June 9, 2017

Volume 11, Issue 23

Feature Article

RJO Futures PRO Online Trading Platform

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Metals - Gold

Strong Dollar Continues to Push Gold Selloff

Nicholas DeGeorge

In the early morning trade, August gold has continued yesterday’s sell off, which is largely due to strength in the US dollar and favorable US economic data from initial jobless claims. Also, former FBI director Comey’s testimony on the Trump Russian saga ended up being uneventful and probably took the fear trade off the table for the bulls. Furthermore, the UK political uncertainty failed to bring fear buying into the market.

If we take a look at the daily August gold chart, you’ll see that it’s pulled back just $30 of its June 6 high of $1,298.8. Its also breached a one month bullish trend line, but currently has not closed below it and is still trading above all its major moving average with the 20-day trying to cross above the 50-day, which usually means to bullish trend will continue, but only time will tell. Below is a chart of the daily August 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.

Aug '17 Gold Daily Chart

Aug '17 Gold Daily Chart

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Metals - Silver

Silver Under Pressure

Phillip Streible

Silver futures could be throwing up a red flag and look vulnerable to more liquidation today. The surprise failure of the U.K. to get a government overnight has put a significant bid under the dollar and caused the Pound and Euro to see a sharp correction. Look out for the FED announcement on Wednesday, June 14 where it is widely expected that the fed will raise rates. I would expect the market to remain on its heels coming into the announcement and then have a sell the rumor buy the fact type of trading affair. This type of chart pattern silver has been in is more of a classical double top and double bottom formation with many 50% retracements. I have identified several on the chart below, and for further insight please download our technical analysis guide. 

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.

Jun '17 Silver Daily Chart

Jun '17 Silver Daily Chart

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Energies - Crude Oil

Who is really in control of the WTI Crude market?

Dan Hussey

With WTI Crude futures trading down $6.00 from its 52.00 handle highs two weeks ago, the market is continuing to whip through the middle of its range, only finding resistance above 52.00 and support below 44.00. As long as this range stays intact, in my opinion, it’s a clear indication the geo-political and economic struggle between OPEC and Western oil producer is still underway. The West which continues to suppress the price of oil by increasing production of North American shale and ethanol, while OPEC and friends attempts to cut supplies and offset the western increase.

OPEC continues to make headlines, reiterating their rhetoric for continued production cuts, however, and their attempts to support this market with talk is proving too cheap. It’s almost impossible to compete with the supply American and its western oil allies are able to ramp up, with the ability to extract shale as well as convert agricultural gains to energy products (ethanol and biodiesel). WTI Crude prices still remain in “no man’s land” hovering above key support but below key resistance, so there is clearly no victory for either bears or bulls for the moment.  What will be important to watch for the time being, are the May lows (43.76 from June contract, and 44.13 for July), as well as the May highs (52.00 for July). While inside these levels, expect to see a fight over trend and continued range bound price action.

From a technical perspective, July crude futures have broken below the 50% retracement from May lows to May highs, which I mentioned as a level to watch in last week’s article. Since the trade has now pressed below 46.60, I expect a retest of the 43.76 May lows (from June contract), and below there, a move to test the 40.65 inflection zone, it’s very likely to test the 44.13 lows and possibly even the 40.00 psychological handle. Every day crude spends in this range, should result in additional stops above and below the range highs and lows respectively.  The stops clustered at those levels should eventually then be the fuel for a burn above or below those thresholds, but while the range remains intact, it’s a range until it fails.

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 Chart

Crude Light Daily Chart

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Energies - Natural Gas

Natural Gas is the Strength in a Weakening Market

Jeff Ratajczak

For the past week, the natural gas market’s minor trend is slightly up to neutral. Today’s price action should be ruled by the storage numbers. We are expected to get a build of 99 bcf as opposed to the 5-yr average of 94 bcf. The underground storage numbers totaled over 2500 bcf. which is about 10% above the 5-yr average too.  

Weakness in the energy sector has dragged on natural gas prices this week, along with above average temperatures and forecasts for the weekend. Support for the July contract is down around 2.900. 

Resistance near by is at 3.100 and further out slightly above 3.240. Our target range is somewhere in the middle near 3.166-3.175. Take caution for a retracement to the support numbers before another leg up. A close below 2.935 would be needed to negate the current minor trend and return to a bearish market. Buying puts or short contracts can be used to take advantage of the short side of the market, looking for a large infusion of gas. Tight stops should be placed in case of a smaller than expected storage number.

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

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Softs - Cotton

Cotton Prices Continue Their Retreat

Following last month’s blow-off-top in July cotton, prices continue to work their way lower as participants shift their attention to new crop supply prospects. Crop conditions appear to be better than last year with 61% coming in at good to excellent, relative to the 52% 20-year average. With excellent crop conditions and significantly higher planted acreage, the fundamental situation in cotton appears to lend itself to lower prices as traders head into the July to December contract roll.

The technical action in cotton also points to lower prices as the market is in the process of producing its fourth session of consecutive lower prices. The market has confirmed a breakout below the ascending trendline and is now threatening the 74.81 – 74.35 area of technical support. If price action breaks below this area, the next level of technical support can be seen around 73.12 (Fibonacci retracement level), followed shortly thereafter by the area from 71.45 – 71.95.

Market sentiment leans negative heading into Friday’s USDA report, which has the potential to set the tone for the next 2-4 weeks of trading. So long as new crop cotton continues to progress nicely, look for cotton prices to continue to face downside pressure.

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

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Softs - Cocoa

Cocoa Production Data Main Factor for Prices

Peter Mooses

The continued talk of a large production surplus controls the market. After a short-term rally higher, prices sold-off for four sessions. Estimates are coming in for processing. Demand is stagnate and a non-factor. A move lower may attract buyers back into the market, especially institutional and commercial traders. Technically support is at 1950 and 1910. The gain on May 30 has not been completely erased so we’ll see what the remainder of the week brings us. Consolidation at these levels could lead to a range bound trade between 1965 and 1905 if the fundamental outlook doesn’t change. Weather premium is something to watch. For now, the production surplus is the main story but may finally be priced in for the season.

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

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Softs - Coffee

Coffee Drips On with Violated Critical Support Numbers

Adam Tuiaana

As July coffee nears the end of its life, we can see a drastic violation of the 12868 critical support area we mentioned in our last article. Most of this weak price action in coffee can be contributed to sluggish demand, and the Brazilian harvest, currently underway, is looking to replenish any tight supply issues that may currently be in place. Outside market forces include the UK election taking place on Thursday of this week, coupled with the testimony of former FBI director, James Comey. These are fundamental forces that may shake things up and affect the coffee market quite a bit. For now, we will wait and watch.

On the daily chart of July coffee below, we mentioned the violation of the 12868 critical low from April 17th, which shortly after, was followed up by some sideways consolidation. We now see coffee prices in a well-defined range, which will likely be a good opportunity for swing traders. We haven’t seen prices in this area since March of 2016. The 12450 area will now become the key support level to monitor because a violation of this area will likely result in a continuation of the downtrend.

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

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Agriculture - Grains

Daily Market Update - Grain Futures - 6/9/2017

Stephen Davis

Weather takes a turn towards higher temps, will this result in higher corn yields?

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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Agriculture - Livestock

catttle



The hourly chart below shows the area of former 123.15 resistance from 22-May holding as new support.  Further weakness below Wed's 122.80 low will threaten the prospect that this week's setback from 127.65 is another correction within the major uptrend and tilt the directional scales towards a developing peak/reversal environment that could be major in scope. In this regard 122.80 is considered our new short-term risk parameter around which traders can objectively manage the risk of bullish exposure.

To finish reading the full article, RJO Futures clients may login here to the client portal and access all RJO Market Insights.

Live Cattle 60 min Chart

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Currencies

The Dollar Track Looks to be High Today

Tony Cholly

June Dollar: The question for the trade in the currency markets today is whether international geopolitical uncertainty from the UK situation is capable of drowning out US presidential difficulties.  The early answer to that question is the dollar does have the chops to extend its recovery in the short term.  However, the US scheduled data of late, declining odds of any progression on US pro-growth legislation and a soon to be confirmed dovish FED should stop the current rally in its tracks next week.  US scheduled data today doesn’t look to play a major role in determining dollar pricing and we would look to downtrend channel resistance early next week up at 9797 as an overly optimistic upside target point.  Closer in resistance is seen at 9728 but the lack of a negative reaction in the dollar to the testimony yesterday suggests that the Dollar has near term upside capacity.

Jun '17 Dollar Index Daily

Jun '17 Dollar Index Daily

 

June Euro: The fear that BREXIT effort will be stalled is accentuated by the developments in the UK and that highlights the uncertainty facing the euro zone ahead.  It also appears as if German and French trade news overnight leans bearish for the Euro currency moving forward.  In the end, it goes without saying that quick progress won’t be seen on the British exit talks and that simply adds to the damage on the euro charts.  With the dollar showing residual strength and the turn of events over the last 24 hours, we can’t rule out a sub 1.12 trade in the September Euro today or Monday.

Jun '17 Euro Index Daily Chart

Jun '17 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

Trend Remains Up and More All-Time Highs Ahead in the S&P

Manon Lasserre

Global equity markets were mostly higher overnight with the exception of the Hang Seng, as the markets were not undermined by the surprise failure to get a “government” in the UK. In retrospect, seeing equity prices manage to forge a sideways consolidation through this week’s geopolitical and economic flashpoints is a testament to the bull’s resolve and perhaps the bull’s enduring capacity. Furthermore, seeing US stocks build consolidation low support in the face of ongoing retail sector fear and noted weakened in oil patch shares suggests the overall bull trend might continue. In fact, some market measures this morning appear to be poised to breakout to the upside again and that clearly relegates the political stories to a back burner. Earnings announcements will include Straight Path Communications before the Wall Street opening.

S&P: As suggested already the September E-mini S&P sits just below an upside breakout point on its charts as if the market has successfully discounted the political incidents this week. Perhaps the bull is cheered by somewhat favorable Chinese economic news items this week and perhaps the markets are sensing recent events and data will leave the Fed on hold next week. Another issue providing support to the bull camp is a series of buyouts announced or expected to be pursued over the last 24 hours. Critical consolidation support in the September E-mini S&P this morning is down at 2421.75 but a more important and closer pivot point is seen at 2429.05. That being said I favor the long side and would not be surprised to see another all-time high today.

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.

Sep '17 Emini S&P Daily Chart

Sep '17 Emini S&P Daily Chart

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