November 17, 2017

Volume 11, Issue 46

Feature Article

NEW: RJO Echo Trading Service

RJO Echo Trading Leader

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Exchange Info

CME Group - Bitcoin Futures

In Q4 2017, pending regulatory review and certification, Bitcoin futures will be listed for trading on CME Globex and for submission for clearing via CME ClearPort.

The Bitcoin futures are based on the underlying CME CF Bitcoin Reference Rate (BRR) value.

Bitcoin Futures

Product

MDP 3.0: tag 6937-Asset

iLink: tag 55-Symbol
MDP 3.0 tag 1151 -
Security Group

Market Data Channel

Channel Number

Bitcoin Futures

BTC

BF

CME Globex Equity Futures - excludes E-mini S&P 500

318

These futures will be available for customer testing in New Release on Monday, November 20.

These contracts are listed with, and subject to, the rules and regulations of CME.

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Metals - Gold

December Gold: Is There a Rally Ahead?

Joshua Graves

December gold futures have been testing the 200-day moving average for several months now which sits at 1273. There are a number of factors that are fundamental factors for the choppy two sided trade we see. On the bear side of the equation you see a most definite rate hike in December which is typically a dollar supporting, risk off event for gold. We have also seen quite positive economic data over the past few weeks that continues to support the stock market and create headwinds for the gold market. Recent PPI and CPI data that has come out this week was seen as very bearish for gold. The CPI did not come out particularly strong, but the “goods” sector number suggested that the economy is quite strong indeed. Reasons to be bullish gold are the unexpected US weekly jobless claims number rising to a 5 week high, and fund buying in the precious metals ETF’s that rose to a 3 week high. North Korea continues to be a non-issue as we have not seen any recent missile tests (over two months now). The President's recent trip to Asia would have been seen as a damper for possible military conflict with NK as he talked with his Chinese counterpart about pressuring their nuclear ambitions.

The technicals on gold look better and better as we continue to trade sideways and build support around the 200-day moving average (green line below). We will most likely see much headwind resistance around the psychological 1300 price level (also the 38% retracement level). From there it’s the 50% retracement level of 1313, and 1325. There needs to be a solid fundamental drive for us to get to these levels, especially with the stock market so strong on prospects of tax reform looking better and better.

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.

Gold Dec '17 Daily Chart

Dec '17 Gold Daily Chart

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Metals - Silver

Bulls Have Technical Edge in Silver

Eli Tesfaye

On November 17, 2017, December silver is trading at 17.100, down about 2 cents on the day with the daily low of 17.02. A pullback in the US dollar index once again is helping to stabilize silver. First notice for December silver is coming up to the end of this month. Market would likely see a bump from the roll, as well as the technical improvement on the chart. Silver is getting into attractive price levels with lows holding near 17.00. The daily chart below shows the support structure in the short term to facilitate higher price action. Momentum will probably send silver to retest 17.50 levels. A break above that will probably entice farther rally. All that said, a break below 16.60 in December contract will likely put near-term lows.

Silver has been consolidating in a tighter range. The Commitment of Traders with Options report (COT) shows increasing non-commercial and non-reportable traders are steadily adding to their net long positions from the week ending November 7, 2017. No doubt that the bull camp needs a further catalyst to drive price higher. Decent correction in equities and/or fresh geopolitical concerns in hot spots around the globe could drive price higher. 

Bargain hunters can ease into the long side from these levels with a tight risk. Those who want to be long silver will be better served if they come in on strength rather than weakness.  That said, a close above 17.05 should provide that near-term lows are possibly in. The March silver contract is trading around 17.200 at this time. I expect to see strength in silver in the coming days. 

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 Dec '17 Daily Chart

Dec '17 Silver Daily Chart

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Energies - Crude Oil

Can WTI Crude Bulls Make New Multi Year Highs?

Dan Hussey

This week’s reading of the EIA Petroleum Status Report, crude oil inventories rose in the US by 1.9 million barrels. Compared to last week’s inventory gain of 2.2 million barrels, trade has responded more in kind with the bulls, as crude demand remains consistent since US refineries have been brought back online (after hurricane Harvey). This week’s EIA report was dwarfed by the API report earlier this week which saw a rise of 6.5 million barrels, so now the only question is which is correct? Gasoline inventories were also reported to have seen a 0.9 million barrel gain and this might be the result of refineries over estimating short term demand for gasoline. A backup in the production chain is usually seen as bearish for trade, and likely a strong proponent for the decline in crude oil futures from last week’s 57.92 highs.

From a technical perspective, WTI crude oil futures have continued to trend higher from the mid-summer lows in the continuous contract. Below I have included a daily bar chart, outlining some of the important price levels that could produce a reaction in the crude market. The most important of which, is the 55.24 high from December of 2016, which the market his currently finding as support now that it has closed securely above. Below those prior highs, the 54.18 and 49.99 50% Fibonacci inflection zones are the next key downside support levels bulls should pay attention to.  To the upside, resistance will likely be found into the 60.00 handle, as the fundamental trade suggest a significant price barrier there (as this is where US shale becomes profitable). Technical upside projections come in around 62.50, as a target zone from the previous Fibonacci support levels.

In my opinion, crude oil futures are now above a short term line in the sand, where a breakout higher could be imminent. I am cautiously optimistic that the 55.00 area will now hold as support and give way to a rally higher, however, the closer to 60.00 a barrel the market gets the higher probability more oil wells and rigs will be brought online (if they aren’t already) to meet demand. With global production nowhere near its full capacity, the price of WTI oil likely remains capped in the near term (where that level is however, remains the battle), but the trend is up 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 Continuation Chart

Crude Light Daily Continuation Chart

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Energies - Natural Gas

Normal Temps and a Draw in Storage for Natural Gas

Jeff Ratajczak

With two days closing slightly higher, the short term trend has turned sideways to positive. The bull gap from November 6 is holding for now, and has slightly bullish implications. The first level of resistance is seen around 3.141. A close above 3.231, the second resistance level, can signal the start of another leg higher toward a target of 3.285. Support once again will be seen at 3.050 at the top of last week’s gap. Below that 3.000 can be used as second support and stops for longer term bullish plays. Momentum studies are at mid levels.

Today’s storage number calls for draw of -15 bcf this week well below the 5-year average. The 5-year average is for a 12 bcf injection. The draw won’t make a big difference in overall storage, but people trade off the reported number. A draw of more than -15 may spark buying, whereas a surprise injection may cause a decrease. Warmer weather was prevalent yesterday across the US. Chicago had a high near 50 degrees. Today however, more seasonal temperatures return and highs should struggle to hit 40. Normal temp’s going into the weekend are predicted. I’m still in the bull camp, with careful long plays or call options suggested.

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.

Natural Gas Dec '17 Daily Chart

Dec '17 Natural Gas Daily Chart

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Softs - Sugar

Sugar Poised for Upside Technical Breakout Again

Joe Nikruto

This week’s comment finds March sugar futures continuing to push higher into territory not seen since mid-September. Energy market strength has translated into higher prices for March sugar futures. The rally appears to be fueled in large part by short covering with open interest shrinking along with the short position of the funds. 15.22 is the line in the sand this market must cross and hold for bulls to gain a level of comfort while funds continue to be pushed out of short positions and begin to establish new, technically signaled, long positions. A recent missive from a long standing, widely read ICE softs markets commentator saw her highlighting the ability of the sugar market to essentially shrug off the end of European production and export controls. The commentator, Judith Ganes, who has always been keenly tuned in to softs market fundamentals, mentioned that it may too soon to conclude the whole episode is baked into the sugar market cake. While I agree with her, the chart has gone from taking aim at new lows to setting up for another attempt at upside breakout. This is not the first time we have been here. Since June we have seen these breakout attempts run into resistance in the 15’s. Technically, the chart looks poised to make a move into the mid 15 area and beyond. Funds are still short and any move over 15.22 will see them getting less so and maybe even long. If commercial pricing at those levels does not show up the market will have to auction higher to find willing sellers. Fundamentally, I am not sure this market has the ingredients to add upside layers to the cake. The 18-day moving average comes in at 14.62 in the March contract. Stochastics are in overbought territory. March sugar has managed to close over the 50-day moving average, 14.45, for the last 8 trading sessions. Every day that this market manages to stay above that level is further evidence of a possible trend change in March sugar in spite of surplus numbers that say otherwise.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-453-4494 or jnikruto@rjofutures.com.

Sugar Mar '18 Daily Chart

Mar '18 Sugar Daily Chart

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Softs - Cocoa

Cocoa: Still poised to keep pricing higher?

The cocoa market looks to be finishing up the week the same way it started on a weak note.  Nonetheless, many are still very animated at the fact that we are still trading above 2100 even after a very volatile week in the currency and equity markets.  It is these outside markets that play a large role in how one gauges the cocoa market when there is not a great deal of information out on the street.  Therefore, I would argue that one should keep in mind that if we do see a large bearish move in equities that investors in long-term bullish cocoa positions may wish to find ways to cover their risk.  Granted, the contract, basis March, still reflects a nice up trend that we could follow up another 100 ticks.  This especially could be the case if we get any negative weather information in the next couple of weeks just prior to the Harmattan in West Africa.  I have always found that in these situations very inexpensive put options going out no more than 30 days is a great way to cover risk.  It will not cut much into ones profit moving forward, but will help make up some of the downside during the long waiting game.  The range one may want to follow going into next week is 2160-2200 on the upside and 2110-2095 on the lower end.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 877-963-6484 or hgalvan@rjofutures.com.

Cocoa Mar '18 Daily Chart

Cocoa Mar '18 Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 11/17/2017

Stephen Davis

Steve discusses grain exports and world weather conditions. How will these effect the grains through the end 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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Currencies

Currency Outlook/ USD, Euro, Yen

John Caruso

After a steady bullish run in the USD spanning the last 2 1/2 months, the Dollar has recently suffered some fairly significant chart damage of the immediate term trend this week.  As we don’t expect a free fall in the USD to ensue immediately, we do believe that some caution moving forward is warranted for the bulls.  The predominant factor that will affect the USD moving forward will be the USA’s domestic growth and inflation outlook provided by the data and ultimately how the Federal Reserve Open Market Committee responds in kind.  Across the “pond”, the EUR has been the main beneficiary of weakness in the USD, however we’re skeptical as to whether this recent found strength can persist.  Euro Zone CPI’s were soft this week, and low yields across the Euro Zone reflected upon the dovish data.  In summary, with mixed emotions on both sides of the USD/EUR trade, for the time being, I’m recommending to currency trader’s that it’s best to manage the range in the USD with respect to 93.40 on the low end and 95.00 on the top end until a stronger fundamental catalyst can present itself to drive a longer term trend. 

Taking a look at the Japanese Yen (JPY), we can’t help but notice a possible bottoming process in place.  From a fundamental standpoint, we can’t really pin point anything significant in the Japanese economy that would suggest a reason to be bullish on the JPY, however, the JPY has also been known to be a “safe-haven” currency with respect to a softening of global economic conditions and geopolitical uncertainty.  So with that respect, although a sound fundamental catalyst has yet to present itself, we do believe that the developing bullish technical action in the JPY should not be ignored in the near-term. 

Technical Outlook:

Daily Chart in the USD; Breach of the immediate term bullish trend on Tuesday will keep the bulls on edge.  Until the USD can retake that trend line, the action will remain. Bearish in the near-term for the USD.  

Japanese Yen Daily Chart; Yen breached the recent swing high of 88.71, with the next major upside target perhaps at 89.75.  We’re on watch for a bottoming turn and a possible reversal of the longer-term trend.  

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.

US Dollar Dec '17 Daily Chart

US Dollar Dec '17 Daily Chart

Japanese Yen Dec '17 Daily Chart

Japanese Yen Dec '17 Daily Chart

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Interest Rates

Where’s the inflation?

Tarik Husseini

Tame inflation numbers this week are keeping a bid under treasuries, along with some geopolitical tension emanating from Saudi Arabia/Iran. It is notable that bonds rallied sharply off an early week sell off in the S&P, and have maintained strength with a 23 point rally in the S&P Thursday. That behavior, where flight to quality moves are sustained when fear has abated, bodes bullish for bonds. 

Yesterday morning the Consumer Price Index showed a .1 percent rise after jumping .5 percent in September. That lowered the year on year increase in the CPI to 2 percent from 2.2 percent in September. The primary argument for higher rates is rapidly rising inflation. Without proof of that, the fed can be much more gradual in hiking rates. It is still expected that the Fed will raise rates once in December, and three more times next year. 

Technically, 30-year treasury bonds are closer to the high of the recent range then the low. There should be very stiff resistance between 155 and 156 on the December 30-year bond. Aggressive traders may want to consider getting short exposure when bonds are in the 154 area. A sustained rally in the S&P will cause rotational pressure out of bonds and into equities. Flight to quality strength will also diminish. Initial support comes in between 150 and 151, with much more downside should it be broken.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-672-0664 or thusseini@rjofutures.com.

30-Year Treasury Dec '17 Daily Chart

Dec '17 30-Year Treasury Daily Chart

 

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Equities

Stocks a Point Higher Ahead of Tax Bill Vote

Jeff Yasak

Global markets regained their footing over Wednesday night and took a positive tone coming into Thursday's trading. There appears to be more optimism over US tax reform measures as the House is expected to bring a bill to vote this week, which provides a boost to risk appetites around the globe. While Chinese shares finished nearly unchanged, Asian stock markets were mostly higher, led by strong gains in the Japanese Nikkei and South Korean KOSPI indices. A busy morning of European data included a reading for Euro zone CPI and better than expected results for UK retail sales. The US trading session will start out with a weekly reading on initial jobless claims that is forecast to have a modest drop from the previous 239,000 reading. Will this recovery be enough to see a resumption of the uptrend? There are still some concerns that earnings growth may slow; especially if there is a long and drawn out fight over tax policy. Some form of tax relief is already priced for 2018 earnings and this may be enough to spark some movement of investors to the sidelines into the end of the year. December e-mini S&P resistance comes in at 257960 with support at 256425.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-861-1656 or jyasak@rjofutures.com.

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

Dec '17 Emini S&P 500 Daily Chart

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