May 11, 2018

Volume 12, Issue 19

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Metals - Gold

Gold Futures are Basing a Bottom

Frank J. Cholly

Gold futures continue to chop around in a sideways trading range of roughly $1,305 to $1,370. The June futures contract has, in my opinion, now based a bottom and is ready to move back towards the $1,350 range. Today June futures are currently trading at $1,320. The 200-day moving average is $1,315. A close at this level or higher would be considered supportive and encourage the bulls to add to the long positions. I like gold at these levels for longer term positions. The only reason that the corrective selloff has reached this level is due to the strength in the US dollar. I believe that is happening because China is buying dollars to devalue the Yuan! Gold does well in a “safe-haven” trade or a weak dollar trade, however, energy prices are very strong and that becomes inflationary. Gold performs best in an “inflationary trade.” I see inflation really heating up and energies are just the leader in the beginning of another commodity bull market. Gold will follow…

Gold needs to have a close above the 200-DMA at $1,315 and then again above $1,325. If this bounce gets rejected, then we will likely see a “hard” test of $1,300.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or

Gold Jun '18 Daily Chart

Gold Jun '18 Daily Chart

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Metals - Silver

Continued S-T Silver Gains Resurrect L-T Base/Reversal Threat, Opportunity

Thursday's clear break above last week's 16.62 high reinforces at least an intermediate-term base/reversal count introduced in 04-May's Technical Blog following last week's gross failure to sustain losses below the past three months' support. As a direct result of this resumed strength, the 240-min chart below shows that the market has identified Tue's 16.335 low as the latest smaller-degree corrective low and new short-term risk parameter it is now minimally required to fail below to stem the recovery from 01-May's 16.07 low, render it a 3-wave and thus corrective affair and re-expose the second-half of Apr's downtrend. In lieu of such sub-16.335 weakness there's no way to know that this rally isn't the 3rd-Wave of within a broader base/reversal process that we believe could be of a shocking scale...

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

Silver 240-Min Continuation Chart

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Energies - Crude Oil

Crude Continues Higher Track

Michael O'Donnell

As crude oil trades at the highest level in the front month contract since 2014, a number of factors should be considered.  Early in the week there were some comments and speculation that record longs may have been reached again, Friday’s commitment of traders will tell.  Tuesday’s Iran announcement saw profit taking and buy the rumor sell the fact trading prior to an EIA report Wednesday which showed a draw in inventories and tighter supply than forecasted with a draw vs. build in inventories, leading to continued strength in the contract.  As of Thursday’s open in the western world, the contact has traded from a high of $71.89 before finding support at $70.56, the June is trading at $71.09 as of this writing.

Looking ahead, it is hard to argue with such a strong chart and fundamental factors.  However, end of the week profit taking, a crowded trade and corresponding stops, possible mean reversion and overbought conditions should be considered.  It will be interesting to see if the strength continues through the end of the week or if the selloff as of this morning continues further.  Charts for all time frames above the 5-minute are from the lower left to upper right.

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

Crude Oil Jun '18 Daily Chart

Crude Oil Jun '18 Daily Chart

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Energies - Natural Gas

EIA Estimate Puts Gas Storage Above 5-Year Average

Jeff Ratajczak

The trend in June natural gas is slightly down.  It has been trading in a range between 2.700 and 2.800 since mid-March.   The short-term moving averages are heading south.   Momentum indicators are at mid-levels and are travelling sideways.  As always, we are looking for divergence in momentum and price action in the market to choose direction.   Support is right around 2.700, and a close beneath 2.690 should signal a selloff, taking aim at April low 2.660 and below.  Resistance is around the 2.800 level.  Closes above this should be enough to stem the tide and put the bulls back in the driver’s seat.

Tomorrow’s EIA estimate for gas storage is 81 bcf.  This is above the 5-year avg. of 75 bcf.   The injection should keep pressure on the prices and take them lower.  Above average temperatures for the foreseeable future lends a bit of support, but not enough to concern traders with cooling demand.   Warmer weather has put heating demand for gas behind us for this year.   Exposure to the short side is recommended.

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

Natural Gas Jun '18 Daily Chart

Natural Gas Jun '18 Daily Chart

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Softs - Cocoa

A Volatile Two Weeks for Cocoa

Peter Mooses

The cocoa futures market has recently seen wide ranges with currency and demand concerns. Although cocoa price remains high at overbought levels, the currency trade and outside factors could change that. Technically, cocoa futures haves been overbought but have fought off this factor to continue to climb towards contract highs. Of late, the stronger dollar, lower euro and weaker pound has hurt demand out of Europe – this has pressured prices and added volatility. Global supply concerns of cocoa have still been able to be the main factor of prices being supported at these levels; but these levels have been trading in 100 point ranges giving traders the idea that this market can move either way at any time. Continue to monitor global demand, grinding data and see where the technicals lead traders over the next week.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or

Cocoa Jul '18 Daily Chart

Cocoa Jul '18 Daily Chart

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Softs - Coffee

Large Brazilian Crop Continues to Weigh on Coffee Market

Adam Tuiaana

The Hightower Group has reported that “a record high Brazilian crop continues to weigh on the market.” This, among other factors such as a strong US dollar and weak Brazilian currency have continued to keep the pressure on July coffee prices. Since my last article, July coffee prices have rallied only to face failure at the 126 resistance area. Keep in mind that the last 5 of 7 trading days have been negative, with momentum and volume, not a great sign for the bull camp. This morning we are now seeing some US dollar weakness, while coffee prices are still trading on the negative side. Expect some serious volatility as the Trump- Iran situation continues to bring uncertainty to many of the commodity markets. Wide swings will likely follow any outcome. The next area of support on the horizon will be the 117 level. If this area is violated, expect a correction (possibly back to the 122 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

Coffee Jul '18 Daily Chart

Coffee Jul '18 Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 5/10/2018

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

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Agriculture - Livestock

Hog Rebound Satisfies 3rd Reversal Requirement, Defines New Bull Risk Level

Nearly a month ago in 12-Apr's Technical Blog we introduced the prospect for a broader base/reversal environment stemming from the market satisfying the first two of our three reversal requirements: a confirmed bullish divergence in momentum needed to stem the downtrend and trendy, impulsive-looking behavior on that initial counter-trend rally attempt. In a 23-Apr Technical Blog follow-up after that day's bearish divergence in short-term momentum, we warned of a suspected 3-wave corrective relapse that the market needed to weather to satisfy the critical third of our three reversal requirements. With yesterday's rally above both Thur's 75.42 initial counter-trend high and 25-Apr's 75.60 corrective high and short-term risk parameter, we can state with confidence that 30-Apr's 72.20 low is THE END of the correction of Apr's 70.25 - 79.10 rally and the arguable start to what should be a (C- or 3rd-Wave) resumption of Apr's rally to new and potentially extensive highs above 79.10.

The critical takeaway here is that 72.20 low as a specific, reliable low and risk parameter from which a more aggressive bullish policy and exposure can now be objectively based and managed. This said, we still acknowledge 19-Apr's 79.10 high as a key resistant hurdle and gateway to a major reversal of Jan-Apr's meltdown...

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

Lean Hogs Jun '18 60min Chart


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Dollar Remains in Uptrend as Euro Faces Weaker Data

Tyler Herrmann

The dollar made yet another new high today, after closing higher yesterday despite potential recoil against the US decision to pull out of the Iran agreement. The strong trend higher, that started back in mid-April, looks to continue as rising yields in the Treasury markets could cause a flood of foreign money into the US dollar. Momentum studies are at overbought levels which will accelerate a break in the lower trendline down to support at 92.22. Any corrective setbacks would need to hold yesterday’s low of 92.50 for the trend to push to the next upside target is at 93.51.

The Euro traded down to start the day, again making a new lower low, as soft data from French industrial output and Italian retail sales were reported lower than expected. The move lower is also being pushed by the market observing future hikes in the US interest rate as well as the continued strength of the dollar. With momentum studies declining to oversold levels we could expect to see some corrective action but would need a close above 1.1960 to see the short-term trend reverse. Trendline support comes in at 1.1820 with the next downside target at 1.1750.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or

U.S. Dollar Jun '18 Daily Chart

US Dollar Jun '18 Daily Chart

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Stocks Poised to Close Higher Yet Again

Bill Dixon

Barring a rather sizable selloff into the closing bell, the E-mini S&P will close higher for the sixth straight session.  Since the beginning of the 2018 calendar year, this will mark the fifth time that has happened.  Of the previous four, only once did we exceed see a seventh consecutive higher close.  That was when we kicked off the year on January 1 and didn’t see a lower close until January 16, ending a streak of nine straight higher closes.  Another one of the six days of higher closes resumed began just three sessions and culminated in new all-time highs for the E-mini S&P.  That rally was followed by a nearly 1% selloff.  Since then, the subsequent rallies have been a bit less dynamic, as were the selloffs that followed.  It remains to be seen if this rally will continue, but assuming that we are able to hold at or around these levels into the weekend, we will have bucked the trend line resistance that has tampered all rallies following the selloff from all time highs.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5342 or

E-mini S&P 500 Jun '18 Daily Chart

E-mini S&P 500 Jun '18 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.


The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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