RJO FuturesCast

August 21, 2020 | Volume 14, Issue 34

The Markets

Metals - Mid-Week Metals Update w/Bob Haberkorn - 08/19/2020×
Bob Haberkorn discusses an interestintg week in the metals market, and outlines where he sees it going.
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-1120 or rhaberkorn@rjofutures.com.
Metals - Gold Traders Should Look at Big Picture×

It’s no secret that gold has been extremely volatile over the past few weeks. I look at the recent unprecedented 7 year intraday $120 selloff and think of this day in particular as a “shake the tree and let the weak longs fall to the ground” type of event. It’s simply scaring traders out of positions they want to be in, but the leverage involved is simply too great for emotions to not be a factor. Gold is a crowded trade at this point, but that doesn’t mean it’s wrong. These types of moves in a market where a $40 up or down used to be a “big” move are now seen as the norm. The Average True Range, or ATR, on gold has been lifted from $23 in late July to now $60. This means that the swings expected are $60 on any given trading day. On one standard COMEX 100 oz futures contract this equates to $6000 profit or loss. Traders who are not prepared to stomach those types of moves should be looking at the smaller 10, 33, and 50 oz futures contracts instead of the 100 oz.

If we look at this from a technical perspective gold still trades in a positive trend and should continue to do so as long as dips continue to get bought into. The volume associated with the key support levels of 1900 and 1950 confirm this. Fundamentally the gold market is very well supported as a weak dollar, aggressive “helicopter money” from the fed, and traders in search of safe havens and a better yield continue to support. Consider the fact that the ETF holdings of gold and central banks around the world week after week continue to increase holdings as another very real bullish factor at play. I have been using a combination of futures and options for protection in my trading strategy for gold which is an approach to trading without emotions getting involved in these large swings.

Gold Sep '20 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 jgraves@rjofutures.com.
Metals - Silver Down on The Day×

Front-month Silver is down 43 cents on the day trading at $26.73. Strong PMI and possibly strong existing home sales here in a few minutes will probably continue to give us a sense that the economy is slowly recovering from the pandemic. After being in free fall for several sessions, the U.S. dollar is showing a sigh of a corrective rally. Silver is still holding on regardless of dollar strength. Silver will probably continue to attract latecomers to the rally that has been trying to push and sustain silver above $30.00. Silver will continue to be sensitive to any signs of slowing down.

From a Technical perspective, silver needs to continue to hold above 2550 areas to keep off a sustained bear attach. A break below that level could trigger a wash below 25.00. a break above 28.00 will signal a continuation of the trend. Gold/Silver ration is sitting around 72.77 most likely, with a good silver showing, we can see a break below 70.00 soon in my view.

As I said before, the path of least resistance remains up. Silver continues to benefit over gold on this rally. The only thing that could slow down silver is recession type of economic data. My favorite saying, “ trade what you see, not what you think”. An option might be a way to approach this market. If you need additional help, please let me know. We can also approach this market using options as well as the 1000oz contract.

Silver Sep '20 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or etesfaye@rjofutures.com.
Energy - Oil Lower on Oversupply Concerns, Uptick in Jobs×

Oil prices are nudging lower this morning after falling nearly 1% yesterday as U.S. jobless claims rose unexpectedly and OPEC+ stating there is a need to address a daily oversupply of over 2 million barrels by some members. OPEC+ earlier this week added that the speed of the recovery process appears to be slower than expected with virus concerns continuing to weigh on the market. US fuel demand fell by more than 2 million bpd to 17.2 bpd according to the EIA with demand down roughly 14% from year ago levels. Oil stocks fell for the fourth consecutive week. The dollar is firming up this morning as well which is continuing to put pressure on prices. The market remains bullish trend with today’s range seen between 41.24 – 43.63.

Crude Oil Oct '20 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-1120 or aturro@rjofutures.com.
Agricultural - Grain Futures Update w/Stephen Davis - 08/21/2020×
Stephen Davis discusses this week's news in the grain markets, including where we are heading with China
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7181 or sdavis@rjofutures.com.
Equity - Stocks Trading Lower After Record Week×

The S&P 500 made an all-time high this week trading higher than the previous mark set in February. The Nasdaq Composite also hit a record high on Thursday led by a rally in Big Tech stocks.  Amazon and Alphabet gained more than 4% this week, Microsoft nearly 3% and Apple became the first publicly traded company to reach $2 trillion in market valuation.  These tech gains have offset some disappointing unemployment data this week.  As lawmakers still struggle to agree on a new coronavirus stimulus bill the U.S. weekly jobless claims came in higher than expected after the additional unemployment benefits had expired.  The Labor Department reported 1.16 million claims last week vs an expectation of 923,000.  Last week this number was under the 1 million mark for the first time since March.

Support is checking in today at 336300 and 333200 and resistance at 340800 and 342000.

E-mini S&P 500 Sep '20 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-861-1656 or jyasak@rjofutures.com.
Economy - Futures Forecast w/ John Caruso×

Overnight Highlights:

*French PMI misses expectations and decelerates m/m to 49.0 vs 53.7 Forecasted and 52.4 previous

*Eurozone PMI misses expectation decelerating m/m to 51.7 vs 52.9 forecasted and 51.8 previous

Global Equities:

*US Futures indicating a lower open led by the Small Cap Russell 2000 Index -0.88%

*Europe lower across the board, led by Germany -1.08%; France -1.09%; Italy -1.25%; and Spain -1.12%

*Asian Equites largely higher across the board with the Shanghai Index +0.50%

Top Market Movers Overnight

Treasuries/Yields

*Following an attempted break to higher levels from the “hawkish” Fed Minutes release, the 10yr yield has slumped back 10bps to 0.62%

*Treasuries catching a bid on a “risk-off” morning in Global Macro Markets

*OPINION: We’ll continue to trade Treasuries with a “Bullish Bias” until our quant signals suggest otherwise – NOT A BUY RECOMMENDATION FOR TODAY

*Our range analysis suggest covering some treasury exposure today as we’re now immediately triggering “overbought”

US Dollar:

*Gaining some fervor overnight off of the weak European PMI data and a flight to safety bid off of a weaker US Equity Open

*We contend there’s a small window for the dollar to rally, however it shouldn’t get too far.  Upside to 93.90 in our model

*We remain BEARISH OF THE USD

Gold:

*Trading lower overnight, retesting some immediate-term trend support at 1915.00 in our model with downside to potentially 1895.00

*Held back by a stronger USD, and a general “risk-off” outlook headed into the day

*OPINION: Gold is in the “Buy to Accumulate” Zone in and around the 1915-1895 level  

*Gold remains BULLISH trend on all time frames coupled with BULLISH momentum, but momentum appears to be turning “Neutral”*We largely expect a range bound trade between 1874-2010 until bullish fundamentals reassert themselves.

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.

Coming Up Next Week...

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