RJO FuturesCast

April 1, 2021 | Volume 15, Issue 13

The Markets

Metals - Gold is Poised to Resume Uptrend

Gold has now bounced four times off the $1,675 level. Now we really need to see a breakout above $1,750! Once again though, you must track the US Dollar and the 10 Year Note yield. Dollar strength is unsustainable with the policy coming out of Washington DC. Sure, the rising rates are somewhat Dollar supportive, but the rising rates are more indicative of the risk of inflation because of the endless amounts of “stimulus”. The Dollar is being devalued and the gold rally is technically set to resume its march towards $1,800. Above $1,800 I see the momentum accelerating. As the Dollar resumes its downtrend, and I’m confident it will, gold will catch a good bid and final leave $1,700 in the rearview mirror. Again, markets must get use to a rising rate environment. If rates are rising due to inflation, then gold will also rise.

Platinum has also bottomed out around the $1,150 range. A close above $1,200 would be considered bullish as that would be above the 10, 20 and 50 DMAs. I like platinum best of the three precious metals. Platinum has the upward chart direction. The trend is your friend.

Gold Apr '21 Daily Chaaart
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 Seeing Mid-Week Bounce

May silver saw a bounce mid-week after starting the week with continued lower trade from last week’s move lower. So far, that strength has pushed it even higher today but the overall trend remains lower. The bounce during Wednesday’s session was partly attributed to Biden’s announcement of an infrastructure plan but the bulls are still looking for a positive US jobs number to really get the inflation chatter started again and start another push to the upside. With May silver hitting key support at $24 this week, we could see some more value buying, especially if there is a continued risk on environment and the stock market continues to do well. The bulls aren’t in the clear yet though with the market having to get through resistance at 25.30 and 25.60 before the trend reverses back to the upside with 26.40 as a short-term target. Failing to get through those resistance levels would likely push silver back down to support at 24.

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 - OPEC+ Set to Decide on Production

OPEC+ plus are set to decide on a rollover of production restraints through May as demand uncertainty continues to persist. This comes shortly after the reopening of the Suez Canal and amid the ongoing concerns regarding the coronavirus continuing to cloud the outlook, which may lead to the most likely outcomes of having production unchanged from April and for Saudi Arabia continue to withhold an additional 1 million barrels per day. This comes as OPEC+ earlier the week had a downward revision to its ‘demand growth forecast’.  Crude stocks fell 876k barrels with the US refinery rate jumping once again for the third consecutive week, according to the EIA. Oil volatility (OVX) continues to fall and remain below trend (~48) with the market remaining bullish trend with today’s range seen between 57.67 – 65.06.

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 Demand Weak

May coffee continues to struggle with weak demand due to the ongoing slow-but-sure reopening of the economy. Although the long-term outlook from the worlds largest producer is still quite bullish, the near term continues to dance along support levels that have been in place since December of last year. In addition, a continued weak Brazilian currency promises to hold May coffee prices in check until demand begins to pick up.

From a technical perspective, May coffee has violated both the 25 and 50-day moving averages. However, May coffee prices have been comfortable in this range from 1.22 to 1.30 since December of last year. Although RSI levels are not yet oversold, we may see a continuation in the intermediate selloff back to the 1.22 level if positive demand news is not found soon.

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 - 04/01/2021
Stephen Davis discusses the grain futures market. We saw corn go limit up with yesterday's release of the USDA Plantings Intention's Report and we could see some fresh action in the grain markets because of it.
Currency - USD Starting to Breakout

With the USD forging another upside breakout, the market has now filled a gap left by the early November sell off in the USD which in turn could signal an extension to 94.00 level. However, in the event that the USD shows any weakness following favorable US economic data, which includes jobs related data, todays action could be a very valuable trend signal. The bias is up in the USD, but data could present a reversal of a market that is extremely overbought right now. Technical indicators have risen into overbought territory which will tend to support reversal action if it does occur.  A positive signal for the trend in the short term was given on a close over the 9-day MA. The next area of resistance is around 93.50 and 93.70 with support coming in at 93.00 and 92.75.

USD Jun '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 tcholly@rjofutures.com.
Interest Rates - Increased Stimulus Talks Pushing Interest Rates Higher

Looking at the June 10-year note today we have a high of 131-135 and a low of 130.26. Earlier this morning, we made a new high on the yield at 1.775 eclipsing the old high of 1.75. The major reason for this push up in yields is the ongoing talk of more stimulus. That is negative for treasuries because the more stimulus people are getting, the hopes are that consumers will spend, which will in turn create inflation. Another reason we continue to see a rise in yield/price decline is because as more states are opening.

The economy is gaining steam and the fed is behind the curve in terms of where rates are and should be going. The problem that the fed has right now is they don’t see the current inflation and they keep stressing that they don’t mind if inflation goes above the so-called magic level of 2%. The market is telling you that the fed is behind the curve and late to the party. All the fed knows is to continue to print money and not realize that there will be severe consequences as they continue with this reckless behavior. Living costs like groceries and gas have been increasing for a while, and those in low-income situations are having an increasingly hard time keeping up.

10-Year Note Jun '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 - New ATH in S&P 500

The indices continue to press higher on talks of massive infrastructure spending and falling yields.  After creeping north of 1.75% just two days ago, the 10-year yield is now back down to 1.679%. The Nasdaq seems particularly happy about this.  June futures are up over 1.5% and trading at their highest levels since 3/2. The June e-mini S&P is up about ¾ of a percent, trading just shy of the 4000 level at 3996.50. The Russel is up a bit over 1%, while the Dow is up slightly (.13%). 

On the flip side of all the spending, is the certainty of an uptick in taxes. The focus is once again on corporations and high earners. The latter part was a bit unclear as the story switched from individuals earning over 400k to families and/or individuals earning over 400k. Details seem to be a bit murky, but I’m sure more will be released soon.

The jobs data will be released tomorrow at 7:30am. Equities markets will be open until 8:15, while treasuries and currencies will trade up until 10:15.  Stay safe and enjoy your weekend. 

E-mini S&P 500 Jun '21 120 Min 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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