May 26, 2017

Volume 11, Issue 21

Feature Article

Play the Go for the Gold with CME Group Contest

Go for the Gold

Enter for a Chance to Win a 1 oz Gold Bar

Between May 25 - June 1, 2017

Gold futures at CME Group are one of the most traded futures contracts today. Many traders use Gold futures as a safe-haven contract during times of economic uncertainty.

Now CME Group invites you to put your knowledge of their Gold markets to the test.

The winner will walk away with a 1 oz. gold bar.

Playing is simple: Between May 25 - June 1, 2017, enter your prediction for the June 30, 2017 closing price of the August Gold Futures Contract (GCQ7).

Ready. Set. Go for the Gold!

Enter Contest

Enter Contest

To top

Metals - Gold

Gold in Tight Range, Will it Hold High?

Nicholas DeGeorge

June gold had a very uneventful day yesterday with a tight trading range of roughly six dollars, and ended the day up just two dollars trading at $1,254.9. Actually, gold has been in a tight trading range all week with it just $15 between the weekly high and low. However, it did dip to a 3 week low Wednesday, but has rejected a price below $1,250.0 an ounce so far. Gold should enjoy some support at these levels with Turkey, Russia, Argentina, and Kazakhstan as they all saw their gold reserve holdings rise with a total 25.4 tonnes accumulated between the countries. However, Chinese net gold imports from Hong Kong declined by 33.5% from the prior month, which has offset the bullish tone just a bit.

If we take a look at the daily June gold chart, you’ll clearly see this week tightly trade range. Therefore, I would approach this market very simply. If gold breaks above and holds this week’s high of $1,263.8, I would suggest going long. If gold breaks below this week’s low of $1247.6, I would consider selling the market. 

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

Jun '17 Gold Daily Chart

To top

Metals - Silver

Near Term Lows in for Silver?

Eli Tesfaye

July silver is trading $17.165, about 5 cents on the day. Sometimes, it is nice to look at the long-term chart to get a clearer picture of silver contract. The chart blow paints a big picture of the silver futures contract going back to 1971. As you can see, silver made a high in the $50 area in January 1980, and again in April 2011. This also shows that trend line going up in silver after a recent low of $13.635 in December 2015. The point for all of this is that silver trades lower from these levels into the $15.00 area, and it should still be on an uptrend that started back in early 2000. 

Equities are on a parabolic rise as NASDAQ makes a seven-month straight positive close not seen since Sept 2009. I was surprised to see that although “Bitcoin” was on the rise before Trump took office, it accelerated and is projected to hit $3000.0. Silver has not benefited in the same way so far, but as long as it holds its long-term uptrend bottom of $15.00, it could potentially reach that triple top shown in the diagram in the future. When will that happen? That is the big question. 

In previous articles, I discussed the possibility of near-term low off the $16.00 lows. My view today is that weakness will probably be bought rather than sold. The commitment of traders with option reports (COT), which will be released tomorrow May 26, should show a little bit of pop in the holding of the non-commercial and non-reportable positions!

I will repeat it again, from a technical perspective, nothing changes in regard to my opinion that we are "getting less and less bearish as prices continue to decline into weekly support lines.” Frankly, $16.00 had better hold, or else more price pressure to the downside will happen as the result of discouraged bulls abandoning the market. However, any sustained close above lows $17.00 will probably start a momentum run to the upside. It will set up a higher low against the December 2016 low signaling near-term lows. 

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.

Silver Monthly Continuation Chart

Silver Monthly Chart

To top

Energies - Crude Oil

What Goes Up Must Come Down: Crude's Summer Surprise

Dan Hussey

With WTI Crude futures trading down $2.73 in the July contract, it’s become clear the market was not impressed in their initial reaction to the continuation of OPEC production cuts.  In an impressive sell off of 5%, the larger range bound dynamics (below 55, but above 40) continue to rein supreme.  Even the EIA status report, which estimated a 4.4 million barrel draw on inventories, wasn’t enough to keep WTI crude future prices at their highs.  The age old notion of “buy the rumor, sell the news” comes to mind after these two events, and the reactive price action of crude lower is a solid showing of selling interest.

OPEC continues to make headlines, reiterating their rhetoric for continued production cuts which seem to be falling on deaf ears for the market.  It’s been months of the same headlines, and while the decreased supply from OPEC certainly helps support crude prices worldwide, the market is being kept suppressed by western supplies.  The EIA status report was brushed off and the market seems to have been anticipating a more aggressive plan from OPEC, after both news events have now resulted in the biggest price decline since mid-March.

From a technical perspective, July crude futures are rolling over, and it will be up to bulls to prove support at the 47.88 to 46.91 50% to 61.8% Fibonacci inflection zone.  Failure below these levels will keep bears eyeing downside to the 40.00 handle, where a much larger 50% Fibonacci supportive inflection zone lies, drawn from February ’16 lows to February ’17 highs.  To add to the 40 handles importance, a 100% equal legs measurement also resides at this level, along with channel support which crude has been ping-ponging between for months now.  It’s a range until it fails, but the future favors the bears for the time being, and downside pressure to test support.

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.

Crude Light Daily Continuation Chart

Crude Light Daily Continuation Chart

To top

Energies - Natural Gas

Natural Gas Tipping Sideways, Where Will it Land?

Jeff Ratajczak

Today the trend in July natural gas is sideways to down. Any bullish action should be contained by yesterday’s highs.  Resistance is at 3.350 and above that at 3.401. Support can be found around the 3.250-3.260 level on the daily chart below.

Weather has not had a significant effect on supporting pricing. A cool stretch has cut down cooling demand, and if the forecast holds true, it will be delayed until much later in the summer. 

A 72 bcf build is expected this week. A reading below that mark would be considered bullish territory. Caution should be used when making a bullish trading decision, because to nullify the bearish trend there must be a close over the corrective high of 3.371. 

The 2-day slide should continue due to a change in momentum, and may continue with prices trending down to levels below 3.200. Momentum indicators (RSI, Stochastics, and MACD) are at mid-levels and trending lower, which should accelerate a move down if support is broken. Today’s trade idea is to gain exposure to the short side of the market. Either short a contract near 3.330 with a stop above 3.350, or look at a bear put spread for July.  

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.

Jul '17 Natural Gas Daily Chart

Jul '17 Natural Gas Daily Chart

To top

Softs - Cotton

Blow-off Top in Cotton Could Put Highs in for the Year

Shrinking old crop stocks and increasingly strong exports for US cotton led to what can only be described as a textbook blow-off top in the July Cotton chart. Starting May 11, the front-month contract skyrocketed over 10.00 before the fierce rally culminated on the 15. From here, it only took about five trading sessions for the market to retrace all of its prior gains and revert back to the intermediate term trend line originating from last March’s low. 

The dust has now settled and it appears as though the recent blow-off top in cotton has the potential to mark the highs for the year. Market participants are now beginning to shift their focus to new crop. With planted acreage up more than 20% year-over-year, new crop stocks appear poised for a solid year and the fundamentals on cotton lean bearish. Weather thus far has been accommodating here in the US, and barring any major weather setbacks, domestic yields for upcoming new crop should be on par with the 5-year average.

Prices have pulled back sharply following the recent top and today’s action validated support from the previously mentioned trend line. This will serve as initial support for the July contact with additional structure seen from 74.80 – 75.35. If the market can produce a close below 74.80, the pattern of relatively higher highs and higher lows would then be violated, opening the door to further downside potential.

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.

Jul '17 Cotton Daily Chart

Jul '17 Cotton Daily Chart

To top

Softs - Cocoa

European Cocoa Demand Not Enough

Peter Mooses

European demand has grown, but is it enough to fight off the large supply levels we have seen this year? After Wednesday’s trading session it looks like the answer is no. The chart is also telling us we have more downside – May’s lows may be tested. The Euro’s pullback hurts the demand rebound from that part of the world. The unrest in Ivory Coast continues to give the market volatility. Rebel and government chaos will provide bounces and support in the futures market for cocoa. A solution would cause cocoa prices to drop lower, mix that with growing production levels and 1775 could be back in the picture. At this time, a wait and see approach may be needed with all these uncertainties.

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

Jul '17 Cocoa Daily Chart

To top

Softs - Coffee

Demand for Coffee Cools, Bearish Traders in Charge

Adam Tuiaana

Demand has been warm to weak for coffee, and coupled with rising output from Vietnam, we can assume that the bear camp will continue to hold the reins. In addition, news that El Nino will likely have little or no impact on Vietnam’s coffee production will likely keep the bulls in check for now. Outside forces impacting coffee prices may include the devastating terror attack in the UK and overnight credit downgrade of China, producing flight to quality strength in the US Dollar, which inversely pushes most commodity prices down.

On the daily chart of July coffee below, we can see the violation of the 13750 critical low from December 28, which shortly after, was followed up by some short covering and sideways consolidation. We now see coffee prices diving back to the near term critical support area of 12865. This area is key to monitor because a violation of this area spells a continuation of the downtrend, 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.

Jul '17 Coffee Daily Chart

Jul '17 Coffee Daily Chart

To top

Softs - Sugar

Sugar Resumes Major Bear, Defines Key New Risk Levels



In Wed's Technical Blog we alluded to the likelihood that that day's failure below 15.58 rendered May's 15.24-to-16.59 recovery attempt a 3-wave and thus corrective affair that warned of a resumption of the major bear trend from Sep'16's 24.10 high. This bearish count was confirmed with this morning's break below 05-May's 15.24 low detailed in the 2140-min chart below. As a direct result of this resumed slide this chart also shows that the market has identified an intra-day corrective high from Wed at 15.78 and certainly 22-May's 16.59 high as our new short- and longer-term risk parameters the market must now recoup to threaten and then negate a broader bearish count.

Today's break below 15.24 nullifies last week's bullish divergence in momentum and chalks up the recovery attempt to 16.59 as a mere correction within the major downtrend. The trend is down on all scales and should be expected to continue and perhaps accelerate with ALL pertinent technical levels ONLY above the market in the form of former 15.24-to-15.44-range support-turned-resistance and prior corrective highs like 15.78 and 16.59.

In effect there is no support as only "derived" levels can be postulated below spot. And as we know with absolutely certainty, such derived levels as channel lines, Bollinger Bands, the ever-useless moving averages and even the vaunted Fibonacci progression relationships we cite often in our analysis have never proven to be reliable reasons to forecast support or resistance without an accompanying momentum failure to, in fact, break the trend at hand. And they never will.

These issues considered, a full and aggressive bearish policy is advised with strength above at least 15.78 and preferably 16.60 required to threaten and then negate this call. In lieu of such strength further and possibly accelerated losses are expected straight away. The market's downside potential is indeterminable and potentially severe.

RJO Futures clients may login here to the client portal and access all RJO Market Insights.

Sugar Daily Chart

 

To top

Agriculture - Grains

Corn Tries to Pop, While Soybeans Take Bearish Tilt

Tony Cholly

Corn:  The story remains the same in the corn market. Weather. Will farmers be able to get the heavy machinery into the fields to do the work they need to be done? Will Tuesday’s crop ratings come in above, below, or as expected?

China sold 2.1 million tonnes out of 2.3 million tonnes offered on Friday on top of 3.34 million tonnes sold yesterday. China auction sales have increased recently due to the pent up industrial and ethanol usage. July corn was pulled lower by a weaker soybean complex yesterday, settling down 2 cents on the day. Pressure was also tied to a slightly drier forecast for northern sections of the eastern corn belt. The problematic areas of Missouri, southern Illinois, and southern Indiana could still see more rain this weekend. Some areas have been able to dodge the wet weather and Tuesdays report should show about 90% completed compared to 5 year average of 91%.

Beans:  Slowing down demand in China gives a bearish tilt to the soybeans. With Chinese crush margins the poorest since August and meal stocks on the rise, there is talk that some crushers may slow operations. Imports, however, are expected to be high for June and July. Strong demand from China has been the key supportive force in the past 10-12 months, so the weaker demand tone helped to push July soybeans down through the August 2 lows yesterday. Selling pressure was also tied to a slightly drier outlook for the corn/bean belt this weekend except in Missouri, Southern Illinois, and Southern Indiana. Weaker Brazilian currency also gave way to increased producer selling out of South America. The realization that even with high demand in China, world soybean supplies are going to be large which has led to the break this week and if Brazil currency drops again, commercial selling could pick up again. Downside targets in July soybean is 919.

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.

Dec '17 Corn Daily Chart

Dec '17 Corn Daily Chart

To top

Currencies

Videio - Daily Market Update - Currency Futures - 5/26/2017

John Caruso

Euro holds, as the USD continues to try and find strength. The Fed waffles on a rate hike in June. 

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.

To top

Equities

Bullish Jobless Claims Report Drives S&P Higher

Manon Lasserre

Just when some traders may have thought the run up in stocks has run its course, the US Department of Labor released its report at 234K at 7:30am CST today. Consensus, or what was expected, was 238K, therefore the number that was released drove stocks like the S&P, Dow and the NASDAQ higher into today’s session. As a reminder, the Initial Jobless Claims is a measure of the number of people filing first-time claims for state unemployment insurance. The US Department of Labor releases this report every Thursday of the week each month. In other words, this report provides a measure of strength in the labor market, and in today’s case, this report proves for a healthy economy. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Furthermore, a decreasing Claims number should be taken as positive or bullish for the USD as well.

S&P 500: The June E-Mini S&P forged a fresh new all-time high over the information of the last three trading sessions, which hints at investor resolve and a consensus that the global economy is moving forward. Apparently, terrorism threats are only a limited influence on these markets and the trade came aware from the Fed meeting minutes yesterday with the idea that rate hikes will be slow yet are coming. The market holds a bull alignment and breakout over 240450 targets a quick run to 2410and potentially beyond 243000+. Failure to extend a breakout push into new highs could prompt reactionary dips, but trade should stabilize in the 2390-2380 range to keep bull forces. Close under 236550 signals a reversing downturn. 

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 Emini S&P 500 Daily Chart

Jun '17 Emini S&P 500 Daily Chart

To top


This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

© 2017 RJO Futures
222 South Riverside Plaza | Suite 1200 | Chicago, Illinois 60606
800.441.1616 | 312.373.5478

 To top