June 22, 2018

Volume 12, Issue 25

Feature Article

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Metals - Gold

Will Gold Find Buyers Off the Fundamentals?

Nicholas DeGeorge

In the early morning trade, August gold is trading slightly down at $1,270 and continuing its selloff that started late last week after the US dollar strengthened to new contract highs on Thursday. If you’re a technical guru and believe in moving average death cross (when the 50-day moving average crosses below the 200-day moving average), then you can say this technical pattern caused more sellers to come into the market and cause a further selloff based on technical momentum. After a five-day selloff, one can say the gold market is extremely oversold and with the US dollar coming off its weekly highs the shiny might see some buyers at these levels. Furthermore, with new tariff threats on the US from around the globe and with the fears of the new state internet taxes passed by the US Supreme Court yesterday that the US dollars might stay under selling pressure, which will also give investors and traders alike to buy gold down at these levels. Lastly, reports from the ECB to the US Feds are showing signs of inflation and a reading that came out yesterday showed a 30-year high fear about inflation. I believe this is another reason to see gold buyers at these levels.

If you take a quick look at the daily August gold chart, you won’t see bullish technical indicators anywhere, so I really believe the buying will have to come from fundamental news stated above but the bears are clearly in control of this market at this point.

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

Silver Moves Lower on Stronger US Dollar

Tyler Herrmann

The silver market continued lower this week after last Friday’s trade wiped out the trend up to resistance levels. Thursdays session saw the first positive day of the week after trading up from the days lows at 16.190 to close slightly positive at 16.310. With the dollar falling from its new highs yesterday the silver market saw some relief of pressure from the dollar’s recent strength. Trade tensions between the US and the rest of the world coupled with the fear of possible state issued internet taxes look to push the dollar lower and provide support to silver. Momentum studies in July silver have fallen to oversold levels. The short-term trend remains negative with any move higher that isn’t able to hold above yesterday’s high of 16.360 continuing the move lower. Support comes in at 16.240 and then below yesterday’s low at 16.175. Resistance comes in at 16.490 and then 16.750. A close above 16. 425 is needed to reverse the trend to the upside. Look for sideways to higher trade next week as the silver market sees relief of recent pressure of the stronger dollar and tests resistance levels.

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.

Silver Jul '18 Daily Chart

Silver Jul '18 Daily Chart

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Energies - Crude Oil

Crude Oil Crux

Michael O'Donnell

As of Thursday morning, the crude oil market is justifiably middling with trading near the top of today’s range so far and in the lower half of yesterday’s.  Given yesterday’s EIA number and this weekend’s upcoming OPEC and OPEC+ meetings, this is understandable.

This week’s EIA had a draw of 5.9 million barrels compared to a previous draw of 4.2 million barrels and the consensus estimates for a draw in the area of 2.5-2.9 million barrels.  While this was a larger than expected draw and there was some positive price action following the number, this was not without some volatility and the market anticipating the upcoming OPEC and OPEC+ meeting in Vienna at the end of this week.

Regarding the Vienna meeting, many are looking for an easing of the production quota to mitigate lost production from Venezuela as well as impending sanctions on Iran.  While an increase may be possible, the question will be how much and whether the market views this as an increase or making up for lost production.

There are also a number of conflicting objectives between the nations involved.  This presents uncertainty given the difference between OPEC needing to be in accordance whereas OPEC+ and its non-OPEC members free to do as they may please.

An interesting development is the Saudi Energy minister beginning with a suggestion for a 1 million barrel per day increase in output as a starting point, a view unlikely to be shared by Iran. While betting ahead of such a meeting seems foolish, there are ways to position for volatility regardless of the outcome.

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 Aug '18 Daily Chart

Crude Oil Aug '18 Daily Chart

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Energies - Natural Gas

August Natural Gas Hitting Resistance

Jeff Ratajczak

The trend in August natural gas is languishing in a range between 2.900 and 3.000, even though the last two days have been up.  Resistance seems to be hitting now as 2.990 is the nearby resistance.  The close in support appears to be today’s low at 2.960.   Closing prices below may signal selloffs but, I doubt it.  A close above 3.000 should take the range a little higher from 3.000 to 3.050.  Momentum studies are trending a bit higher but are still locked in the middle of the trading ranges, not helping or hurting the market in either direction.  Higher than normal temps are forecast in the coming week.  An 85 bcf injection is anticipated today.   This is right in line with the 5-year average which at 83 bcf is almost the estimated rate. 

The forecasted above average highs are lending a bit of support to the August natural gas. The next 14 days should be slightly above average after below seasonal highs in Chicago this week.  The next days beyond the weekend should help determine the direction of the market.  I expect more range trading below 3.050, and a selloff to 2.960.

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 Aug '18 Daily Chart

Natural Gas Aug '18 Daily Chart

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Softs - Cocoa

Cocoa Futures Trying to Recover

Peter Mooses

Supply concerns have taken over the cocoa trade again. September futures are trying to stay above 2500. A few weeks back there were concerns of prices moving lower due to weaker currency prices and no “new” news on the supply/demand side of the equation. Of late, new supply concerns have surfaced in key growing regions. The possibility of El Nino affecting crops later in 2018, early 2019 are also helping prices rally. There still isn’t the demand needed in Europe and N. America to really push prices back to levels we traded earlier this year. Prices in the euro futures - which recently hit an 11-month low and pound, hitting a 7-month low are hurting demand in cocoa as well.

For now, monitor potential weather premium that could take place. Look for any fresh supply news to provide support in prices. Cautious bullish traders can look for entry in the market by buying longer-term calls until we see more solid fundamentals for guidance.

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 Prices Continue Struggling Against Large Supply

Adam Tuiaana

Continued tough-tariff-talk seems to be the main story in all commodity futures this week. Although September coffee has been able to garner some support from less outside fears that have been applying pressure, but a bearish fundamental outlook should remain our bias. More and more coffee production and supplies continue to be the main culprit keeping September coffee prices in check. Primarily, the ongoing forecast that producers in Brazil may be looking at a record harvest ahead. News like this won’t allow a steady, falling market like coffee to put in a bottom any time soon. Let’s keep in mind that Columbia is also seeing a larger supply outlook than expected.

This week, September coffee prices were able to violate a very critical 11755 low from April 17of this year. Subsequently, we’ve seen some active follow-through selling and have managed to reach the 115 level, which is now our critical support area. Lower lows and lower highs continue to be the technical story for September coffee, and bullish traders should take caution.

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 Sep '18 Daily Chart

Coffee Sep '18 Daily Chart

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Softs - Sugar

A Case for $0.0675 Sugar???

Wow, with the market back to hanging around some of its lowest prices in the past 10 years, the case for another halving of prices over the next two or three years might seem absurd. But we'll discuss some of the building blocks for such a longer-term case further down. First, we'd like to discuss the growing prospect that the recovery attempt from 25-Apr's 11.23 low in the now-prompt Oct contract to 01-Jun's 13.18 high is a 3-wave and thus corrective affair consistent with the current broader downtrend from 03-Jan's 15.43 high as labeled in the 240-min chart below.

Following 04-Jun's bearish divergence in momentum that identified 01-Jun's 13.18 as relevant, the extent of this week's relapse shows that the market survived a corrective retest-of-the-high attempt that leaves 12-Jun's 12.85 high in its wake as a short-term risk parameter this market is now minimally required to recoup to threaten a more immediate bearish count. No, the market has not yet broken 08-Jun's 11.91 initial counter-trend low needed to CONFIRM this shorter-term bearish count, but against the volume of bearish work on longer-term scales we believe the odds are in favor of continuing to err on the side of the bear.

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

Sugar Oct '18 240min Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 06/22/2018

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 29 Acreage Report

Looking ahead to the June 29 Acreage Report

What story will the upcoming June 29 Acreage report tell about corn, soybeans and wheat? Industry leaders Dave Hightower, Founding Principal of The Hightower Report, and Dan Basse, President of AgResource Company, preview the report and discuss impacts to supply and demand fundamentals along with trading opportunities for the current environment.

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Dollar Needs to See Positive Data to Hold Its Ground

Tony Cholly

The US dollar has regained upside momentum and has climbed to a new 2018 high coming into this morning’s action in spite of an overnight flare-up of trade tensions.  Fed Chairman Powell’s comments that there is a strong case for additional Fed rate hikes may not be a total surprise to the market, but the comments are being emphasized by several other major central banks holding in an accommodative stance.  This morning’s rally may have been fueled by events in the eurozone but will need decent results from this morning’s US data for the USD to climb further.  Resistance comes in at 9493 in the September contract, with support at 9454.

The euro is back on the defensive and has reached a new low for the move this morning. The proposed appointment of a “Eurosceptic” to a key government post has caused a sharp rise in Italian yields early today that clearly rattled sentiment throughout the eurozone.  ECB President Draghi expressed confidence that eurozone inflation will rise back towards their 2% objective, there have been few highlights from recent eurozone data points.  Resistance is at 11689 with support at 11626.

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 Sep '18 Daily Chart

US Dollar Sep '18 Daily Chart

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Stock Indices Mixed Shortly After Open

Bill Dixon

Stock indices are higher shortly after this morning’s open.  The S&P and Dow have kicked the morning off in the green by a decent amount, while the Nasdaq is struggling a bit (Likely due in large part to the online sales tax ruling handed down by the Supreme Court this week).  The Nasdaq and S&P are near the upper end of the trading channel we’ve spent the majority of the last two and a half years trading in, while the Dow appears to be on the lower end of its channel.  Given the threats of tariffs that are hanging over the markets, I would argue the action over the past week or so is rather impressive.  Should we find some middle ground before the tariffs are set to go into effect early next week, I believe we could see some sizeable rallies.  Barring some compromise, we may struggle to build on the upward momentum as the second quarter comes to a close.  Today’s news cycle is very light, but next week’s data could very well provide the market with some fuel for the next move higher or lower.  Housing data, consumer confidence and sentiment, and GDP will be the numbers I’ll be watching closest. 

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 500 Weekly Chart

E-mini S&P 500 Weekly 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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