April 13, 2018

Volume 12, Issue 15

Feature Article

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Metals - Gold

Possible Buying Opportunity for Gold

Nicholas DeGeorge

In the early morning trade, June gold is slightly in the negative and trading at $1,340.4. After President Trump didn’t retaliate against the Assad Regime in Syria for gassing his own people earlier in the week, gold has fallen nearly $35 off its April 11 high of $1,369.4. After the big three day drop in gold and the overnight rhetoric out of Russia that war cannot be ruled out, there is a good chance that gold can find some support down at these levels. Furthermore, with all these geopolitical headlines, I find it very hard for traders/investors to want or feel comfortable going home short over the weekend as anything can unfold from this situation. Lastly, Chinese investors have been rushing to buy gold ETF’s, which will obviously be seen as a positive for gold bulls.

If we take a quick look at the daily June gold chart, you’ll see that gold found support around its 20- and 50-day moving averages, which come into play at $1,338.0 and $1,336.4. If it fails to hold these, then look for a pull back to last week’s low of $1,322.60. If all hell breaks out today, over the weekend, or soon with the Syria conflict, then look for a rally back to at least this week’s high or much higher.

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 Jun '18 Daily Chart

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Metals - Copper

Copper Clawing Its Way Back Into Major Bull Mode



In 27-Mar's Technical Blog we discussed the developing threats to the major uptrend as well as a very short-term, nondescript show of strength above 23-Mar's 3.0230 minor corrective high. After further gains and a relapse attempt, this week's recovery above 02-Apr's 3.0725 initial counter-trend high not only confirms at least the intermediate-term trend as up, we believe the long-term directional scale has tilted back in favor of the secular bull.

By virtue of this week's resumed uptrend, the 240-min chart below shows that the market has identified Fri's 3.0245 low and 04-Apr's 2.9700 low as the latest smaller- and larger-degree corrective lows. In light of broader bullish evidence we'll elaborate on below, traders are advised to use these two levels are our new short- and longer-term parameters from which to rebase and manage the risk of a resumed bullish policy.

Integral to a resumed long-term bullish count are the following:

  • the clear 3-wave and this corrective decline from 28-Dec's 3.3085 high close to 26-Mar's 2.9700 low on a daily close-only basis above
    • the Fibonacci fact that the (prospective C-Wave) decline from 16-Feb's 3.2485 high came within a third of a penny of equaling (i.e. 1.000 progression) Dec-Feb's initial (A-Wave) decline from 3.3085 to 3.0335
  • the bear's gross failure to "perform" below early-Feb's 3.0260 low when it had every chance in the world to do so with late-Mar's break
  • the market's inability to correct/retrace much more than a Fibonacci minimum 38.2% of May-Dec'17's 2.4725 - 3.3220 rally
  • the return to relatively low bullish sentiment levels that have warned of and accompanied other corrective ends within the major two-year bull.

Indeed, at a current 51% reading our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC is at its lowest, least-bullish level since Oct 2016 when the market exploded higher.

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

Copper 240min Continuation Chart

Copper 240min Chart

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Energies - Crude Oil

Fresh Highs and Near Record Longs in Crude Oil

Michael O'Donnell

As of nearly noon Thursday, the May crude oil contract is trading at $66.75 as the market made a high of $67.45 yesterday following the EIA inventory report and geopolitical concerns in the Middle East, namely Syria and Riyadh.

While continued saber rattling and brinkmanship will aid a bid in this market as it trades higher than it has since 2014 and above recent highs of $66.66, market participants may also note the near record net longs in Commitments of Traders data and the potential for those longs to be liquidated rather rapidly if things cool down internationally.

There is the potential for new highs to continue given trading at prices not seen in years and near record longs. There is also the possibility the near record longs begin to become a crowded trade, liquidating more quickly as falling markets have the potential to fall more quickly, taking the stairs up and the escalator down.

OPEC production quotas and US Production set to eclipse Russia in 2019 with output at its greatest level since the 1970s should also be considered.

 For a market such as this, trading at a level not seen in several years, our desk is utilizing a number of strategies including futures, options, combinations of both and spreads of each.  Contact us to discuss the best strategy for your account.

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 Weekly Chart with COT

Crude Oil Weekly Chart

Chart Source: finviz.com

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Energies - Natural Gas

Natural Gas Futures Sit in Consolidated Downtrend

Jeff Ratajczak

The trend in May natural gas is down.  It has been trading in a consolidation over the last week to week and a half.  The market is supported between 2.650 down to 2.600.  Above 2.700 may turn the tide back to the bulls.  Above the April 4 high of 2.746 should signal a charge toward the 2.800 mark, and finally above the March 13 high of 2.831 might see a run to a target in the 2.900’s.  All momentum studies are at mid-levels and moving sideways.  We are still waiting for a divergence to signal a directional move.  

Weather has been starting to warm up.  This year has started out below normal temperatures up until now.  This week the forecast is calling for more seasonal temps.  Some 60’s and 70’s temperatures will be seen in the Midwest.  The last snows might have fallen for this year and spring will finally arrive, after one more cold spell early next week.  A slightly larger draw of -19 bcf was realized this week after the estimates called for -11 bcf.  The 5-year average is a slight surplus of 9 bcf.  I suggest further exposure to the short side until we see something material to change the current trend.

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 May '18 Daily Chart

Natural Gas May '18 Daily Chart

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Softs - Cocoa

Cocoa Futures Prices Continue to Hold as Grindings Data Take Front Seat

Peter Mooses

Fundamental news in cocoa continues to be the story in the futures market. Grindings data is expected to show a rise in all regions. The European Cocoa Association report is released April 18 and the North American report on April 19. The market is being cautious as the trading range has tightened this week – you can see this in the July chart below. Expect volatility over the next few weeks. West African output is also going to add to this trend. Prices have moved higher, faster than most anticipated. Will the new data support the market or cause a break and correction back to 2200? Most likely the data will support the market and not be much of a mover but traders will lean on the side of caution. Watch support at 2475 – prices appear to like the level above 2500. Resistance has been set at 2670, bullish fundamentals and a break above this could set the market to 2750 over the next few weeks.

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 Jul '18 Daily Chart

Cocoa Jul '18 Daily Chart

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Softs - Coffee

Using Options for Downward Continuation in Coffee

Adam Tuiaana

Sizeable exports from both Vietnam and Brazil continue to put downward pressure on May coffee prices. The Hightower Group has reported “the prospects for coffee’s top two growing nations continue to lean bearish”, and the price action continues to support that statement. There is no real change from the past couple of weeks for coffee. There is no doubt that for the foreseeable future, the bears have control of this market. Continued violations of key support areas (most recently 11686) have been followed by tight corrections and continued selling. The next area of support on the horizon will be the 116 area, and we will be paying close attention. If this area is violated, expect a correction (possibly back to the 120 level), and engage in a short position at that time. Traders can position themselves for a long-term downward continuation using long put options that allow exposure and leverage, while managing risk effectively. In addition, buy equal-numbered quantities of options, so that you can remove half of the position when the option value doubles (thus eliminating the premium risk).

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 May '18 Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 04/13/2017

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

Follow the Trends in Currencies

Tony Cholly

While the dollar has shown a bit of weakness to start off this morning, the weakness has been somewhat minimal. However, expectations are calling for weaker data this morning and it may take hawkish dialogue from two FED speeches to ignite the recoveries from the lows seen in the last few trading sessions. Support comes in today for the US dollar at 8930 with resistance coming in at 8970.

While the US has solicited some support from European officials regarding the need to respond to the human tragedies in Syria, the Russian comments overnight clearly raise the risk to those who participate in a military action in Syria. Trump is scheduled to speak with the French leadership and France has indicated they have proof of the use of chemical weapons and therefore the euro should be expected to be pressured along with the dollar because of geopolitical concerns. We see overnight German inflation readings and euro zone Eurostat trade readings minimally supportive. However, the last two days have provided negative chart action. Support comes in at 1247300 with resistance at 1242500.

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.

U.S. Dollar Jun '18 Daily Chart

 Dollar Jun '18 Daily Chart

Euro Jun '18 Daily Chart

Euro Jun '18 Daily Chart

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Interest Rates

T-Note Bullish Count Fades



Yesterday's break below 05-Apr's 120.165 initial counter-trend low confirms a bearish divergence in daily momentum and reinforces our bearish count discussed in 05-Apr's Trading Strategies Blog. This resumed weakness leaves Wed's 121.035 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter from which an advised bearish policy and exposure can be objectively rebased and managed.

The daily chart below shows the bearish divergence in momentum after what clearly is only a 3-wave recovery from 15-Feb's 119.14 low. Left unaltered by a recovery above 02-Apr's 121.12 high, this 3-wave bounce is considered a corrective/consolidative event ahead of the eventual resumption of the secular bear trend shown in the weekly chart below.

These issues considered, a bearish policy and exposure remain advised with a recovery above 121.04 required to defer or threaten this call enough to warrant its cover. In lieu of such strength we anticipate at least a return to the lower-quarter of the past couple months' range straight away and eventually a resumption of the secular bear trend to new lows below 15-Feb's 119.14 low.

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

T-Note Jun '18 Daily Chart

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Equities

Stocks Giving up Gains After Open

Bill Dixon

Stocks hit their highest levels since the giant selloff on 3/22 overnight but are paring some of those gains after the open. The gains we have seen this week are pretty impressive considering the war of words with Russia seems to be escalating along with the ongoing crisis in Syria.  Technically speaking, the double bottom followed by a pattern of higher highs and higher lows seems to bode well for the indices moving forward. We’re running into some trend line resistance on the E-mini S&P, and quite frankly, I wouldn’t be surprised to see some profit taking heading into the weekend given the circumstances mentioned above. 

Adding to the weakness, the Consumer Sentiment reading came out soft.  We were expecting to see 101.0, but the data fell short and reported only 97.8.  It’s not the biggest of misses, but markets were expecting something a bit more in line with the March reading of 101.4, which was a 14 year high.  We also saw a JOLTS reading of 6.052.  That reading was in line but slightly lower than expectations.  Economic news next week is pretty light, but we’re back into earnings season.  Those readings and Syria news are likely to drive direction next week.

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 Jun '18 Daily Chart

E-mini Jun '18 Daily Chart

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Bitcoin

Bitcoin Bottom is Here

Phillip Streible

After a long grind down from posting a double top at $11,800 it looks like the bleeding may have stopped. In early February we saw this type of reversal off the lows where heavy volume drove the contract to double in value over the next 20 days.  I would suspect that this rally was triggered by extensive short covering by the short sellers which is typically a bull move in a bear market. However, the continued follow through today suggests that we could see another couple days of rallies and a move back up to $10,000 would mark a 61.8% retracement off of the low. If we see a breakdown below $7,000 the bull recovery would be negated and that could be the final blow to the longs, so time will tell.

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.

Bitcoin Daily Chart

Bitcoin Daily Chart

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