RJO FuturesCast

June 11, 2021 | Volume 15, Issue 23

The Markets

Metals - More Consolidation in Gold Market×

There’s no question that inflation is growing. The only question is whether inflation will be transitory or long lasting. Clearly the Fed believes that inflation is transitory and still not willing to even discuss tapering. I have to believe that behind closed doors, tapering is being discussed. The bond market doesn’t seem to be concerned at this point either. The Fed will wait until inflation growth exceeds expectations. Remember these guys don’t worry about debt when rates are so low. You and I know this spending is not just wickless, it’s dangerous and won’t end well.

Gold is range bound. A close above $1,916 is needed to drive follow through rally back towards $1,950 range. However, a close under $1,875 warns of further correction down to $1,845 to $1,850 range.

Silver is poised for a breakout rally but needs a close above $28.50 to confirm. Platinum seems to have found a short term bottom and has potential for a $100 rally in my opinion, based on other metals and daily chart pattern.

Gold Aug '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 Looking Potentially Bullish×

Front-month July is trading 28.185 up 13 cents today. Yesterday's price action is lifting silver in the positive territory keeping it on the uptrend channel. Well, the trend is your friend. The nature of the bull market is that you have to feed it every day. I would expect silver to trade sideways to higher in the coming weeks. Fed signaled to taper, but no timetable is set. There is a lot of cash on the street to revive the economy. If economic recovery is more robust as we minimize remote work, inflation concerns could be popping up. The housing market way too hot, and commodities are firm as silver prices are heading in $30.00 territory.

From a technical perspective, silver will likely see above $30 before we see a low $20.00  A drop under $27.50 alerts for a near-term bear signal, but any strong sell-off should be rejected.  Trade under $26.90 will trigger sell-off to $26.25-. A close over 29.00 will drive higher prices.

Silver Daily Chart
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Energy - Oil Continues Inflation Higher×

Oil prices are forging new contract highs amid continued optimism surrounding a rebound in global demand. Forecast from the IEA have noted that OPEC+ will need to raise output in the coming year order to compensate for the increase in demand prospects with OPEC+ stating oil demand would rise by 6.6% this year. Oil stocks declined more than expected with the US refinery rate jumping to 91.3%, suggesting an increase in product supply. This comes amid India indicating their intention to enhance their refinery activity by nearly 90% in the coming weeks. Oil remains bullish trend as oil volatility (OVX) continues to collapse with the potential to dip below the 30 handle with today’s range seen between 67.01 – 71.64.

Crude Oil Jul '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.
Agricultural - Jul Beans Rolling Over; Nov? Not So Fast×

JUL SOYBEANS

Yesterday and today's relapse below 03-Jun's 15.43 low and our micro risk parameter discussed in Mon's Technical Blog not only confirms a bearish divergence in short-term momentum, it leaves Mon's 16.11 high in its wake as the end of what looks to be a 3-wave recovery from 26-May's pivotal 14.89 low as labeled in the hourly chart below.  Left unaltered by a recovery above 16.11, this 3-wave recovery attempt is considered a corrective/consolidative event that satisfies the key third of our three reversal requirements we've been squawking about since 19-May's bearish divergence in daily momentum (1st requirement) and subsequent proof of 5-wave impulsive behavior down to 26-May's 14.89 low (2nd requirement).  Combined with waning upside momentum virtually all year and historically frothy bullish sentiment, we believe the Jul contract is poised for a major correction/reversal lower.

Per such, Mon's 16.11 high is considered the B- or 2nd-wave of a major correction or reversal lower and our new short-term risk parameter from which traders can base and manage the risk of a newly advised bearish policy and exposure while 12-May's 16.68 high is considered the end of at least the rally from 31-Mar's 13.55 low and possibly then secular bull trend from Apr'20's 8.18 low and our new key long-term risk parameter from which commercial players can objectively base and manage non-bullish decisions like long-covers and new bearish exposure.

Further proof of weakness below 26-May's 14.89 low remains required to confirm this major peak/correction/reversal count and expose potentially steep losses thereafter.  The prospect that 12-May's 16.68 high completed a major 5-wave Elliott sequence from last year's 8.18 low is labeled in the weekly log active-continuation chart below that also shows waning upside momentum all year amidst historically frothy sentiment/contrary opinion levels that haven't been seen since 2012's infamous peak and reversal.

These technical facts and observations are enough to at least question the risk/reward merits of maintaining a bullish policy and, we believe, enough to warrant a new bearish policy and exposure until this market can recoup at least 16.11.  In sum, traders are advised to neutralize bearish exposure and move to a new cautious/hedged bearish policy and exposure at-the-market (15.15) with a recovery 16.11 required to threaten this call enough to warrant its cover.  In lieu of such 16.11+ strength, further and possibly accelerated losses straight away should not surprise.

NOV SOYBEANS

Conversely, since the Nov contract established a new high for its secular bull trend this past Mon, it has yet to satisfy even the first of our three reversal requirements, with a failure below 03-Jun's 13.97 corrective low and short-term risk parameter required to break the uptrend from even 26-May's 13.25 low, let alone threaten the secular bull.  Per such, this 13.97 level serves as our new short-term risk parameter from which traders can objectively rebase and manage the risk of still-advised bullish policy and exposure ahead of a continuation of the secular bull trend.

The daily log scale chart below shows the obviousness of 26-May's 13.25 larger-degree corrective low this market remains required to fail below to confirm a bearish divergence in momentum of a scale sufficient to break the major bull.  In this regard, this 13.25 level remains intact as our key long-term bull risk parameter.  A short-term failure below 13.97 may raise the odds of an eventual larger-degree failure below 13.25, but we can only cross that bridge if/when the market takes us there.

These issues considered, a bullish policy and exposure remain advised with a failure below 13.97 required for shorter-term traders to move to the sidelines and for longer-term players to pare exposure to more conservative levels.  In lieu of such weakness, this week's setback attempt should not surprise by being only another corrective hiccup within the still-arguable secular bull for new crop.

Equity - Stocks Remain Near ATH's×

The melt up in indices has continued this week with the S&P printing a new all-time high during yesterday’s trading session.  Despite another hot CPI number, markets don’t seem terribly worried about the threat of inflation.  Fed Chair Powell has consistently said he views this to be transitory, and perhaps the market agrees.  Low interest rates, reopenings, reflation, and jobs numbers that likely keep tapering talks on the back burner for now have been enough to keep this market charging higher. 

The news slate today is very light.  Consumer sentiment improved to 86.4, which is up 4.2% from last month.  With nothing else being reported today, traders will be looking forward to next week’s FOMC meeting.  Powell has repeatedly mentioned that he’s not interested in tapering until we reach full employment, and I think the pro taper crowd may be disappointed in what he has to say.  That said, other members of the FOMC have indicated a willingness to have the discussion as of late, so perhaps they’ll drop some hints on when they may start to pull the reins back a bit. 

E-mini S&P 500 Sep '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 - Futures Market Outlook w/John Caruso - 06/09/2021×
John Caruso gives a rundown of the market action today and we are seeing some movement up. Crude Oil is also nearing oversold levels and we will continue to monitor that **Please note this video is commentary for June 9th, the date stated at the beginning of the video is wrong**
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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