RJO FuturesCast

March 19, 2021 | Volume 15, Issue 11

The Markets

Metals - Positive Action in Gold

Beginning with last Friday’s rejection of a dip just below $1,700, the gold market has had a positive week. But the gold bulls are not out of the woods yet. The overall trend is still sideways to down. A couple keys levels that still need to be penetrated are a close above $1,760 and then there is significant resistance in the range of $1,785 to $1,800. Above $1,800 there isn’t much in terms of resistance until $1,850. I firmly believe that gold will be much higher by year end, but I must caution you that it’s still possible to retest $1,675 swing low. You could see that the buyers were very aggressive off that $1,675 level and then again on last Friday’s dip to $1,696. Perhaps a little consolidation just under $1,750 is in order before moving higher but I am encouraged by the way gold has performed since putting in that low.

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 - Choppy Week for Silver

An overall choppy week of trade was seen in the silver market this week. We saw the low of the week of 25.805 posted Wednesday before closing higher. In similar fashion, Thursday traded as high as 26.740 before pulling back and closing lower on the day. Silver is slightly lower this morning, opening at 26.15 in the May contract. The silver market faced a lot of adversity this week with a falling stock market and rising US dollar. Despite the 10 yr falling this week and showing signs of inflation the Fed meeting left rates low and maintained their stance on focusing on job growth and using tools to raise inflation in a controlled manner. This welcoming of a rise in inflation should benefit silver and the metals markets in general but the rising US dollar is negating any rally with some downward pressure. There is still a disconnect between physical silver demand and the futures price. Silver ETFs saw several outflows this week with Thursday being the highest at 2.4 million ounces. Support comes in at 25.85 and resistance is above the market at 26.70 and then 27.07. This week’s sideways chop shows some coiling and a potential breakout to the upside if resistance levels are broken that would trigger stop loss buying from the shorts pressuring the market. With the Fed’s comments this week the bulls have a slight edge but if the support that was built is broken another leg lower is expected.

Silver May '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 - Spike in Oil Volatility

Oil prices have continued to edge lower early Friday following a precipitous drop of over 7% on Thursday amid slowing vaccination progress in Europe renewing concerns about the demand outlook. In addition, US crude inventories rose for the fourth consecutive week, with the EIA reporting a build of 2.4 million barrels. This recent buildup, however, will be eased by an increase in the US operating rate as refinery demand for spot crude ticks up. Other bullish developments include the expectation that Russian daily exports are expected to fall 3% in the 2nd quarter coupled with decline in Chinese stockpiles as well an increase in Chinese oil imports of 12% in February over year ago levels. Most importantly, with the recent spike in oil volatility (OVX) from 37 -48 is the ability to sustain below trend, which comes in around 48 and would suggest the spike is more ‘episodic’ and non-trending in nature. The market remains bullish trend with today’s range seen between 59.76 – 67.97.

Crude Oil May '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 Showing Strength

May coffee is looking to garner support with a very large swing from the 50-day moving average around the 128 level, up to the 137 level. Since bouncing directly off the 50-day MA (on March 9th of this year), we can also see a failed outside-day (down) pattern followed by a massive rally. RSI levels are not yet at overbought levels, and volumes are high.

Due to ongoing dry weather in key growing areas of Brazil, we can expect the new crop 21/22 to have some supply side shortage issues which should continue to support higher May coffee prices. In addition, demand is continuing to pick up in the US, with stocks rallying to new highs by the day.

We can expect continued support for the foreseeable future, and new buyers should wait for another pullback to the 1.31 level (25-day moving average) to ride another leg higher. 

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

Coffee May '21 Daily Chart
Agricultural - Grain Futures Update w/Stephen Davis - 03/19/2021
Stephen Davis discusses the latest news making waves in the grain markets and where he expects the market to trend in the coming weeks.
Interest Rates - Fed to Keep Interest Rates at Zero

Looking at the June 10-year, we see a high of 132-03 and a low of 131-00 and currently the market is at 131.065, down 28 ticks on the day. The yield on the note hit a yearly high this morning of 1.754, this was after Chairman Powell reiterated yesterday that rates will be kept at zero for an extended period and the Fed does not mind if inflation shoots over the 2% level. The problem the central bank is facing is that the market leads fiscal policy and the market is clearly telling us that rates are on the rise. The next big level to watch in the 10-year note yield is 2%. If it breaches this level, that will surly put a damper on stocks. The fed also is cornered now because of the improving economy and the mass opening that we are seeing across the US. Along with the improving economy, fiscal stimulus, and unlimited printing of money, the market is trading like inflation is already here. In my opinion, the fed is stuck and boxed in.  Looking at technicals, I see support in the June 10-year note at 103-10 and resistance near 132-05-15.   Preferred trading strategy is to sell rallies.

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 - Rising Yields Weigh on Stock Market

Markets continued to fall this morning as 10-year yields are flirting with 1.75%.  Forecasts all seem to suggest we’ll see that figure north of 2.0% in relatively short order, which seems to have the equity markets a bit nervous.  Fed Chair Powell addressed inflationary concerns earlier this week, suggesting that inflation figures may temporarily exceed their 2.0% target.  However, they should tick back down to 2.0% next year before ticking back up to 2.1% in 2023.  He also predicted that we’d see 6.5% GDP growth this year. 

The indices were all lower to start the session, but things seem to be turning back up.  The Dow is the weakest, while the Nasdaq and Russell have flipped green.  The S&P is still down slightly.  The news slate for today is virtually nonexistent, but traders will be looking forward to the home sales numbers on Monday and Tuesday as well as GDP on Thursday.

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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