RJO FuturesCast

The silver market is poised to run higher. It has spent numerous days holding bases around and above $25.00. As I have written about it before, Silver would likely see $30.00 before low $20’s. in my opinion, the silver market is look for an aggressive punch to the upside. As you might know, when silver moves, it moves big in my view!!!. Of course time is everything, the longer the market hangs around these levels, the better chance it will pop. The new jobless claim this week is encouraging but inflation pressure will keep silver bears on their edge. Not sure if you have been paying attention but commodities are heating up. To think that inflation pressure is not around the corner is naïve. For now, a break below $25.60 could trigger a wash to $24.70. A break above $26.70 will trigger a run to high $28.00.

Oil prices are edging higher on Friday but are poised to end the week with losses as the continued improvement in fuel demand and subsequent economic recovery remain in focus. This comes amid easing restrictions and lockdowns in Europe but enhanced measures in India and Japan, the third and fourth world’s largest oil importers. Key Chinese port oil stockpiles came in at an 11-week low, which may have helped buoy sentiment. The market may be looking ahead to next weeks OPEC+ ‘technical meeting’ to reassess the previously agreed upon production increases. The market remains bullish trend with today’s range seen between 60.01 – 65.19.

As traders turned their focus to the July cocoa contract, we saw prices fall sharply earlier this week. After the steady decline we saw in prices throughout March, April appeared to be forming somewhat of a recovery as equities moved higher. The continued vaccine rollout paired with reopenings gave the food markets some sense of hope for a recovery in demand.

The problems with potential vaccine side effects have people hesitant to get vaccinated, refusing the vaccine or waiting for more information to be released during this live trial. Until herd immunity is reached, we won’t truly have an idea if an end to this pandemic is in sight. For now, traders should continue to monitor the equity markets, currencies and macro reports being released to gage how far into the “recovery” we are.

Cocoa futures rely heavily on supply and demand news, so until demand increases or there is a real issue with production, look for trading to continue to look like this – sideways followed by short-term dramatic moves as news breaks. Traders who are anticipating a longer-term recovery and want exposure to the market should continue to look at buying calls in further out months.

Today's continued slide below 25-Mar's 50595 next larger-degree corrective low in the Apr contract confirms a bigger level of weakness and vulnerability and reinforces our shorter-term bearish count discussed in Mon's Technical Blog following that day's short-term momentum failure below 07-Apr's 55675 corrective low.  This continued slide leaves yesterday's 55645 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to arrest what is at least an intermediate-term downtrend and possibly just the start of a more protracted correction or reversal lower.  Per such, this 55645 level serves as our new short-term risk parameter from which traders can objectively rebase and manage non-bullish decisions like long-covers and cautious bearish punts.  This short-term risk parameter is thus "trailed" down from 14-ASpr's 65520 high as a direct result of this continued weakness.

The developing weakness is easy to see in the daily chart of the contract above, where today's break below 25-Mart's 50360 larger-degree corrective low confirms a bearish divergence in daily momentum that raises the odds that 14-Apr's 65520 high might be one of a larger scale and the start of a major correction or reversal lower.  Given the magnitude of the secular bull trend however, there's one remaining level- 26-Ferb's 44555 low in the then-prompt mar contract that long-term bulls can still require a failure below to, in fact, break the major bull trend and warrant a move to the sidelines.  Regardless, it is clear that the past TWO MONTHS' waning upside momentum is coming home to roost and threatening one of the great bull runs we've seen in many years.

This said and relative to that secular advance, even the past few days' setback still falls well within the bounds of a mere correction within the still-arguable major bull trend.  But if this is the case, this market has now defined two distinct levels at 55645 and 65520 that the bull must recover above to threaten or mitigate a broader peak/reversal threat and re-expose the secular uptrend.  Until and unless such strength is shown, and especially if the market weakens further below 44555, traders and investors should not now be surprised by further and potentially protracted losses ahead.

The daily (above) and weekly (below) log scale charts of the underlying Bitcoin Real Time Index takes the sometimes vague monthly futures contracts "roll" out of the equation and provides the purest indication of this market.  The clear momentum failure a least threatens the bull and warns of a more protracted correction lower, and possibly a more extensive reversal.  While the depth of either a correction or reversal is indeterminable at this juncture, the levels this index must recoup to threaten or negate a bearish count are not.  These bear risk parameters are specific and objective at yesterday's 55469 high from a short-term perspective and 14-Apr's 64858 from a long-term perspective.  Until and unless these levels are recouped, at least the intermediate-term trend is confirmed as down, and possibly the new major trend.  Indeed, even a Fibonacci minimum 23.6% retrace of Mar'20 - Apr's 21's 3901 - 64858 rally doesn't cut across until the 33400-area.

These issues considered, shorter-term traders have already been advised to move to a neutral/sideline position following Mon's sub-55675 failure.  Longer-term institutional players are likewise advised to move to the sidelines to circumvent the depths unknown of a correction or reversal lower that could be major in scope.  We will be watchful for a relapse-stemming bullish divergence in short-term momentum to define a more reliable low and support from which the risk of a resumed bullish policy can only then be objectively based and managed.  In lieu of such a mo failure, further and possibly protracted losses should not surprise. 

Early stock futures trading is suggesting a recovery, ending a down week in the market after Thursday’s report that President Biden is proposing a hike in the capital-gains tax rate to 39.6% from 20% for people making over $1 million a year.  This week saw choppy results as traders dealt with concerns on the new wave of Covid-19 infections with some optimism from promising economic data.  The jobless claim number hit its lowest point since the pandemic, a strong sign that the labor market in the U.S. is improving.  The number of claims for jobless benefits dropped to 547,000 last week, making it a 39,000-lower revision from the week prior.  Bitcoin also plunged on the Biden tax news of the increase after a wave of selloffs that pushed the crypto below $50,000 for the first time since March.  News from India and Turkey that they are working on banning the trading and ownership of crypto also helped with the downward pressure.

Support today is 410000 and 408000 with resistance showing 416000 and 419500.