September 29, 2017

Volume 11, Issue 39

Feature Article

Upcoming Webinar

Trading Agricultural Futures

Trading Agricultural Futures

Wednesday, October 4 at 7 p.m. CT

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  • Keys to understanding the agricultural markets
  • Benefits of trading agricultural futures
  • What to consider before trading this market
  • Basic technical analysis techniques on the ags

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Metals - Gold

Gold’s Bullish Trend is Broken

Nicholas DeGeorge

In the early morning trade, December gold is slightly up and currently trading at $1,290.1. However, it is trading $10 higher than yesterday’s low. Yesterday, December gold hit its lowest level since mid-August and bounced up off its 50% Fibonacci retracement point. With the gold chart technically broken, it will be hard in the short-term to get and stay back above $1,300.0 an ounce. You’ll need more aggressive rhetoric from our President, North Korea, or even some kind of physical action from the two. If you get nothing from that direction, then a bad jobs number next Friday or some solid evidence of inflation could do the job as well.

If you take a quick look at the daily December gold chart, you’ll clearly see that last week it broke its bullish trend line from early July. Therefore, unless we see any action which I mentioned above, I would consider watching that bearish trend line which is highlighted below on the daily gold chart. As of today, it comes in roughly at $1,310 an ounce.

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.

Dec '17 Gold Daily Chart

 Dec '17 Gold Daily Chart

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Metals - Silver

Is Silver Done with its Correction?

Eli Tesfaye

As of now, December silver is trading near yesterday’s lows at the contract's lowest level since August 17, 2017. A number of bearish factors weighed on the metals this week, including hawkish Fed comments and anticipation of rate hikes. This leads to dollar strength, as well as the easing, or “pricing in”, of North Korean tensions and learning the details of a new tax plan in the US. All of this leads to abandonment of a flight to quality, continuing the recent down move from the recent September 17 high. 

On the daily chart, this move could be losing steam as the market meanders between the 17.00 and 16.50 levels, with a narrowing range in the recent days and an outside day yesterday. Even with these factors, a close below the 16.80 defining point could lead to a continuation of this move to the 16.50 level, and possibly continuing to the low $16.10-$16.20 ($16.18 level). On the other hand, with possible end of week profit taking and short covering, as well as nearing oversold levels on the RSI, we could be seeing the beginning of a near term bottom. The decline seems to have stalled and in recent days, as coiling price action prior returns to the $17.10-$17.20 ($17.11 level).

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.

Dec '17 Silver Daily Chart

Dec '17 Silver Daily Chart

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Energies - Crude Oil

Crude is About to be the Next Bull Market

Phillip Streible

Investors have gained confidence that OPEC will be able to help curb the global supply leaving crude oil up over 9% on the month. The rally was initially fueled by the International Energy Agency upward revision on demand outlook. The futures value began to factor in this re-balance at the start of the quarter, leaving prices up by 14.5% putting it at the highest level since April. It is expected for global demand to rise 1.6 million barrels per day. While hedge funds and traders have been betting U.S. shale production would increase, causing the price to sell off. A recent push through $52 has sparked a short covering rally, and bearish bets could continue to unwind. The one thing to watch out for is U.S. producers locking in higher prices and hedging at these levels.

Below is a November daily chart of crude oil, where you can see that it has clearly entered into a bull market. I would back that opinion unless we have 2 consecutive closes below $50.

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.

Nov '17 Crude Oil Daily Chart

Nov '17 Crude Light Daily Chart

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Energies - Natural Gas

Nat Gas Risk/Reward Preference Shifts Back to Bull from Lower-Range



As a result of yesterday's continuation of the past week's relapse, the 240-min chart below shows that the market has left Mon's 3.049 high in its wake in the now-prompt Nov contract as the latest smaller-degree corrective high it would not be expected to sustain losses below to maintain this downtrend. Its failure to do so would confirm a bullish divergence in momentum, stem the slide and expose at least another intra-range rebound. In this regard we're considering 3.050 as our new short-term risk parameter to any non-bearish decisions like short-covers or cautious bullish punts.
This said however, we believe the combination of:

  • this waning downside momentum
  • the market's proximity to 08-Sep's key 2.957 low and the lower-quarter of the past quarter's 3.21 - 2.88-range and
  • an arguably complete, even textbook 5-wave Elliott sequence down from 19-Sep's 3.214 high

warrants jumping the gun here a little bit and moving to a neutral-to-cautiously-bullish policy from current 3.030-area prices OB with a failure below our long-term risk parameter defined by that 08-Sep 2.957 low.

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

Natural Gas 240 min Chart

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Softs - Cocoa

Range Bound Cocoa Market

Peter Mooses

December cocoa ended Wednesday’s trading session near the high. The contract has been range bound despite the drop in the Euro and the British pound. The German election has brought some volatility to the currencies. As reports come in for the 2018 crop from Ivory Coast and Ghana, we see that news is mixed. Ivory Coast’s wet weather appears not to have affected future crops for now. Ghana’s production and pod development could suffer due to a drier season. Demand in Europe was unable to sustain a recent increase but forecasts show global consumption should be on the rise. If production comes up high for the 2017/2018 outlook, this data could be a wash.

Technically, looking at the chart below, we are sitting at resistance. A break above 2025 and a close at 2060 would push this recent move higher. As the month comes to an end and we receive the COT numbers on Friday, look for cocoa to test 2100.

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.

Dec '17 Cocoa Daily Chart

Dec '17 Cocoa Daily Chart

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Softs - Coffee

Are Rains Enough to Wake Up Coffee?

Adam Tuiaana

The initial dry weather that prompted a run up in December coffee prices has been eased by a solid forecast of rains throughout the key Arabica growing areas in Brazil. This should allow for a decent flowering period. The next couple of weeks will be key in determining whether or not the aforementioned rains will be able to satisfy the already dry region. Commodities in general continue to see more of a “risk-on” appetite, adding volatility to the coffee trade. Will strong US stocks continue to prompt demand? All eyes are on an uncertain Vietnamese crop, which will help determine whether or not this coffee selloff will find support.  

The near term support will be the September 6 low of 12675. If this area is violated, we should see a continued selloff back down to the 120 area. We’ve now seen 6 of the last 8 trading days go strong into the negative, which looks very bearish. 

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.

Dec '17 Coffee Daily Chart

Dec '17 Coffee Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 9/29/2017

Stephen Davis

It's the end of the month and the end of the quarter. What can we expect from today's crop report?

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

Short-Term Correction for December Cattle, but Bottoming Out

The Dec cattle market looks to continue to push lower over the near-term as the wide December basis, the overbought technical condition, and an adjustment down due to bearish USDA reports help to pressure the market. Dec cattle opened sharply lower yesterday off of the bearish news from the Cattle-on-Feed and cold storage reports, and the selling continued to drive the market to limit down into the close. Fears that the large premium of December to the cash market will encourage extra feeding, which will boost short-term production is seen as a bearish force as well. Furthermore, news that there was a major jump in heavier-weight feeder cattle placed in August was seen as a particularly bearish set-up. The USDA estimated cattle slaughter came in at 118,000 head yesterday, which was up from 112,000 last week and from 112,000 a year ago at this time.

DEC CATTLE: The market definitely has several short-term bearish forces, but the recovery in beef and cattle off the recent lows is somewhat positive. The drop reverses the short-term trend down. An inability to back fill Monday’s gap lower will encourage selloffs to 113525* support. A close under 113525* is bearish for declines into the 112-11100 time. A close over 116475* is needed to rekindle bull forces. I recommend looking for a setback with 113.52 and 112.25 as next 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.

Dec '17 Live Cattle Daily Chart

Dec '17 Live Cattle Daily Chart

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Currencies

Major Bottom in USDCAD?



In recent updates we have discussed what we believe to be significant base/reversal prospects for the USD Index, what could be surprising, if intra-LT-range gains in USDJPY and major peak/reversal threats in EURUSD and GBPUSD. The USDCAD's failure yesterday to sustain early-Sep losses below what we believe is a pivotal lower-1.24-handle-area exposes this market to the same and potentially major bullish-USD story.

The 240-min chart below shows this month's methodical, stair-stepping uptrend that, as a result of yesterday's continuation, leaves yesterday's 1.2336 low in its wake as the latest smaller-degree corrective low and new short-term risk parameter this market is now minimally required to fail below to stem the rally and expose at least an interim corrective setback. We'll circle around as to the importance of this tight but objective risk parameter within what we believe is a broader base/reversal PROCESS that could provide a preferred risk/reward buying opportunity in the weeks ahead and from lower levels after the market gets this initial (suspected A- or 1st-Wave) rally out of the way.

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

Canada Dollar 240 min Chart

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Equities

Stocks Trying to Build on All-Time Highs

Bill Dixon

Stocks were very quiet in the overnight session, and the news today has done little to spur much movement. Personal incomes came out in line at .2%, but the spending and inflation readings both came out weak. We’ve got some time between now and the next FOMC announcement, but this data could definitely help build a case against a December rate hike. In fact, the odds of the December rate hike dropped from mid-80s to the mid-70s following the release. Chicago PMI was released a bit later. It came out at 65.2 vs. an expected 58.5. This was the second highest reading of 2017, but it failed to provide much of a lift to the indices. Consumer sentiment came in strong at 95.1 vs. an expected 95.3. Following this release, the indices have crept into positive territory after trading slightly lower most of the morning, but this is a pretty tame response to the morning’s slate of data. Aside from next week’s jobs numbers, traders will continue to monitor geopolitical situations and tax related news from Washington. We’ll see if they’re actually able to make some progress, but markets seem to remain optimistic that something may get done.

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

Dec '17 E-mini S&P 500

Dec '17 E-Mini S&P 500 Daily Chart

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