March 31, 2017

Volume 11, Issue 13

Feature Article

Upcoming Webinars

Trading Agricultural Futures

Trading Agricultural Futures

Register Now!

Wednesday, April 5 at 11 a.m. CT

Trading grains and various agricultural products requires knowledge of the underlying asset class and our goal in this webinar is to introduce new agriculture futures traders to the contracts available in this market. Knowing when to be out of the market is just as critical as knowing when to be in the market and we will introduce technical analysis basics to identify potential market entry points in conjunction with our fundamental knowledge of the agricultural markets.

In this webinar you will learn:

  • Keys to understanding the agricultural markets

  • Benefits of trading the grains

  • What to consider before trading this market

  • Basic technical analysis techniques on the ags

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Metals - Gold

Possible Further Sell-off in June Gold

Nicholas DeGeorge

In the early morning trade, June gold is slightly up and currently trading at $1,248.2. After a strong advance in the US dollar this week and relatively strong global markets, June gold has been holding onto this week’s rally with just a minimal pullback. After gold put in a double top on a daily chart this week, there has been a drop in open interest which means the gold bulls can be running thin, and the market can be overbought for the short-term. Furthermore, if the US dollar continues to rally, look for even a larger selloff and lower prices.

If we take a look at the daily June gold chart, you’ll clearly see the double top that June gold is trying to complete with a further selloff. If the selloff does in fact continue, then look for some buying or support down where the 20 and 50-day moving averages are, which currently rest at $1,232.0. However, if these support areas don’t hold, then look for a selloff all the way back down to $1,200.0 an ounce. For the gold bulls, if gold can break above this week’s high of $1,264.2 (The Double Top), then look for a rally up to and probably above $1,300.0 an ounce. Below is a daily June Gold chart with all the technical level from today article. 

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.

Jun '17 Gold Daily Chart

June Gold Daily Chart

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Metals - Silver

The Top Technical Indicator for Silver

Phillip Streible

There are many different types of fundamental and technical chart patterns that market technicians focus on when making trading decisions, and multiple ways to interpret them. This is why technical analysis is an art form. The key is to be able to recognize these patterns and implement a trading strategy based on what you believe the charts are telling you will happen next. 

The Trend Line
You probably know the classic adage: the trend is your friend. There are dangers to fighting the trend; it leaves you with headaches and sleepless nights, wondering why you went against it. Sometimes the trend isn’t all that easy to identify, but it can help to look at charts over several time frames.

The trend line is one of the most basic charting tools. These are lines drawn across successively higher bottoms in bullish markets (moving up from lower left to top right), or successively lower tops in bearish markets (moving down from upper left to bottom right). A bullish trend is indicated by a series of higher highs and higher lows, and a bearish trend, by lower highs and lower lows. Look for three good tests of support or resistance. Breaking through a trend line is an important signal a trend is coming to an end.

You can see the trend in a very basic chart of the silver futures contract. In this case, I am looking at a daily continuation chart. The key to determine whether this is in fact a solid bearish trend is to look for three tests of resistance. To the far right of the chart, we see a possible shift in the long-term trend. The market bounces to a key resistance point, then bounces without much follow through—trading in an up down, up, down pattern. To signal a shift in trend, you want to look for two days of higher closes, with the second high above the previous day’s high. We can see in this silver chart below how the market has stayed below the trend line from March 13 until the time this article was published. 

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.

May '17 Silver Daily Chart

May Silver Daily Chart

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Energies - Crude Oil

May Crude Comeback? Things to Consider…

Joshua Graves

The May crude oil futures contract has had a strong close for the past few trading sessions. The trade had a few different reasons to rally. The EIA report this week did in fact show a build in crude inventories at Cushing, but by less than 1M barrels, as compared to the much larger builds we have seen over the past few weeks (last week was a 5M barrel build). We were in oversold conditions, and a double bottom was formed in the near term near the $47 lows this month. We also had some stronger Economic data out this week as well as GDP data today showing a slightly friendly 2.1% growth. The crude market is still ripe for long liquidation. The latest COT report showed a long position of 493,000 contracts, off from the record of over 600,000 before crude broke $50, but still heavily weighted on one side of the equation.

The main driver behind this rally, I believe, is the widely held belief that OPEC is going to extend their production cut agreement past June when it is set to expire. This was no surprise as they had to do something to prop prices up. Even if crude manages to claw its way back to the mid $50 level, I believe that any rally will be sold into given the incredible glut of oil in the world (37% above the 5 year average to be exact). OPEC is in a tough position. If they cut production further or extend their agreement, the US shale producers become more profitable as prices rally on the news. If they do nothing the prices collapse and their efforts were for nothing. There are ways to play this crude situation correctly. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-435-4805 or jgraves@rjofutures.com.

May '17 Crude Oil Daily Chart

May Crude Light Daily Chart

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Energies - Natural Gas

May Natural Gas Trending Up Despite Season

Jeff Ratajczak

The overall trend in the May Natural gas contract is up. Resistance on a daily chart is at 3.255 – 3.270. A close above 3.310 signals a breakout targeting 3.400 to the upside. Momentum studies MACD, Slow Stochastics, and RSI are all above mid-levels, and headed North. 

Close in support is at 3.190. Below that, the 3.150-3.140 range stands out as strong support, and a close below 3.060 would violate a corrective low and negate the current trend. New short plays can be initiated at this point.

Larger than expected draws support the price action here. We got a -43 bcf draw today in the natural gas storage number, as opposed to an expected draw of-37 bcf. Both numbers are greater than the 5 year average of 27 bcf. A late winter, and an early spring blast of arctic air sent the mercury plummeting below average temps, accounting for the larger than expected draw. 

Good export numbers are also supportive of natural gas prices, which are the highest they have been since Feb. during the peak of heating season. Exposure to the long side is recommended until technical damage is done to the charts. You may consider long May contracts or long May call spreads for the short term run up. 

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.

May '17 Natural Gas Daily Chart

May Natural Gas Daily Chart

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Softs - Cocoa

Time to Buy Cocoa?

Peter Mooses

Chairman of the regulator Cocobod said Ghana has run out of funds to buy more cocoa. Their loan of nearly $1.8 billion is almost gone to get them through the season. This means that although they are the second largest producer of cocoa, they do not have the financing needed for the remainder of the production year. This comes at a time when the futures market tried to rally to 2200 but failed. Crop concerns came up: were pods damaged as they sat at ports waiting for buyers? Demand was coming back into the long-term picture. This news stopped the recent rally and has the short-term trade in question. On a chart, it looks like the market has a reason to be trading around 2200 and if fundamental news can turn around, 2600 is the next level of attraction technically for the July contract. Key levels had recently been met and broken, 2050, 2080, 2100…but now holding above 2080 is a must.

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.

Jul '17 Cocoa Daily Chart

July Cocoa Daily Chart

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Softs - Coffee

May Coffee Violation of Support

Adam Tuiaana

In May and June we will see what the Brazilian harvest has to offer. Many believe that the numbers will be less tight than expected, which should help the bears take control. Adequate supplies should mean resistance levels will keep coffee prices from moving higher. In addition, the USD is seeing a strong boost, which continues to put pressure on most soft commodities. Big funds may be gearing up for a large short position, as open interest is at very high levels.

On the daily chart of March coffee below, we can see the violation of the 13860 critical low on March 24, which shortly after, was followed up by a quick correction and consolidation. So far, a quiet day in today’s price action, but in the near term, traders should look for a re-test of the December low of 13520. If this area is able to hold support, we may see a bounce back to the top of the range, say 14550. However, a violation of this area spells a major selloff, likely back to lows not seen since June of last year.

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.

May '17 Coffee Daily Chart

May Coffee Daily Chart

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Agriculture - Grains

Video - Daily Market Update - Grain Futures - 3/31/2017

Stephen Davis

Today is the release of the US planting report. Expect to see larger planted acreage numbers, and a head start in US farming for the upcoming season.

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

USD holds positive tone in front of today’s US data

Tony Cholly

June Dollar:  The dollar has built onto overnight strength coming into this morning’s trading and remains on track to climb back above its 50 day moving average for the first time since March 15, which is in sharp contrast to the 4-month low that was reached early this week.  Recent US data has been mixed but has been highlighted by better than expected results for GDP and a multi-year high in consumer confidence.  Even if there are continued Washington difficulties with tax cuts and/or fiscal spending, the FED has been signaling that there will be at least two more rate hikes this year.  Today’s US data could provide some hurdles for the Dollar, particularly with a private survey of consumer sentiment that could have a moderate down tick.  Even so, the USD looks to finish the first quarter 2017 with the upper hand on most major currencies.  Near term support is at 100.18 as the dollar should maintain a positive tone going into the US data window.

June Dollar Index Daily Chart

 

June Euro: The Euro appears to have put some brakes on this week’s downtrend but continues to hold onto a negative tone coming into this morning’s trading.  Reports that ECB officials were reluctant to change monetary policy has been borne out today by today's sluggish European data points, none more so that a euro zone CPI reading that was well below forecasts and reached its lowest year over year reading in 5 months.  A positive turnaround in risk sentiment would clearly help that euro, but better economic number results from the region will be required in order to sustain any longer-term recovery move.  Near-term resistance is at 10748 as the euro is likely to finish the week on the defensive. 

June Euro Index 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 Remain Positive Despite Continuous Wall of Worry

Manon Lasserre

Global markets are mostly a bit lower overnight and were able to maintain a mostly positive tone yesterday. A better than expected reading on pending home sales reflected strength in the US housing market, but the main event for global markets occurred when the UK’s Article 50 letter officially started the Brexit process/ US equity markets ended up with mixed results as the financials-weighed the Dow Jones behind the S&P and Nasdaq. Treasuries remained well supported as the market comes to terms with “only” two more Fed rate hikes over the rest of this year, although the Fed’s Rosengren and Williams hinted that three more hikes were not totally off the table. The Dollar extended this week’s recovery move with a moderate gain while the Euro was pressured from indications that ECB officials are reluctant to make policy changes at their upcoming meeting.

S&P 500: The US and global economies are doing better than expected, and consumer sentiment readings are off the charts! Outside of economic policy, the Trump administration is struggling with other issues which could bleed into trade policy but with the tax policy outlook and plans for further active deregulation and infrastructure spending, the stock market outlook remains positive as shown below. However, throw in a positive tilt to Asia and Europe and the market looks like we could continue to climb a wall of worry – In other words, how much longer can the Bulls drive this market up? This is the key question for the stock market right now.

Market Ideas: Close-in support for June E-Mini S&P is at 2348.20 and 2340.50. Traders should consider buying into support with 2366.90 and 2388.70 as next resistance. The market’s short-term trend is positive on the close above the 9-day moving average. Cheaper commodity prices, soaring consumer confidence and the outlook for stimulus from taxes, infrastructure and regulation reform are all seen as supportive forces. Consider buying breaks into support. 

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.

Jun '17 E-mini S&P 500 Index Daily Chart

June Emini Daily Chart

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