RJO FuturesCast

November 4, 2021 | Volume 15, Issue 44

The Markets

Metals - Gold in Technical Recovery

After yesterday’s sharp selloff in gold, today’s rally is most likely just a technical correction. If, however, December gold could manage a close above $1,796 that would bring in new longs. The gold market has been stuck in a big choppy sideways channel for so long now that it feels like it will never find direction. Every time it tries to breakout above it $1,800 it gets smacked back down, but also seems that gold is basing a long-term bottom in the $1,750 range. Until gold manages a breakout, up or down, there is a clear and tradeable range. I still favor an upside breakout due to all the idle cash out there and of course the longer lasting inflationary fears. Who still thinks inflation is “transitory”?  Signs of real inflation are everywhere, and inflation is structural. Gold, in my opinion, can only move higher from this current range that it’s been marking time in. I think playing gold from the long side still makes the most sense. I’d rather buy dips than “short” rallies.

Gold Dec '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 Continues Shining

Silver is currently trading near a psychological level of $24.00. Given the current price structure, $20.00 silver will hold firm. As I said in previously, any pullback in price will be seen as a buying opportunity rather than selling. The Fed made it clear that they would start the tapering process. Currently, there is a slow recovery process coming out of the pandemic, so the Fed is very cautious not to slow down recovery. Now, the economic recovery faces a supply logistics problem, and there isn't much the Fed can do about that. So, silver will continue to shine. Anything over $30.00 would probably be overpriced in the near term, and anything below $20.00 is way cheap. So short range that the market will stay in for the rest of the year.

From a technical perspective, as seen per the weekly chart price structure attached, near term lows are in. Call me or email me if you want to get involved in the current silver market.

Silver Weekly 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 Eases at OPEC+ Agrees to Production Plan

Oil prices ramped up more than 2% early Thursday as OPEC+ held onto output increases of 400k barrels per day despite outside calls and pressure from the United States to raise output. Japan and India had also joined efforts by the US in order to curb energy prices. Crude stocks increased 3.29 million barrels with stocks increasing 20.13 million barrels over the last 6 weeks. Stocks are now -50.32 million barrels below last year and 26.92 below the five-year average, according to the EIA. US refinery rate increased 1.20% and along with strong global demand for diesel continue to support. The market remains bullish trend with today’s range seen between 80.35 – 85.72. 

Crude Oil Dec '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 - Fed Tapering, Weak Demand, and Growing Supply - Cocoa Futures

December cocoa is attempting to find support. After the market found consolidation last week, it broke lower the past few sessions. Technically, the market broke support and moved to levels last seen in August. At that point on the chart, cocoa saw a decent rally – will the same happen now?

The fundamentals are similar – unknown demand for the rest of the year, will the recent weather affect production levels and will the global economy pressure commodities? Currently, there are a lot of unknowns.

Trader’s need to monitor the Fed tapering and how outside markets react. At the moment, this recent pullback could be a good buying opportunity for bulls looking to gain exposure. A not so far off target of 2600 is realistic in the near-term for December cocoa. Expect volatility as we approach contract expiration.

Cocoa 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 pmooses@rjofutures.com.
Equity - Stocks Hold Near Record Highs

This morning has stock futures mixed, holding close to record highs as investors digested the Federal reserve’s decision to taper some of their monetary policies as the economy continues to recover. Tech stocks were higher, and the Nasdaq led the way on the major indexes. With the Fed’s latest monetary policy decision and the stronger than expected quarterly corporate earnings released on Thursday the S&P 500, Dow and Nasdaq set intraday and closing highs once again. Not to anyone’s surprise the central bank announced that it would begin tapering its asset purchase program starting this month. The Federal Open Market Committee members decided that the economy had made “substantial further progress” in recovery paving the way for removal of policy support. The next month will see a reduction in $15 billion in asset purchases and another $15 billion in December but they have added flexibility with the uncertainty around inflation.

Support today is 462950 and 460000 with resistance at 467500 and 469000.

E-mini S&P 500 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 Market Insight w/John Caruso - 11/02/2021

A massive rally yesterday in US Value with the Russell 2000 gaining +2.3%.  Now signaling immediate OB, but on the brink of eclipsing a new ATH.  We did catch it with some of our core longs, but it’s my fault we didn’t catch it “bigger”.  We’ll likely have another look in coming weeks we think from more favorable levels – or maybe not, we’ll see.  The SP500 also closed at a new ATH which I believe is its 60th All-time CLOSING High of the year.  Earnings remain solid, despite the disappointments from Apple, Facebook, and Amazon.  Aggregate SPY Sales growth +17.69%, and EPS growth +38% with more than half of the Index having reported. 

*ISM MFG PMI slowed yesterday m/m but rose y/y to 60.8. 

Today marks the beginning of the FOMCs 2 day policy meeting.  I think by now we all know what’s coming, and to be honest, it’s overdue and much ado about nothing if you ask me. 

*Copper catching a slight bid here, with the LME stocks reporting another decline in inventories. 

*Oil- can’t stop, won’t stop.  Lower high in the range, could mean a quick but shallow correction, but you certainly don’t play for one.  Path of least resistance remains UP, and every break in the market has been a buying opportunity. 

*USD/Gold – just a lot of chop in these 2 markets with no real sense of direction.  I will certainly welcome another SELL opportunity in Gold if presented with one.  Gold doesn’t look to be ready to move into a favorable period until out into next year/and may likely coincide with a cool down period in US Rates/a stronger USD as we head into very difficult y/y comparisons for macro data and corporate earnings in Q2/Q3 2022.

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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