April 27, 2018

Volume 12, Issue 17

Feature Article

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Metals - Gold

Is the Rally Over in Gold?

Nicholas DeGeorge

In the early morning trade, gold has received a slight bump up and is currently trading at $1,322.9. Gold has been under pressure all week mostly due to the explosion of a rally in the US dollar. So far the positive peace talks between North and South Korea have also helped put some pressure on the shiny one as it puts the risk on trade to the sidelines. This morning’s better than expected US GDP numbers of 2.3% probably gave June gold a mini boost up after a big selloff this week. However, there are signs that the US economy is slowing just a bit, which might minimize this short-term rally in gold along with a damaging chart pattern.

If we take a quick look at the daily June gold chart, you’ll clearly see the technical damage and the big weekly selloff. The last two times that gold has traded down to these levels it has been able to rally back up around $40 a troy ounce. As long as gold is trading above its 200-day moving average, which is at $1,312.8, then the shiny one will be able to find gold buyers/bulls at these levels. However, if you see it close below the 200-day, then it opens itself up to a huge sell off back to the December 12 low of $1,247.2.

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

Move to Conservative-Bullish Stance at Copper Range-Center



In 27-Mar's Technical Webcast we discussed the importance of 26-Mar's 2.9375 low and 21-Mar's 3.0930 corrective high the market needed to recover above to threaten Dec-Mar's sell-off attempt and possibly resurrect the secular bull. The market obviously recovered above very short-term corrective highs at 3.0230 and 3.0930 that led to the subsequent gains seen in the 240-min chart below.

While we're unsure of whether 19-Apr's 3.1955 high completed only three or five waves up from 26-Mar's 2.9375 low, this week's recovery thus far leaves Mon's 3.0780 low as the end to what to this point is only a 3-wave setback as labeled. Left unaltered by resumed weakness below 3.0780, this 3-wave setback is considered another corrective event within the past month's uptrend. In this regard this 3.0780 low serves as our new short-term risk parameter from which traders can effectively rebase and manage the risk of bullish exposure...

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

Copper 240min Chart

 

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Energies - Crude Oil

Crude Bull Flagging or Rolling Over?

Michael O'Donnell

As of Thursday afternoon, the June 2018 WTI Crude contract was trading at $68.23 as the bull market shrugged off a number of potentially bearish factors throughout the week including:

  • builds as opposed to expected draws in both the API and EIA inventories
  • a strong dollar
  • outside markets concerned with multiyear highs in rates.

Of course, the high rates relate to inflation which helps the bull side as well as:

  • concerns about the Iran deal on the horizon
  • near record or possibly record Commitment of Trader longs
  • all time historical export levels and tight supplies compared to the 5-year average.

There is no recent price action above these levels, so it is interesting to note the lack of technical resistance from a charting standpoint as well as the hint of lower highs and lower lows over the past few days, in addition to ranges which have been smaller than a number of days prior.

While it is easy to see the bull market continuing with momentum, COT managed money and a lack of technical resistance, traders may also remember the recent record longs and the possibility of the trade becoming crowded and stops being hit amid long liquidation.

Traders may consider options strategies with June options having 21 days until expiration.

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 Jun '18 Daily Chart

Crude Oil Jun '18 Daily Chart

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Energies - RBOB Gasoline

RBOB Gasoline Futures Up 17% YTD

Phillip Streible

The national average for gas at the pump currently stands at $2.79 per gallon, jumping 6 cents this week. Where typical seasonal demand kicks in around Memorial Day, it looks like this year we are off to an earlier and stronger start. This comes as a surprise given that current daily gasoline demand stands at 9.083 million barrels per day compared to year ago levels of 9.206 million barrels. Also, current stock levels of gasoline stand at 236.807 million barrels versus the 5-year average of 227.461 which would indicate that a supply/demand isn’t the catalyst. Recent strength in the dollar along with another interest rate hike expected in June haven’t curbed this rally either. I would anticipate that a peak will be reached once the national average reaches $3/gallon which puts futures near $2.25/ gallon.

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.

RJOB Gasoline Jun ’18 Daily Chart

RBOB Gasoline Jun '18 Daily Chart

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Energies - Natural Gas

June Natural Gas in an Uptrend – for Now

Jeff Ratajczak

The trend in the June natural gas June is up.  Bullish forces will be in control with a close over yesterday’s 2.825 high, signaling a continuation of the trend upward to challenge the March 13 high of 2.873.  Resistance is seen at yesterday’s high and above that near the 2.850.  Support today is at 2.780, further out support is seen just under 2.750.  A close below, will send the market back into the 2.700-2.650 range.  Momentum studies are at mid-levels and starting to turn south.  This may increase a move down if support is broken.  If neither price is penetrated some consolidation may occur, but the trend will still be intact.

Today’s estimated EIA storage number is a -11bcf draw.  The five-year average for this week is a 60bcf build, this disparity favors the bull camp.  The weather is starting to turn more spring like and heating demand is waning with the seasonal change.  Warmer temperatures should bring 80’s to the Midwest, but along with the warmth comes the risk of severe weather. Demand for electricity for cooling has yet to be a major force in gas prices.  Continued exposure to the long side of the market should be considered.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-874-8110 or jratajczak@rjofutures.com.

Natural Gas Jun '18 Daily Chart

Natural Gas Jun '18 Daily Chart

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Softs - Cocoa

Cocoa Prices Headed for Higher Highs

Peter Mooses

No new news is good news? There is a repeating pattern in cocoa futures prices – pullback, buy more, move higher. It appears that traders do not think this rally is over. Every time prices stall, or try to consolidate, prices move to the next level of support. The technical trade is still bullish, a continued close above the 9-day moving average plus a strong trend-line to follow higher. If the July contract can hold above 2860, look for 2900 + to be reached by next week. It appears that 2915 is that next level.  The supply and demand side of the equation is still there, production levels continue to come in low, crops in West Africa are a continued concern. The New York ICE contract versus London Cocoa spread continues to widen. All these signs show that the top in cocoa futures has not been put in. One of the top performing markets in 2018 looks to be keeping its own pace and not done climbing yet.

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

Coffee Selloff Now Underway

Adam Tuiaana

Continued abundance of exports from major producing countries continue to keep the pressure on July coffee prices, as a visit to the 115 level is now in the history books. In my last article, I had mentioned that “continued violations of key support areas (most recently 11686) have been followed by tight corrections and continued selling.” Subsequently, once the 116 level was violated, July coffee quickly fell off, dropping to 11530.  Shortly thereafter, some short covering took place (tight correction) and July coffee prices rallied back to 12075. However, this morning we are now seeing some US dollar strength, and a “risk-off” mood is now underway, keeping July coffee prices in check at the 118 level. The next area of support on the horizon will be the 115 level. If this area is violated, expect a correction (possibly back to the 118 level again), 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 Jul '18 Daily

Coffee Jul '18 Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 04/27/2018

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

US Dollar Moves Higher and into Overbought Levels

Tony Cholly

The US dollar continued its move higher to start the morning and has traded higher eight of the last nine sessions. The current run has brought the market to slight overbought levels. Any surprises from the GDP or Employment Cost Index reports could increase volatility and push the market to resistance around the 92.00 level. Support comes in at 91.22, then 90.50 and a close under that first support would reverse the trend to the downside. The second level of resistance comes in at 92.46.

The euro started the day lower and with the ECB giving a cautious outlook yesterday the trend lower looks to continue. The ECB remained unchanged on its policy, but President Draghi was uncertain on the strength of the European market. Currently, bulls have little backing to push the euro higher with resistance at 12195.00, and 12285.50. Support comes in at 12047.00 and 11985.50.

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

US Dollar Jun '18 Daily Chart

Euro Jun '18 Daily Chart

Euro Jun '18 Daily Chart

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Agriculture - Livestock

Cattle Rebound Intact Above $101.60 S-T Bull Risk



The longer-term directional jury remains out as to whether this month's recovery is merely a correction within the broader bear from last Nov's 121.525 high or the start of a more significant reversal higher. As a direct result of Tue's break above 17-Apr's previous 106.175 high however, AT LEAST the intermediate-term uptrend has been reaffirmed with the important by-product being the market's definition of 20-Apr's 101.625 low as the latest smaller-degree corrective low the market is now minimally required to sustain gains above to maintain a more immediate bullish count. In this regard we're considering 101.60 as our new short-term risk parameter from which traders can objectively rebase and manage the risk of a bullish policy and exposure.

A relapse below 101.60 will render the recovery from 04-Apr's 97.075 low a 3-wave and thus corrective event that would then re-expose the major downtrend...

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

Live Cattle Jun '18 60min Chart

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