August 4, 2017

Volume 11, Issue 31

Feature Article

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Metals - Gold

October Gold in Up Trend

Nicholas DeGeorge

In the early morning trade, October gold is currently down $6 and trading at $1264.5 an ounce. After this morning’s better than expected monthly non-farm payroll number, October gold has pulled back $8 off its overnight high. The bull camp took back control after yesterday’s morning sell off, but it has been making lower highs this week which cannot be ignored for a possible reversal. Furthermore, after today’s job number, the US Dollar has caught a bid and that also is putting pressure on gold at these price levels.

If we take a look at the daily gold chart, you’ll clearly see that October gold is in a near-term up trending market. Furthermore, there are some bullish moving average technical patterns on the daily gold chart. The 20-day moving average crossed over the 200-day moving average this week and is slopping up and about to cross above the 50-day moving average. If it does, then look for more buying momentum to come into play and push October gold up to around $1,300.0 an ounce. Below is a daily October gold chart with highlighted technical levels.

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.

Oct '17 Gold Daily Chart

Oct '17 Gold Daily Chart

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Metals - Silver

September Silver, Is A Break Above $17.00 Coming?

Joshua Graves

The silver market has enjoyed the recent run up in gold and other precious metals from most recent low of just over $15. The question is, with the recent break from 16.96 are we going to get another shot at breaking 17? Let’s first take a look at the fundamental news that might continue to drive the market higher. The first and most obvious to me is a potential pullback in the stock market as stocks are now trading with sky high valuations, and no sign of any pulling back. The gold demand in India tends to pick up near the end of the summer with the autumn festivals starting, and this could see some buying interest in silver as well. North Korea is another supportive factor with another recent ICBM launch being reported and triggering more buying interest in safe havens. ADP non-farm payrolls figures have just come out this morning, and a very healthy 209,000 number was reported. Its well above the consensus of 178,000 that most analysts were expecting. We are currently seeing the metals complex under much pressure because of this quite positive number. The fundamentals as a whole are a mixed bag, with the bears having a slight edge based on the recent US economic data. 

A technical perspective shows that a pullback toward 16.20 is more likely than a push higher. The MACD has indicated a buy signal on July 17 with the cross. We are not in overbought territory by any means, but the recent trend up is extremely weak according to the ADX which currently sits at 15.83. Look for a retest of the 16 level before we see any leg higher. Silver is likely to make a move higher in the long run, but a retest of the lows before this happens is likely. We had a key reversal that formed just two days ago, but was not “confirmed” by a lower close the following day which is necessary to validate the formation.

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.

Dec '17 Silver Daily Chart

Sep '17 Silver Daily Chart

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Energies - Crude Oil

Can WTI Crude Oil Break the Bears?

Dan Hussey

It’s been five weeks of straight crude inventory draws, with Wednesdays EIA Petroleum status report estimated stockpiles had declined by 1.5 million barrels, keeping pace with the anticipated summer month demand.  Gasoline inventories also saw a draw, increasing by 1.5 million barrels from last week’s report, to 2.5 million barrels.  Crude being consumed by refiners to replenish the draws in gasoline stockpiles is to be expected, however seeing increases in gasoline consumption is the key leading indicator to continuing crude demand.

The same set of technical indicators that were diving the market price over the last couple weeks, including two Fibonacci measurements, the lows from July of last year, and the channel the market has been holding the last 4 months.  The 44.00 support from equal legs and 50% fibs on the smaller timeframe charts, which I mentioned in last week’s article, is proving supportive and may be signaling the bulls are gaining back the ability to defend their ground.  Now that front month crude prices have tested but are continuing to close below the 50.00 handle, the bears have a line in the sand to defend.

Resistance for this week is being tested into channel and Fibonacci confluence zone into the 49.00 to 50.00 handle.  There is an equal legs measurement at 48.80 (which extends to the 123.6% line at 50.00), and this level aligns with channel trend line resistance.  This short term line in the sand may keep the market under pressure in the near term, and the bulls will need to overtake 50.00 again to maintain short term control.  Price has begun to pull back, and while still too early to call a reversal, a break down below 48.00 could confirm bears are back in control.  In the medium to long term, WTI crude futures should find a support level where there is a confluence of Fibonacci support bands (retracements and extensions) between 40.65 and 37.20 (daily continuous chart below).  In the near-term, the prior highs into 48.00 will be the next level of support to watch, followed by the prior lows of 42.05 for the September contract.  The short term trend is up until it fails, but considering the massive draws to inventories, without crude above 50 handle the bulls aren’t out of hot water yet.

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 Oil Daily Continuation Chart

Crude Light Daily Continuous Chart

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Energies - Natural Gas

Natural Gas Simmering Down, the Close is the Call

Jeff Ratajczak

The trend in September natural gas is still down. Resistance is at 2.900 –2.850. Support comes in around 2.75. Our target objective is 2.67 -2.70. The breakout beneath July’s consolidation on a daily chart may signal a sell off below 2.70. A close above 2.90 will change the trend to new higher range.

Momentum studies are moving lower, and the 9, 18, and 27 period moving averages are also trending lower, which could signal more downside action. Today’s storage number came in at an increase 20 bcf, almost the expected 23 bcf, while the 5 year average is 44 bcf injection. Our inventory of gas surplus is still 4% above the average as well. Below normal temperatures are predicted over the next two weeks and could hold for as long as Mid-August. With no real cooling demand, gas should struggle to gain any ground. COT is not at record highs, but still shows a sizable number longs that might contribute to selloff should standing stop orders get hit. Position yourself with exposure to the down side of the market. Bear put spreads or outright shorts are something to consider until the market closes above a corrective high.

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.

Sep '17 Natural Gas Daily Chart

Sep '17 Nat Gas Daily Chart

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Softs - Cocoa

Cocoa to Remain Range Bound

Peter Mooses

Supply and demand data has dominated cocoa futures news – higher production, lower prices; lack of demand, lower prices but recently short-term weather premium may have helped the September contract trade and hold above 2000. Technically, cocoa futures seem to be held in a 2020 – 2090 trading range. September cocoa is trading in an area the market has stayed away from since June. Talks of funds having large short positions have kept prices at these recent levels as well. Will more sellers be attracted into the market or have levels hit prices low enough in July that traders and users are buying back in for a long-term trade? Demand concerns continue to loom. Nestle and Lindt have recently given little to no improvement in their outlooks. Weaker Dollar, and stronger Euro prices have also been affecting commodities on a broader level. Softs may also be affected by the recent reports of a change in the head of the Coffee and Cocoa Council, but this may already be included in pricing since defaults by exporters have been on the rise this year.

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.

Sep '17 Cocoa Daily Chart

Sep '17 Cocoa Daily Chart

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Softs - Coffee

September Coffee at Resistance

Adam Tuiaana

Price action in the September coffee futures continue to look very impressive as we near resistance levels not seen since May. Will we be able to break above the 140 level? If so, a break above this critical resistance area could prompt a continued bullish push to the 150 level rather quickly. Bullish near-term supply issues seem to be supporting September coffee prices quite well. While the US Dollar has garnered some strength as of late, so has the Brazilian Real, which has pretty much offset currency pressure on either side. The Brazilian harvest appears to be projecting a slight decline, which should also help support coffee prices.

On the daily chart of September coffee below, we can see prices are aggressively testing the 140 high from May 3. At this level, we can see that prices have also aggressively violated a downtrend that’s been in place since January of this year. From a risk-reward perspective, a short position would be advised, risking slightly above the aforementioned resistance area.

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.

Sep '17 Coffee Daily Chart

Sep '17 Coffee Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 8/4/2017

Stephen Davis

Sunday's weather will be all important for corn. Watch exports in all grains to see where the markets are headed.

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

Trends won’t be altered with a 200,000+ US payroll result

Tony Cholly

Dollar: The trend in the dollar is firmly entrenched in the downward motion to such a degree that a lack of definitive downside extension over a couple days has discouraged some sellers.  However, news of fresh subpoenas in the Russian/Trump affair provides the bear camp with ongoing ammunition for their case.  On the other hand given the oversold condition of the dollar in the wake of consistent declines since July 5, traders should expect some measure of short covering bounce today.  In fact, the patter in the dollar has been to respond favorably to goo data but it then fails to sustain that reaction.  In our opinion, to throw off the downtrend in the dollar is extremely difficult due to the overhang of political baggage and therefore a trend changing result today might have to present a reading equal to last month's 222,000 US payroll again.  Resistance comes in at 93.05.

Sep '17 Dollar Index Daily Chart

Sep '17 Dollar Index Daily Chart

 

Euro: While some might have seen the overnight European scheduled data as somewhat mixed German industrial orders were better than expectations even though they were softer than the prior month.  However, the Italian retail sales results on a month over month and year over year basis came in very strong and that combined with presentation of fresh developments in the Russia/Trump affair should leave the euro well bid.  As suggested in the dollar coverage this morning it will take a noted positive US nonfarm payroll result to knock the euro out of its uptrend pattern.  Traders should expect a measure of volatility today but a general support level in the September euro is seen at 1.1840.

Sep '17 Euro Index Daily Chart

Sep '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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Interest Rates

Interim T-Note Strength Still Capped by Broader Range



Yesterday's late poke above 21-Jul's 126.12 high nullifies the bearish divergence in momentum and resulting bearish count discussed in 25-Jul's Technical Blog and obviously resurrects the uptrend from 06-Jul's 124.255 low shown in the 240-min chart below.  This resumed strength leaves corrective lows in its wake at 125.31 and 125.15 that now serves as our new micro- and short-term risk parameters from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.  These specific and objective risk parameters may come in very handy given 1) this morning's release of the key Aug nonfarm payroll report and 2) the market's engagement of the upper-quarter of the past couple months' range that poses a slippery slope for bulls "up here"...

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

10 yr Treasury 240 min Chart

 

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Equities

Stocks Up After Strong Jobs Reading

Bill Dixon

A week and a day removed from new all-time highs in the Nasdaq and S&P, and only two days after new highs in the Dow, the markets are up slightly so far, but a pretty good deal off of the overnight lows.  Today’s Nonfarm Payrolls were expected to come in at or around 178,000, down from last month’s surprise 222,000 reading.  The actual number came out at 209,000.  We were also expecting to see a consensus unemployment rate at 4.3%, down from last month’s 4.4%.  That number came in as expected.  Markets seem to be looking for a catalyst for the next leg higher.  While it would seem as though some positive developments out of Washington regarding healthcare or tax reform would provide the fuel for such a move, it seems rather unlikely that the two sides will be able to come to an agreeable terms any time soon.  Therefore, many will continue to monitor data and look for some clues from the Fed mid-month.  Next week’s news cycle is fairly light, so traders are looking forward to August 16 when the Fed will release the minutes from the previous meeting.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5342 or bdixon@rjofutures.com

Sep '17 E-mini S&P Daily Chart

Sep '17 Emini S&P Daily Chart

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