October 13, 2017

Volume 11, Issue 41

Feature Article

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Metals - Gold

December Gold, Is The Move Justified?

Joshua Graves

December gold has seen quite the rally over the past few weeks. After a major selloff from contract highs, to coming right back down to the 200-day moving average of 1263, gold has been able to once again rally above 1300. It appears we are now going to be stuck in a trading range between 1250 and 1350 for the foreseeable future. Chinese imports of precious metals has been up for the past several weeks, and there have been some instances of talk of conflict out of North Korea. This is nothing out of the ordinary, however. We have seen imports of North Korean goods to China down 38% over the last month. Could this be attributed why North Korea has been quiet regarding missile and nuclear tests? North Korea had a founding holiday, the equivalent of our Independence Day holiday, on October 9. While everyone was expecting some sort of military or nuclear show of force, we saw nothing.

I think for gold to have real teeth above the 1325 level, we will need to see a ratcheting up of aggressive rhetoric from North Korea. A bigger reason behind the rally could be from President Trump announcing he will decertify the Iran Nuclear Deal. It’s expected to now be left up to congress if they want to stay in the deal. A look at the technical signals bullish price action with a close above 1300 today. A positive MACD cross as well as having the 200-day moving average lending support shows the strong technical. One thing to keep in mind is the ADX which measures strength of a trend, is quite low sitting at just 18 (a strong trending market sits at 40+). 

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 Gold Daily Chart

Dec '17 Gold Daily Chart

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Metals - Copper

The Copper Bull Market Continues

Phillip Streible

Copper futures continue to close in on the 52 week high at $3.17/lb. and are up 25% on the year after reversing off $2.90/lb 1 month ago. A recent release of Chinese trade figures indicate that strong economy should continue to expand resulting in improved import demand for basic commodities. U.S. economic conditions also have been continuing to show signs of strength. Remember that China represents 15% of global GDP and the U.S. 24%, so these are the two most important countries to watch while trading copper. As far as positioning is concerned in the markets, speculators continue to pile in on the long side as near record levels. Watch out for a short covering blow off top at $3.20/lb.

Below is a daily chart showing the near term record high and the strength of the recent move. 

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.

Dec '17 Copper Daily Chart

Dec '17 Copper Daily Chart

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Energies - Crude Oil

Oil is Coiling

Michael O'Donnell

In the past week, oil has dealt with the monthly unemployment report, various OPEC and Fed speak and this morning’s weekly EIA report. Yesterday’s FOMC minutes steered more towards inflationary caution than the prior month, or many months past for that matter, while this morning’s EIA inventories showed a 2.7 million barrel draw for the previous week.

In the two hours following the report, oil traded in most of the range of the $50 handle while mostly above the hourly 100 moving average, and psychologically significant $50 level and below the 50 period. It is interesting to note the potential coiling price action over the longer term between these moving averages and 2 point trend lines drawn from the August 30 and October 9 lows, and September 29 and October 11 highs.

Many see oil as range bound around the averages’ flat rate of change and $50 level, between the defining points of the previously mentioned trend lines. Any close above or below these trendlines and/or there defining points should see significant follow through.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or modonnell@rjofutures.com.

Nov '17 Crude Light 240-min chart

Nov '17 Crude Light 240 min Chart

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Energies - Natural Gas

Natural Gas Floats Higher in Uptrend

Jeff Ratajczak

Today’s trend in the November natural gas market is up with yesterday’s market posting higher highs and higher lows.  The spike up on the charts signals for increased buying action today. Support is seen at $2.827, resistance at $3.000 and at $3.100. A rise above $3.100 will take us to a higher range. All momentum indicators are turning up from mid levels. This should accelerate buying as resistance levels are breached. MACD, RSI, and stochastics are all in agreement to market momentum. The 9, 18, and 27-day moving averages still show a slight downtrend, but seem to be turning with momentum. A close under $2.845 would be need to negate this short term move. 

Today’s natural gas storage number is expected to be 74 bcf. Last week, 42 bcf was the build. This week’s expectations seem a bit high. Anything under the expected number may result in buying moving us up to the next trading range. The weather is forecast for normal to slightly above normal temperatures for the next 6-14 days, and below average temps for this winter are forecasted. The average household may pay 13% more for heating costs according to EIA’s winter fuel report. I suggest a cautiously long exposure to the market.

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.

Nov '17 Natural Gas Daily Chart

Nov '17 Natural Gas Daily Chart

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Softs - Cocoa

Demand Gaining Strength in Cocoa

Peter Mooses

European grindings provided some bullish demand news for cocoa. Support in the market has also been provided by the steady increase in global demand. Throughout this trading year, traders have been focused on the abundance of cocoa being estimated – turns out there is less than anticipated. Ongoing concerns that demand would be down in Europe, the top consumer, turns out to be the opposite. Third quarter grindings showed an increase of 3%. The moves higher in the Euro and pound also supported prices, and this recent move up. Focus will turn to North American numbers and see if this region can help with follow-through as we head into the last leg of 2017 and enter the holiday season.

Technically, resistance was broken at 2050 and 2105 – the 200-day moving average was also broken. The market will need to move above and hold over 2125 in the December contract to entice more buyers into cocoa.

Look for the next target, 2200, being touched in the near future as the fundamentals and technicals work together for the moment.

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

December Coffee Keeps the Pace

Adam Tuiaana

December coffee is currently trading in the middle of no man’s land today. Over the past couple weeks we saw a massive selloff from the 142 level, but December coffee prices were able to hold support last week at 124. Most of the volatility is likely due to the volatile weather patterns over key growing areas of Brazil. Is the demand for coffee still what it once was? Although the US stock market has been able to hold support, the US dollar had steadily and aggressively been rising through the end of September, thus adding pressure to December coffee prices and other commodities.

The near term resistance area will be 13279, with strong support coming in at 12425. For the time being, we will likely see consolidation over the next week as the weather issues in Brazil garner more solid direction.

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 - 10/13/2017

Stephen Davis

Steve discusses the most recent crop report, and what that could mean throughout the rest of the year.

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

Fourth Quarter Bearish Cattle Supply Shifts Warn for Selloffs

Live Cattle: A turn down from an overbought condition and from a wide basis suggests a short-term correction may have begun for the December Live Cattle market. Given a much tighter situation for the first quarter, a sharp correction for the February cattle will be a buying opportunity and rising stochastics at overbought levels warrant some caution for bulls. A positive signal on December Live Cattle for trend short-term was given on a close over the 9-bar moving average. The close below the second swing support number puts the market on the defensive and the next upside target is 119.900. The next area of resistance is around 118.450 and 119.900, while support hits today at 116.100.

Feeder Cattle: A bearish signal was triggered in feeder cattle on a crossover down as far as daily stochastics, and declining momentum studies in the neutral zone will tend to reinforce lower price action. The close below the 18-day moving average is an indication the intermediate-term trend has turned down. Fundamentally, feeder futures fell as pressures in live cattle futures and “ideas prices” have topped were expressed in the market. Both live and feeder cattle futures expressed expected volatility yesterday and going into the open today after moving higher early and then pulling back down with cash cattle before making a small rally on the close.

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

Nov '17 Feeder Cattle Daily Chart

Nov '17 Feeder Cattle Daily Chart


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Leadership is a Miss in the USD Today

Tony Cholly

US Dollar: We are surprised that the dollar is not showing more week ending short covering, or even a wave of fresh buying as the press is carrying stories that the ECB is poised to extend its bond buying program. Another issue that should be providing the dollar with more support is a suggestion from Fed’s Rosengren yesterday that US asset prices are moving higher at a pace that could require some type of policy action. The Fed’s Bullard has countered the hawkish bent somewhat by suggesting rate hikes should be put on hold until prices show signs of any recovering. Therefore the Fed influence to start today is countervailing but a US a CPI comes in above +.2%. The inability to hold above 92.80 could also set the stage for a poor finish to the week.

Euro: As suggested in the dollar coverage, ideas that the ECB is set to extend their bond buying program for another six months is the most significant undermine of the euro this week. If US inflation shows at expected or even above inflation, there could be more erosion in the euro early today. Traders should also be aware of multiple US Fed speeches today as that could put significant volatility into the currency markets. Critical support in the euro is seen at 11850 and it could take a rally above 11881 to throw off the bearish track.

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 Dollar Index Daily Chart

Dec '17 Dollar Index Daily Chart

Dec '17 Euro FX Daily Chart

Dec '17 Euro FX Daily Chart

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Stocks Probing for New All-Time Highs

Bill Dixon

The Dow and Nasdaq both printed new all-time highs in the early going of Thursday's session. The mini S&P touched Wednesday's all-time high, but was unable to print a higher price. All three indices are a bit lower heading into the close, but I don’t know that bears will be too encouraged by the slightly red net change readings we’re seeing. Data hasn’t been all that great as of late (Highlighted by last Friday’s Non-Farm Payrolls), but the markets seem to have given it a pass on account of the hurricanes’ effects. With the numbers being given a bit of a pass due to the weather, I think it will take a lot more negative news to shake the indices. Friday's slate includes CPI, Retail Sales, Business Inventories, and Consumer Sentiment. I tend to think good news will be seen as a reason to rally, while bad news will continue to be discounted as a result of the hurricanes. While bad news may not provide a reason to continue higher, I think it will take several substantial misses in economic readings and earnings to turn this over. Traders will also want to pay attention on Sunday morning when Janet Yellen speaks. She’ll be speaking about the global economy, but she may drop some clues as to what will follow the likely rate hike in December.

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 Daily Chart

Dec '17 Emini S&P Daily Chart

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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.


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