June 8, 2018

Volume 12, Issue 23

Feature Article

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Metals - Gold

Which Direction Will the Gold Market Go?

Nicholas DeGeorge

In the early morning trade, gold is ever so slightly trading down today and currently trading at $1,302.7. Gold has remained in a back and forth three-week trading range and looks like it’s prone to break out in either direction. August gold is hanging in there quit well this morning even with the US dollar trading higher overnight. Some could say gold is losing its role as a safe-haven to silver, which also has more physical demand than gold. Gold might be trading in this tight trading range until after the June 12 summit with North Korea as investors and traders alike passionately await an outcome. Furthermore, the negative rhetoric from some G-7 leaders that they aren’t happy with the Trump admiration’s unfair trade practices talk against the United States can also be holding this gold market up in the midst of a stronger dollar.

Let’s take a quick look at the daily August gold chart, which is interesting. It looks like the 50-day MAV is trying to cross below the 200-day, which would mean a bearish death cross pattern has formed and is a very strong indicator for a big and further selloff in the market will accrue. However, the 50-day is starting to level off instead of sloping down, which means if this pattern fails, then a big momentum rally will occur. Furthermore, gold looks like it is slowly trending above a bearish trend line which I highlighted below, and the case can be made with the right factors coming into play that gold is ready to take off to the upside. However, I think the next major move might have to wait until the June 12 summit is over.

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 Aug '18 Daily Chart

Gold Aug '18 Daily Chart

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Metals - Silver

A Silver Rally is Coming

Phillip Streible

Silver and the PMG are set to have a big week with the FOMC meeting on Tuesday and Wednesday with a rate hike expected. The last two rate hikes have seen selling come into the announcement followed by a sharp rally in days after. Also, on June 12 is the historical summit between Kim Jung Un and President Trump. I would expect to see silver futures start to track higher given its strong correlation to copper, which is nearing a four year high. The key level of resistance in silver is the 200-day moving average at 16.92/oz. On a closing basis if we see a multiple day close above this level we should be able to see an attack to $17.50/oz as indicated on the July daily chart below.

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.

Silver Jul '18 Daily Chart

Silver Jul '18 Daily Chart

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Energies - Crude Oil

Crude Correction Subsides

Michael O'Donnell

As crude oil begins to rebound from what some may say was a rash 11.9% drop in price per barrel from the May 22 high of $72.90 to the low of $64.22 on Tuesday, market participants are weighing a number of factors.

While the talk of OPEC producers possibly lifting their supply quota curb to mitigate lost output from Iran and Venezuela joins heavy output from Russia and the United States, there is also the build in yesterday’s EIA report adding to the selling.

As of Thursday afternoon’s trading and this writing, the July contract has rebounded over a dollar per barrel to just under $66.  For those looking for a retracement from the previously mentioned drop, the 50% retracement comes in at $68.57 and coincides with the top of the range from April 19 and May 3’s congestion.

For those looking for continued weakness, although the 100-day moving average has acted support recently, should that level be breached along with this week’s lows, a return to the range pictured below is not out of the question.

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 Jul '18 Daily Chart

Crude Oil Jul '18 Daily Chart

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Softs - Cocoa

Cocoa Futures Headed for 2200?

Peter Mooses

As we look at the July cocoa contract and prepare for the roll to September, futures continue to move lower - 2400 is being tested while 2200 is where the chart shows heavy support. Traders have moved out of the July options and will have first notice day in the futures on June 18. COT data released this past Friday showed very little change in long positions. Traders hanging on to longs still believe the supply concerns will take over the market long-term as very little fresh demand news has surfaced.

Currencies have been a big factor in the short-term direction of cocoa. A strong dollar has weakened cocoa prices but small rallies in the Euro and Pound have led to small recoveries.

If bullish traders decide to hold on to their long positions – look for September prices to rise as we approach first notice day in the July contracts. If long traders go to the sidelines around the 18th of June, look for 2200 to be a realistic target in cocoa prices while we await more global news to guide commodities.

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 Sep '18 Daily Chart

Cocoa Sep '18 Daily Chart

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Softs - Coffee

Coffee Futures Prices Continue Struggling

Adam Tuiaana

More and more coffee production and supplies continue to weigh heavily on the price of July coffee. An extremely volatile week last week had July coffee prices rallying to challenge the May 125 level highs, only to promptly retreat to the 118 level. The Hightower Group has reported that “Brazil producers are preparing for a record harvest ahead”. To add more pressure to July coffee prices, Columbia is also seeing outputs larger than expected.

Last week’s failure to break above the 126 resistance level (and subsequent selloff) is bearish. The large supply outlook is also bearish. Let’s keep in mind that coffee prices have been trending down consistently for the last two years, and there is no reason at this point to believe a reversal is in place. Traders should 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 Chart

Coffee Jul '18 Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 06/08/2018

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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Agriculture - Grains

CME Group Market Movers: June Crop Report

Looking ahead to the June 12 Crop Report

Industry experts Dave Hightower, Founding Principal of The Hightower Report, and Dan Basse, President of AgResource Company, preview the June 12 USDA report discussing NAFTA concerns, tariffs, corn and soybean yields in advance of its publication.

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Agriculture - Livestock

Cattle and Hogs Start the Week Lower

Tyler Herrmann

August live cattle traded lower yesterday, down 2.3 cents from last Thursday’s fail high of 105.200. August feeder cattle also started the week negative, closing down 0.775 to 145.225. After choppy trade the cattle couldn’t hold the highs of the day and continued the short-term trend lower after failing to break resistance last week. The agricultural sector as a whole saw lower trade to start the week, lead by trade friction between the US and several other countries. A weaker dollar and stronger stock market failed to provide much if any support. The cash market trading at a premium to the futures coupled with increased margins for packers provides some support.

August live cattle are trending higher despite three consecutive down days. Resistance is above at 105.275 and a close above that level is needed to continue trade higher. Momentum studies are reaching overbought levels and could push trade lower on a close below where the 21-day moving average and trendline meet at 102.560. If the trend reverses lower look for support to come in at 101.000.

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

Live Cattle Aug '18 Daily Chart

Live Cattle Aug '18 Daily Chart

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Currencies

Euro Trades Higher on US Dollar Weakness

Tyler Herrmann

The US dollar traded down Wednesday to its lowest point since May 22, continuing its trend lower since May 29’s high of 94.500. With weakness expected to continue from a consensus of 225k initial jobless claims for the week of June 2, a slight increase from the prior week’s number of 221k and continued negative pressure from US trade negotiations. The bears seem to be in control here with plenty of backing to remain pushing the market lower. In the September US dollar support comes in at 92.580 and 92.075 with resistance at 93.430 and 93.855.

The euro closed higher Wednesday but traded off the highs of the day after failing at resistance of 1.1805. Even with a decline in German factory orders and Italian political issues still a concern, the euro continued the short-term trend higher with the weakness in the US dollar. With this recent move higher momentum studies are approaching overbought levels which could accelerate a turn to the downside. The bulls are wanting to see continued weakness in the US dollar as well as an end to the ECB’s current stimulus program in order to see the trend continue higher. Support comes in at 1.1741 with resistance at 1.1865.

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

US Dollar Jun '18 Daily Chart

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Equities

S&P Forges a High for the Move

Jeff Yasak

The Wednesday overnight global equity markets were mostly higher with the Shanghai markets and the FTSE 100 being the exceptions.  While the markets forged fresh higher highs overnight they were initially unable to hold all of those gains perhaps because of disappointment with German and European data and ongoing fears of rising rates.

As indicated already, the E-mini S&P did forge a higher high for the move overnight and the highest price since March 14, but it has initially fallen back from that high and was trading both sides of unchanged earlier today in a pattern that suggests the bull camp needs fresh headlines to continue the recent uptrend pattern. The markets may be benefitting from the CNBC interview with Warren Buffet and Jamie Dimon as they are optimistic about economic environment in their discussions regarding the need for long-term thinking on Wall Street.  Uptrend channel support in the e-mini S&P is seen at 2754 with a closer pivot at 2765.

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 Jun '18 Daily Chart

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

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