March 16, 2018

Volume 12, Issue 11

Feature Article

Upcoming Webinar

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Agriculture Planting Intentions Report

Thursday, March 22 at 11 a.m. CT

In this session you will discuss:

  • How much has Argentina weather changed North American market fundamentals?
  • Soybean planted area may exceed corn for first time ever; corn impact?
  • Driest Southwest Kansas Dec-Feb weather on record; July KC wheat impact

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Metals - Gold

Gold is in a Range-What Direction?

Nicholas DeGeorge

For Thursdays trade, June gold saw little movement and traded within a tight $13 range. However, it traded down about $9 and extended its two-day selloff and is still trading in a tight range over the last two weeks.  Once again, the dollar traded higher Thursday, which has largely kept gold in check and preventing it from rallying to higher prices. The gold bulls and bears will keep a close watch on the US dollar or any kind of trade war brewing to see what direction the shiny one will pick next. Furthermore, with the new Chief Economic Advisor Larry Kudlow joining the Trump Administration this week, whom favors a strong US dollar, gold might find further difficulties in finding higher prices for the time being.

If we take a quick look at the daily June gold chart, we can pick from some good technical levels to help us with the next direction of the market. If gold breaks above this week’s high that is also above a bearish trendline, then look for a rally to the February 16 high of $1,369.6, which was the start of this trendline. If gold trades below this week’s low of $1,319.1, then look for a selloff to at least the 200-day MA, which is currently at $1,302.5. I highlighted all these levels below on my RJOF PRO daily June 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.

Gold Jun '18 Daily Chart

gold_jun18_daily_chart

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Metals - Copper

Copper Continuing Sideways Action

Phillip Streible

Copper futures continue to monitor global developments over trade disputes with China over its sister metals aluminum and steel. President Trump is considering a new trade package with China that could play a substantial role in the next direction for copper and could impact demand. Over the past two months copper has slowly channeled lower since the start of the year with expectations that the Federal Reserve will raise rates up to four times this year. This should start to curb demand for building in the United States and increase cost of capital for new projects.

Technically, copper looks to be trapped with the 50-day moving average at 3.1935 as well as where the downward sloping trendline comes in just above it. The longer term support is at 3.0345 at the 200-day moving average and a gap that has been left open at 2.7980. Using these levels for breakouts of key support and resistance should help determine the next likely direction.

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.

Copper May '18 Daily Chart

copper_may18_daily_chart

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Energies - Crude Oil

Crude Oil Poised for Possible Major Move

Michael O'Donnell

As of Thursday afternoon, April crude oil was trading near $61.30 as the market weighs a number of significant developments and appears to be approaching a crucial point amid relative consolidation for this market.

Wednesday morning’s EIA report showed a large build in inventories of 5 million barrels amid a time of year the refineries are switching their blends.  This corresponded with large draws in gasoline and distillates of 6.3 million and 4.4 million barrels, respectively.

While the market took the build as bearish selling off initially Wednesday post report, traders also have considered the decline from the level last year and tightness of compared to years past.  We must also consider the historical highs in terms of US production and murmurs that OPEC quota and corresponding compliance may change should their objective be met or from such US production.

One thing that is for certain is the fact the market has simultaneously traded with higher lows and lower highs for some time now.  For some, this may represent coiling price action prior the market finding further direction.

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.

Crude Oil Apr '18 60min Chart

crude_oil_apr18_60min_chart

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Energies - Natural Gas

Natural Gas Selloff May Be in the Cards

Jeff Ratajczak

The prevailing trend in April natural gas is sideways to up.  It has been a steady climb since the low of 2.565 on February 12 to the high of 2.811 on March 13.  The 2.800 level is today’s first level of resistance followed by 2.850, and then January’s high of 2.983.  Support comes in at around 2.630. Below that there doesn’t seem to be anything technical as support until 2.560.  Momentum studies are at mid-levels and are turning up slightly leaving plenty of room for the market to adjust to fundamentals.  However, the 2.800 level seems to be one the market is comfortable with.

The weather forecast for the short term is for colder than normal weather in the Eastern United States.  The expected draw is -99 bcf, which is pretty much in line with the average.  A larger than expected draw may be needed for the gas market to climb above resistance.  Continuation of yesterday’s sell off may be in the cards, down into the support numbers in the low 2.600’s.  I’m leaning toward the down side today if the storage numbers are close to expectations. 

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 Apr '18 Daily Chart

natural_gas_apr18_daily_chart

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Softs - Cocoa

Cocoa Supply Concerns Take Driver’s Seat as Prices Move Toward 2600

Peter Mooses

During the month of March, cocoa futures (May contract) has moved over 300 points - rising about 14%. This recent rally has helped cocoa become the best performing commodity of the year thus far. Supply/demand news created this move and continues to support it. Ghana production is expected to come in lower still. Grinding data numbers from Ivory Coast are higher, ahead of last year. All supply news seems to be favorable for a bullish market. Technically, a continued close above the 9-day moving average is also a short-term positive.

A few things are concerning though - overbought levels, profit taking and the correlation between the euro, pound and dollar. Cocoa futures are overbought, eventually there will be a correction – where is the top? The chart seems to think 2600 is a realistic next target. Profit taking seems to be creating pullbacks and possible buying opportunities, but these patterns will eventually lead to consolidation. The euro and pound could be a good indicator of the demand for cocoa. A weaker dollar will also show us what the global outlook may be for commodities in the near-term and may lead to pressuring the markets.

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.

Cocoa May '18 Daily Chart

cocoa_may18_daily_chart

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Softs - Coffee

May Coffee Futures Continues Downward

Adam Tuiaana

Extremely volatile and choppy sideways price action seems to be the ongoing story for May coffee prices. As is the case in many long term down trends, May coffee prices continue to have solid and steep corrections, as part of the downward continuation. Continued wet weather in Brazil is managing to put pressure on May prices this morning. On a side note, the addition of Larry Kudlow as Trump’s top economic advisor will likely promise solid efforts to continue US dollar strength, inversely (and ultimately) pushing other currencies and commodity prices lower.  From a technical perspective, ongoing violation of critical support areas (initially 120 and then 11850 shortly thereafter) have done nothing but convince already-bearish traders that a continued downtrend is underway. Although traders should expect steep corrections, the bears seem to be fully in control at this point.

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.

Coffee May '18 Daily Chart

coffee_may18_daily_chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 03/16/2018

Stephen Davis

RJO Futures Senior Market Strategist Stephen Davis discusses the grain futures markets. 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

Is the US Dollar Weak or Strong?

Tony Cholly

US Dollar: Although the dollar is coming off of a multi-day recovery bounce, there does not seem to be a definitive trend present in either direction. Some of the dollar strength was justified by better than expected US scheduled data yesterday and we are surprised that the dollar is trading weaker this morning in the face of European inflation readings overnight. However, expectations for a rather active US report slate call for soft results and the trade was made aware yesterday of further softening of foreign investment for US financial instruments. Resistance is building around 8975 and we can’t rule out a chop down toward consolidation low support of 8915.

Euro: Despite weakness in the dollar, the euro has only managed a modest short covering rally, it has also forged a fresh lower low in the early going and there are some suggestions that euro zone growth is generally slackening. Fortunately for the euro bulls, the US scheduled report slate might provide further short covering gains, but resistance comes in at 12435.

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.

US Dollar Jun '18 Daily Chart

dollar_jun18_daily_chart

Euro Jun '18 Daily Chart

euro_jun18_daily_chart

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Equities

Stocks Quiet Heading into Open

Bill Dixon

The day’s slate of news kicked things off with the Housing Starts data.  Both the starts and permits came in below expectations.  January starts were expected to come in at 1.285 million, but we saw only 1.236 million. February permits were expected to show 1.322 million, but came in at only 1.298 million.  The markets gave back a little bit following the news, but have since regained those small losses and are all slightly in the green minutes before the opening bell.    

Industrial production, and consumer sentiment, and JOLTS are to follow.  I’m not sure we’ll see too many fireworks following those releases, and I think most traders are already looking forward to next week’s FOMC announcement.  It is all but guaranteed we’ll see our first hike of the year, but traders will be listening closely to see if the Fed still intends to raise three additional times in 2018 and for their 2019 forecast. 

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.

E-mini S&P Jun '18 Daily Chart

e-mini_s&p_jun18_daily_chart

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