February 17, 2017

Volume 11, Issue 7

Feature Article

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Metals - Gold

Gold Starts Weak, but the Uptrend Looks Strong

Nicholas DeGeorge

This week’s April gold has been very weak and looking like it was going to sell off down to $1,200.0 an ounce. However, gold has been in a very strong uptrend over the last two months and the gold bulls bought aggressively, and gold ended up $8 for the session on Wednesday. Furthermore, Wednesday’s CPI numbers reported stronger inflationary numbers than originally expected, which brought more gold bulls into the market. Any signs of inflation will continue to provide support for gold.

If you take a look at the daily gold chart, you’ll clearly see that it bounced off the 20-day moving average Wednesday, which showed strong support. If the gold market can break above $1,237.0 an ounce, then look for a rally up to its 200-day moving average that currently reads $1,272.7. All technical levels are below on our RJOF PRO daily April gold chart.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-453-4494 or ndegeorge@rjofutures.com.

Apr ’17 Gold Daily Chart

Gold Daily Chart

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Metals - Silver

The Uptrend Continues in Silver

Phillip Streible

Silver futures continue to show relentless strength to the upside pushing through $18.00 and the next technical stop should be in the $20 range where it traded most of last year. The most impressive aspect of the rally has been the almost baked in 2-3 rates hikes we expect from the fed this year, which should be causing setbacks. In turn, outside cues from Brexit, inflation data upticks, and uncertainty with the legs of the stock rally have been keeping a steady bid under the market. Two sided action in the dollar has also provided support.

Technically, keep an eye on the upward channels support at $17.75 and $17.50. ADX which measures the strength of the trend is at 35.43 and climbing and that should indicate this uptrend is healthy and strong. Stochastics are in overbought territory but with rising ADX this gives the bullish nod.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-438-4805 or pstreible@rjofutures.com

Mar '17 Silver Daily Chart

Silver Daily Chart

 

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Energies - Crude Oil

Three Weeks, Three Builds – Can Anything Stop this Crude Rally?

Dan Hussey

March ‘17 crude oil futures are unchanged on the day, following this morning’s EIA petroleum status report.  For the third week running, the EIA sited a build in crude oil inventories at a 9.5 million barrel increase since last week’s report of an increase of 13.8 million barrels.  The large surge in crude oil inventories is either priced into the market already or being ignored entirely, as the price of WTI crude oil futures remains relatively unchanged through these heavy-handed reports.  An initial sell-off was sparked by the reported API inventories last week, but those losses were quickly pared by the market and almost completely unchanged after today's report.

From a technical perspective, and at the risk of sounding like a broken record, March crude oil futures remain in a tight trading range.  Last week’s low of 51.22 remains a key line in the sand for bulls, and marks the 6thtest of the 52.00 to 51.00 supportive price band I have pointed out over the last several futures cast articles.  While price continues to consolidate above this pivotal area, we can expect continued pressure from bulls to test the 54.00 handle resistance and the cluster of prior highs the market has been building below.  If the price of the March ’17 crude oil futures can break below the 51.00 area, the next supportive inflection zone comes in at 49.80 to 48.60.  Watch for continued compression from and or the break of the downward sloping trend line against the highs of this range.  This trend line has acted as solid resistance over the last couple weeks, and the break-of-which may signal for a more sustained upside move.

In my opinion, we can continue to expect a range bound market and consolidation above the supportive price band but below the downward sloping trend line.  This has been a particularly tough market to trade on an intra-day basis, with virtually no trend to be able to grab onto.  With the lack of response in price action to what has quickly become substantial builds in crude oil inventories, I cannot help but feel this is the calm before a storm.  I am expecting this consolidation to result like a spring under pressure… Up or down, the longer crude remains in this range the larger the resulting move should be.  Define your risk, pick a side, and get ready for what could be a volatile ride.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or dhussey@rjofutures.com.

Mar '17 Crude Oil Daily Chart

Crude Light Daily Chart

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Energies - Natural Gas

Natural Gas Trending Down, Weather to Blame?

Jeff Ratajczak

The trend in natural gas is down.  Prices have been retreating for the past week.  With unseasonably warm weather patterns expected throughout the end of February, natural gas may struggle to hold the 2.900 mark.   Temperatures at or near the 60 degree mark should extend over two thirds of the country, with no end in sight.  Clear skies and sunshine are reported going into the next week.    

The close beneath the 9, 18; and 27-day moving averages confirm the downtrend. RSI, MACD, and Stochastics are all approaching oversold levels, but until we see a divergence in the price action it simply indicates the market is trading strongly in this direction.   COT information shows the funds are still long over 100,000 contracts.  This can be troublesome, as stops are hit or they decide to liquidate their positions. 

Resistance is right around the 3.000 level.  Then about 3.200 and above.  A close above 3.000 might spark the bull market.  Until then, any bounces should be viewed as opportunities to sell.  A close south of 2.900 is bearish and could signal a greater leg down.  I would suggest exposure to short side.  Either short the contract or owning puts. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-874-81104 or jratajczak@rjofutures.com.

Natural Gas Daily Chart

Natural Gas Daily Chart

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Softs - Cotton

Strong Exports Continue to Fuel Cotton Rally

May 24, 2016 marks the last time that cotton prices were trading below the 200-day simple moving average, thus reaffirming the positive trend that traders have seen over the past several months.  With price action continuously making relatively higher lows and higher highs on the chart following the February 2016 low, the bulls appear to be in firm control of this market.

The recent USDA WASDE report provided some fundamental verification of the current trend with export forecasts revised higher to 12.7 million bales, a month-over-month increase of 200,000 bales.  Strong domestic export demand led to relatively lower ending stocks here in the US, setting the stage for an environment conducive to further gains in price.

Despite the relatively up-beat tone of this market, many traders are looking forward to new crop cotton expectations for the 17/18 year which, depending on yields, could boost ending stocks even higher, despite the strong export demand.  An argument could be made that the markets are overbought at these levels; however, a break in technical structure (i.e. relatively lower low) would like be needed to negative the current positive bias.  

If you’d like to discuss potential trading strategies in the cotton market, I encourage you to contact me directly at 866-397-8195 or etatje@rjofutures.com.

May’17 Cotton Daily Chart

Cotton Daily Chart

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Softs - Cocoa

Cocoa Prices Begin to Entice Buyers

Peter Mooses

Traders looking to go long in cocoa futures have patiently been waiting for demand to strengthen before they re-enter the market, but it appears that this recent drop in prices may be enough to create demand in cocoa instead. 1890 held as the floor, now cocoa futures have rallied heading into the holiday weekend. With little fundamental change in the news, an expected record high in production from the Ivory Coast could mean this rally will be short-lived. Traders will have to look to the technicals to position themselves in the short-term. Oversold levels have been reached - some think a key reversal was hit and this price point could catapult us back above 2300. Until we know more about what pods are looking like and if production levels are as high as estimated, many traders will take a cautious approach with their entry points or stay sidelined entirely.

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.

May'17 Cocoa Daily Chart

Cocoa Daily Chart

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Softs - Coffee

March Coffee Showing Strength Pending Brazilian Decisions

Adam Tuiaana

A pending decision by Brazil as to whether or not to allow for coffee imports is providing March coffee some solid support lately. Although the Brazilian Chamber of Foreign Trade has not officially made a decision on imports, which is likely to be sometime around February 22, the fact that the decision is pending in the first place weighs heavy on the price of coffee.  In any case, understandably, Brazilian producers will continue to fight tooth and nail to table the whole coffee import situation for as long as they possibly can. However, one cannot ignore the fact that a discussion of potential imports to the world’s largest producer of coffee only leads traders to believe that domestic supply is tight, and we may see much higher prices in the coming days, until a decision is made. Also, let’s keep in mind that the outlook for the upcoming season’s production is weak, so that too should support higher prices of coffee.

On the daily chart of March coffee below, we can see the 14525 resistance has become new support. Since we broke above this resistance area on January 9, coffee prices promptly met the November lows, and have subsequently pulled back. March coffee prices seem to be taking a breather, waiting on the upcoming decision. Ultimately, I would advise positioning bullishly.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or atuiaana@rjofutures.com.

March'17 Daily Coffee

Coffee Daily Chart

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Agriculture - Grains

Video - Daily Market Update - Grain Futures - 2/17/2017

Stephen Davis

Soy is consistently strong across the world, which is reflected in strong US exports. Corn and wheat are also maintaining.

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.

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Currencies

Lack of Leadership in Currencies Favors the Yen

Tony Cholly

March Dollar:  While the Us dollar is showing some corrective bounce early this morning we would suggest macroeconomic optimism in the US is likely to deteriorate in the wake of a focus on political contentiousness instead of pro-growth tax reform.  We think the corrective action from this week’s high is significant and telling.  In fact the bull camp needs to see a better than expected leading indicator result to counter veil what appears to be weakening US equity market action and escalation Washington warfare with the media.  It goes without saying the March dollar index this morning has critical pivot point at 10049 with a failure of that level possibly targeting a slide to 10000.

Dollar Index Daily

 

March Euro:  While the March euro is showing initial corrective action today the currency sits impressively above its 48-hour low.  Unfortunately the euro hasn’t derived much in the way of support from partially supportive ECB official dialogue overnight perhaps because euro zone construction output declined for the month of December.  It is also possible that a slight downshift in global economic sentiment holds back the euro because of its fledging recovery status.  Critical support in the March euro this morning comes in at 10644 and to turn the tide back in the favor of the bull camp requires and early bid above 10679.

Euro Index Daily Chart

 

March Yen: While the increase in safe haven/anxiety is modest, the yen appears to remain in a gently upward slope on its charts from this week’s low.  Weakness throughout global equity markets and news of expanding new loans in China might add to the upward tilt in the Yen which may have little in the way of resistance until the 88.93 level.  A Modest supportive issue for the yen this morning is optimistic views from the Japanese prime minister predicting steady progress in the Japanese economy off the Bank of Japan’s monetary easing program.

Yen Daily Chart

 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or tcholly@rjofutures.com.

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Equities

Stocks Leave Long-Term Trend Pointing Up after President Trumps Inauguration

Manon Lasserre

Global equity markets were mostly weaker overnight, and we are seeing a slight pull back due to top heavy markets, however I believe stock markets are favoring the long side of the market long term. Overall, international economic data this morning is favorable as unemployment fell into separate regions in the latest monthly figures. Overnight changes in the S&P can be attributed to the corporate news slate mixed with Time Inc. revenue declining, and Wendy’s same-store sales beating expectations. Given bullish chart action over the past couple weeks, however, there is no denying that talk of policies such as deregulation, tax cuts and an increase in infrastructure are all business friendly news and therefore support a bullish overall market. On top of all this, Q4 earnings are coming in better than expected.

Traders should look at booking profits on stocks now during this slight correction in the market, and look to get long slight pull backs. One may profit from day trading by simply buying dips and selling into the rallies. I believe the market continues to digest political news since Donald Trump’s inauguration on January 20, however it is safe to say that his policies are business friendly and will make for a healthy stock market going into 2017. Uptrend channel support in the March E-Mini S&P today is seen at 2321.50 and to start today the even number 2350.00 level is initial support (see below). 

Emini Daily Chart

E-Mini NASDAQ (MAR): If traders look to the chart below, one can see the market rallied to a new contract high yesterday, however daily stochastics have risen into overbought territory much like the E-Mini S&P above. The market's close above the 9-day moving average suggests the short-term trend remains positive, and the market has a bullish tilt coming into today’s trade with the close above the second swing resistance. The near-term upside objective is at 5344.12.

Emini 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 mlasserre@rjofutures.com.

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