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The Markets
Metals - The Shiny One Has Lift Off
The Shiny One Has Lift Off
By: Nicholas DeGeorgePosted 10/25/2019
In the early morning trade, December gold has finally broken
out above major resistance and you are witnessing momentum buying take place
with the shiny one currently trading at $1,519. New data has been coming out
weak, which has heightened the possibility of another fed rate cut next week.
Furthermore, the announcement of another British election next week has
obviously added fuel to the broad base metals rally this morning. Traders and
investors alike are speculating if a U.S./China resolution trade deal is
reached, then China will come in and buy gold which will give more confidence
to the bull camp.
If you take a clear look at the daily December gold chart, you’ll see that it broke above the resistance level that it’s been trading in over the last two months. If we keep it simple, the next two levels that the shiny one should try to retest is the September 24th high and then the contact high of $1,566 back on September 4th. I highlighted these levels below on my RJO Futures Pro daily December gold chart.
Metals - Silver Eyes $20.00 After Spike in Volatility
Silver Eyes $20.00 After Spike in Volatility
By: Eli Tesfaye, Senior Market StrategistPosted Oct 25, 2019 7:39AM CT
Since July 2019, Silver has continued to outperform gold.
The gold/silver ratio is around 84.50, relative to what it was in July of this
year hitting approximately 93.39 on weekly bases. I still expect to see silver
continue to appreciate relative to gold. It is impressive how silver held its
ground considering dollar strength-today! Fed meeting in a few weeks. Would
they cut-rate? Maybe .25 base point? Who
knows. Well, any cut would favor silver. There is a talk of progress in trade
negotiating with Beijing.
From a technical perspective, a closer look shows that momentum is turning up. The bulls continue to enjoy a technical advantage. There is formidable support around $17.00 that needs to hold per close bases; otherwise, the bear will resume. Also, the commitment of traders with options report measured last week shows the non-commercial and non-reportable position hold sizable longer over 118K contracts. Given where we are now trading around 17.80 in the December futures, more longs came to the market. It would take a real fundamental change for sides to switch.
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 Prices Continue Climb Higher
Oil Prices Continue Climb Higher
By: Alexander Turro, Senior Market StrategistPosted Oct 25, 2019 7:35AM CT
Oil prices have continued to rally and have broken out of their multi-week consolidation despite continual soft economic data from Europe and Asia, which has only served to heighten demand concerns. This comes amidst conflicting stockpile reports from the EIA and API this week, as EIA reported a 1.7 million barrel decline in U.S. crude oil stocks while API reported a larger than expected build of 4.45 million barrels. Earlier in the week, there were reports that OPEC would discuss expanding productions cuts at their December meeting as well as enhance compliance standards. However, that was debunked by Russian Oil Minister Novak who stated that no formal proposal had been put forward. Further, China’s import quota was expected to increase by the end of the year, which provided underlying support. Despite record production levels in the U.S., net exports showed nearly the highest reading on record at 3.685 million barrels a day and with a drastic drop in imports (lowest since May 95), the market should continue to remain fairly supported with outlook orienting more towards OPEC and global demand concerns. This is not to discount the ongoing geopolitical risk factors, which remain at the forefront. The market is now neutral trend trend with today’s range seen between 52.25 – 56.17.
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 - Is Sugar Ready for a Reversal?
Is Sugar Ready for a Reversal?
By: Eric ScolesPosted 10/23/2019
Mar ’20 sugar futures start the day down again but may find its footing soon. Demand concerns have weighed down heavily on prices and indication that the 2020/21 crop will rebound with high yields have granted managed money funds an opportunity to press prices down further. Sugar has been weak from a technical perspective, even with recent strength in the Brazilian real, sugar has seen very little support. There could be a change in demand tone however, with China making a large increase in imports. From the supply side there is a lot of support for the near to intermediate term as we are going into a period where supplies could be tight with what’s expected to be a massive production deficit for the 2019/20 crop; which could be a bullish opportunity for spread traders, with near term supplies threatening to be tight and the next crop possibly abundant. Looking at the charts traders should notice that each time prices have broken down below 1225, it has only been temporary and followed by a sharp rally. With this market so heavily oversold I think that as news shifts to tightening near term supplies we may see prices spiking higher soon.
On
the heels of mid-Sep-to-early-Oct's steeper, accelerated, 3rd-wave-looking
recovery, the past week-and-a-half's boringly lateral chop is first considered
a corrective/consolidative event that warns of a continuation of the uptrend
that preceded it to new highs above 04-Oct's 891.0 high. This count
remains consistent with our broader base/correction/recovery count introduced
in 13-Sep's Technical Blog following that
day's bullish divergence in short-term momentum above 07-Sep's 809.5 minor
corrective high detailed in the hourly chart below.
The
important takeaway from this month's lateral, sleepy price action is the
definition of Wed's 851.5 low as
the end or lower boundary of a suspected 4th-Wave correction. A failure
below 851.5 will confirm a bearish divergence in daily momentum and defer or
threaten a bullish count enough to warrant non-bullish decisions like
long-covers. A failure below 851.5 will not
necessarily negate a broader bullish count, but it will threaten it enough to
warrant defensive measures as the next pertinent technical levels below 851.5 are
13-Sep's prospective minor 1st-Wave high at 813.8 and obviously 08-Sep's 766.0
low. And making non-bullish decisions "down there" is
sub-optimal to say the least. Per such, both short- and longer-term
commercial traders are advised to pare or neutralize bullish exposure on a
failure below 851.5, acknowledging and accepting whipsaw risk- back above 04-Oct's
891.0 high- in exchange for much deeper and sub-optimal nominal risk below
766.0.
On
a broader scale, the daily log scale chart above shows the developing potential
for a bearish divergence in daily momentum that will be considered confirmed
below 851.5. This chart also shows the past month's recovery thus far
stalling in the immediate neighborhood of the (888.0) Fibonacci
minimum 38.2% retrace of Apr-Sep's entire 1128 - 766 decline). COMBINED
with a failure below 851.5, traders
would then need to be concerned with at least a larger-degree correction pf the
past month's rally and possibly a resumption of Apr-Sep's major downtrend.
Until
and unless the market fails below 851.5 however, we would
remind longer-term players of the key elements on which our bullish count is
predicated:
a confirmed bullish divergence in WEEKLY momentum
(below)
amidst
an
historically low 11% reading in out RJO Bullish Sentiment Index and
a
textbook complete and major 5-wave Elliott sequence down from 29-Apr's
1128 high to 08-Sep's 766.0 low.
Thus
far, the market is only a month into correcting a 4-MONTH, 32% drawdown, so
further and possibly protracted gains remain well within the bounds of a major
(suspected 2nd-Wave) correction of Apr-Sep's decline within an even more
massive PEAK/reversal process from 17-May's 1219 high on an active continuation
basis below.
These
issues considered, a bullish policy and exposure remain advised with a failure
below 851.5 required to defer or threaten this call enough to warrant moving to
a neutral/sideline position. In lieu of such weakness, we anticipate a
continuation of the past month's rally to new highs and potentially significant
gains above 891.0.
Agricultural - Grain Futures Update w/Stephen Davis - 10/25/2019
Grain Futures Update w/Stephen Davis - 10/25/2019
By: Stephen DavisPosted 10/25/2019
RJO Futures Senior Market Strategist, Stephen Davis discusses this weeks movements in the grain markets. With winter staring us down the barrel, he also discusses where he expects the grain markets to go in the near future.Agricultural - Cattle Market Looking Sideways
Cattle Market Looking Sideways
By: Peter McGinnPosted 10/23/2019
The December cattle market remains overbought technically, but there is no good fundamental reason for sellers to start becoming a more active participant in the market. U.S. beef production is expected to be 120 million pounds lower in the 4th quarter than it was in the 3rd. Last year, production increased by 43 million pounds over the same period and it would also be the first time in 5 years that production increased in the 4th quarter. The USDA boxed beef cutout was up 75 cents at mid-session yesterday and closed 80 cents higher at $220.93. This was up from $218.02 the previous week and was the highest the cutout had been since September 10th. The higher beef trend could support a positive tilt to the cash cattle trade this week. The USDA estimated cattle slaughter came in at 119,000 a head yesterday. This brings the total for the week so far to 237,000 head, up from 235,000 last week, but down from 238,000 a year ago. The cattle on feed report is released on Friday and is expected to only show a modest increase in both the placements and marketings during September and fewer cattle on feed than the previous year. I expect the market to trade sideways for the rest of the week and into next week. If there is a breakout over the $115 level, then I suspect a further run up to the $118 level. If there is a rejection at the $115 level, then expect a retracement down the $112 level.
Currency - U.S. Dollar Establishes Bear Flag Amid Correction
U.S. Dollar Establishes Bear Flag Amid Correction
By: Ian BannonPosted 10/25/2019
Currency futures were fighting for direction this week as back-and-fill action gripped the complex. The U.S. dollar marked a weekly low at 96.89 but was able to close every day above the pivotal 97 level. The recent correction in the dollar is attributed to the commencement of liquidity injection by the U.S. Fed. A pullback of this magnitude is expected after mild monetary easing, but a close under the 97 level would cause investors to take inventory and establish bearish momentum on the dollar chart. The FOMC is meeting again next week and is expected to cut the federal funds rate another 25 bps. According to the CME, the probability of a quarter point cut is over 90%. As the dollar broke down, foreign currencies have gained upside traction. The euro and the pound have had sizeable rallies, breaking through think channel resistance levels that have previously stopped their rallies all year long. After another delay in the Brexit process earlier this week, both currencies have taken a pause from their rallies. The euro appears to be forming a bull flag on the daily chart, which coincides with the bear flag forming in the USD. Should the greenback fight back to 98, and hold those levels, its correction should be short-lived, and the currency markets would return to “business as usual”. However, if the bear flag materializes, and we begin to see closes under the 97 handle, bullish strength would compound in foreign currencies and the euro could extend rallies back to 1.13.
All eyes will be on the Fed next Wednesday. Should they bring out the big guns in order to promote stock market strength, the dollar will fall through the floor. However, if they continue their trend of “less-than-dovish” rhetoric, the correction in the dollar could be over for the time being. Look for resistance back at the 98 level and be careful shorting the other currency markets. Aggressive traders can find success in these choppy waters, but passive investors must be weary of trend reversals that accompany easing monetary policy.
Equity - Stocks Go As China Goes
Stocks Go As China Goes
By: Jeff Yasak, Senior Market StrategistPosted Oct 25, 2019 9:32AM CT
Global markets were generally mixed coming into Fridays open. Amazon’s 6% premarket decline from their disappointing earnings was putting a damper on the open. On the positive side, word out of China is that they are willing to buy more agricultural products from the U.S. if they cancel existing and forthcoming tariffs on Chinese goods. China’s Foreign Ministry spokesperson, Hua Chunying, hit out at Vice President Mike Pence for his critical comments on Beijing’s human rights record. Further suggesting that Pence should focus on America’s domestic troubles rather than taking aim at them. According to Bloomberg, “U.S. consumer sentiment paired gains from earlier in October while remaining elevated, suggesting America’s spending will continue to support the economy despite weakness in manufacturing.”
Today’s support is 299600 and 298900 with resistance checking in at 3012 and 302200.
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 - S-T Mo Failure Insufficient to End RBOB Correction, But Beware
S-T Mo Failure Insufficient to End RBOB Correction, But Beware
By: RJO Market InsightsPosted 11/08/2022
Posted on Nov 08, 2022, 07:51 by Dave Toth
In Fri's Technical Webcast we identified a
minor corrective low at 2.6328 from Thur as a mini risk parameter the market
needed to sustain gains above to maintain a more immediate bullish count.
The 240-min chart below shows the market's failure overnight below this level,
confirming a bearish divergence in very short-term momentum. This mo
failure defines Fri's 2.8172 high as
one of developing importance and a parameter from which very short-term traders
can objectively base non-bullish decisions like long-covers.
Given
the magnitude of the past three weeks' broader recovery however, this
short-term momentum failure is of an insufficient scale to conclude anything
more than another correction within this broader recovery from 26-Sep's 2.1877
low. Indeed, overnights failure below 2.6328 only allows us to conclude
the end of the portion of the month-and-a-half rally from 31-Oct's 2.4822 next
larger-degree corrective low. 2.4822 is the
risk parameter this market still needs to fail below to break the uptrend from
18-Oct's 2.3526 low while this 2.3526 low
remains intact as the risk parameter this market needs to fail below to break
the month-and-a-half uptrend. From an
intermediate-to-longer-term perspective, this week's setback falls well within
the bounds of another correction ahead of further gains. This is another
excellent example of the importance of technical and trading SCALE and
understanding and matching directional risk exposure to one's personal risk
profile.
The
reason overnight's admittedly minor mo failure might have longer-term
importance is the 2.8172-area from which it stemmed. In
Fri's Technical Blog we also noted the market's engagement of the
2.8076-to-2.8159-area marked by the 61.8% retrace of Jun0-Sewp's 3.2758 -2.1877
decline and the 1.000 progression of Sep-Oct's initial 2.1877 - 2.6185
(suspected a-Wave) rally from 18-Oct's 2.3526 (suspected b-Wave) low. We
remind longer-term players that because of the unique and compelling confluence
of:
early-Aug's bearish divergence in WEEKLY momentum
amidst
historically
extreme bullish sentiment/contrary opinion levels in our RJO Bullish
Sentiment Index
an
arguably complete and massive 5-wave Elliott sequence from Mar'20's 0.4605
low to Jun's 4.3260 high (as labeled in the weekly log active-continuation
chart below) and
the
5-wave impulsive sub-division of Jun-Sep's (suspected initial 1st-Wave) decline
The
recovery attempt from 26-Sep's 2.1877 low is arguably only a 3-wave (Wave-2)
corrective rebuttal to Jun-Sep's decline within a massive, multi-quarter
PEAK/reversal process. Now granted, due to the magnitude of 2020 -2022's
secular bull market, we discussed the prospect for this (2nd-Wave corrective)
recovery to be "extensive" in terms of both price and time. A
"more extensive" correction is typified by a retracement of 61.8% or
more and spanning weeks or even months following a 3-month decline. Per
such, the (suspected corrective) recovery from 26-Sep's 2.1877 low could easily
have further to go, with commensurately larger-degree weakness than that
exhibited this week (i.e., a failure below at least 2.4822) required
to consider the correction complete. Indeed, the daily log chart above
shows the market thus far respecting former 2.6185-area resistance from 10-Oct
as a new support candidate.
These
issues considered, very shorter-term traders have been advised to move to a neutral/sideline
position following overnight's momentum failure below 2.6328, with a recovery
above 2.8172 required to negate this call, reaffirm the recovery and re-expose
potentially significant gains thereafter. For intermediate- and
longer-term players, a bullish policy and exposure remain advised with a
failure below 2.4822 required to threaten this call enough to warrant
neutralizing exposure. We will be watchful for another bearish divergence
in momentum following a recovery attempt that falls short of Fri's 2.8172 high
that would be considered the next reinforcing factor to a count calling that
2.8172 high the prospective end to the month-and-a-half 2nd-Wave
correction. In lieu of such, a resumption of the current rally to
eventual new highs above 2.8172 should not surprise.