed against increased infrastructure spending, all while the impending shadow of massive inflationary fears looms imminent.

Brazilian coffee exports for 2020 were at a record high, and this should help the March Coffee futures gain continued ground and attract more bullish activity. A clear and decisive hold above the 50-day moving average (located at the 120.00 level) and subsequent rally and break above the 129.50 resistance level should signal a retest of the 135 level over the next few weeks.

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Agricultural - Grain Futures Update w/Stephen Davis - 01/22/2021
Stephen Davis discusses the latest news moving the grain markets. Currently we are in the midst of a downturn as grains have been down the last couple days.
Interest Rates - Interest Rates Impacted by Looming Stimulus

Looking at the March 10-year overnight we had a high of 137.02 and a low of 136-23 and the market is currently trading 136-29 down two ticks. The trade the last few days has been quiet as earnings season has started and many are awaiting to see how companies performed last quarter amid the pandemic.  The notes in general have been trending down in recent weeks as traders have noted that Biden is looking at a massive stimulus bill that should be presented in the not too distant future. That is looked at as being negative as the money being sent out to people should encourage spending and hopefully will also put some money in consumers pocket that have been unemployed due to the pandemic. If you look at many of the outside markets, one can say inflation has already arrived which will be negative for the interest rate markets. Many of the grain markets have been making new contract highs recently, particularly soybeans and corn. So, as these markets continue to act bullish, which is often viewed as inflationary, one should expect the notes to remain on the defensive. Looking at technicals, I see good resistance in the March 10 year at 137-10-13 area and would look to sell rallies if those the levels are hit.   

10-Year 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 - Overnight Equities Dip Being Bought

Overnight weakness in global equity markets crept into our own in the early going.  While the Dow and Russell have seen somewhat minor corrections from their lows, the Nasdaq and mini S&P have retraced more than half of their losses.  In addition to weakness elsewhere, investors seem to be losing faith in a swift passing of a stimulus bill.  Right now, the focus seems to be on once again impeaching Donald Trump.  We also need to consider the possibility of further lockdowns if President Biden’s mask mandate does not see the intended results.  That said, I’m not sure the market takes those fundamental factors all that seriously.  The market and all its participants know that money will be spent.  Janet Yellen has said as much.  We’ll see what kind of legs this selloff has, but dip buyers continue to be active. 

E-mini S&P 500 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.

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