August 10, 2018

Volume 12, Issue 32

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Metals - Gold

Bottom to Finally Fall Out in Gold?

Joshua Graves

December Gold has had no real reason to rally from a fundamental or technical perspective. The first and most obvious reason for gold’s continued weakness is a much stronger (and today is no exception) US Dollar Index. As of today, the front month dollar index has made a new high and shows no signs of slowing down. The fed continues to take a more hawkish rhetoric and four rate hikes is getting closer and closer to becoming a sure thing. The CPI number out today was in line with expectations at .2% and remains at a 6.5 year high. Inflation is still likely to remain strong with a tight labor market and an upside breakout in wage growth likely being the result, cementing a fourth rate hike in December. One longer term reason to be a buyer of gold is the yield curve which many in the financial markets are talking about. Before every major recession the yield curve between the longer term and shorter-term government loans starts to flip with shorter term loans yielding more than longer term loans, and it’s approaching an inversion once more. It’s something to keep an eye on that would change the tone for gold.

Gold technicals don’t look any better if you are bullish. The stair step pattern down is nothing new, with the first bear flag forming from May 1 to May 11 of this year, followed by a sharp move lower. I would look at gold as a trader and think that if 1200 doesn’t hold (and I don’t think it will) that a washout down around 1150 is surely possible before buyers of value step in and start to bid prices up.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-435-4805 or

Gold Dec '18 Daily Chart

Gold Dec '18 Daily Chart

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Metals - Silver

Quiet Before the Storm in Silver Market

Eli Tesfaye

September silver is trading 15.40, down about 6 cents. The strength in the US dollar as shown below is putting a great deal of pressure upon the silver market. The last issue, I wrote about the dollar is in consolidation and poised for a breakout. What I find interesting is that gold is the only metal that is shown positive on the chart today. Silver has been in a lengthy consolidation as seen in the chart below. Breakout in silver is likely to come sooner than later. I suspect that safe heaven bid could help silver come out of this consolidation to the upside. With the Fed likely to consider more rate hikes, the dollar would continue to benefit from it.  I still believe silver needs to trade above 16.50 to get the bulls excited. If the dollar recovers, low 15.00’s are likely in silver

The technical outlook for silver suggests tighter consolidation, the upside is favored for now. A break below 15.18 would likely set a fresh downside pressure for the September contract forcing the market to go below 15.00. Options trades seems to be an effective way to approach this market for a breakout type of strategy.

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

Silver Sep '18 Daily Chart

Silver Sep '18 Daily Chart

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Energies - Crude Oil

Could the top be in for WTI Crude?

This week the EIA Petroleum Status Report showed a less than spectacular -1.4 million barrel draw, taking inventories to 407.4 million barrels (14.3% below their levels one year ago).  Although this is a fundamentally bullish report, the market has responded by selling off, and likely due to lower than expected crude oil consumption.  Surprisingly, US refineries were operating at 96.6% of their capacity, up .5% from last week and very near all-time highs for production.  The increase in US refinery operations alongside a minimal draw on crude oil inventories seems to be sending mixed signals to the market, as crude oil prices have been generally lower since this report.

From a technical perspective, WTI crude oil futures have pulled back from the $75.00 technical price targets, and now find themselves entering a supportive inflection zone at $66.00.  WTI crude prices found support into the $66.00 Fibonacci inflection zone, and while it remained above trend line support, had technical upside price projections into the $79.00 area.  This scenario seems to be the path of least resistance, and the next logical progression of the trend was for a pullback to find the next supportive inflection zone (which has now occurred and proving to hold).  While the market remains above $64.60 (61.8% Fibonacci technical ‘line in the sand’), this price level projects upside technical targets of $79.33 in the near-term.  Below $64.60 at this time, would suggest a retest of last support at $55.00-50.00 inflection zones, and below those levels the continuation of the current multi-week and multi-month uptrend may come into questions.

In my opinion, the rally that has taken WTI crude prices above the $66.66 continuous contract highs (into the end of 2017 and start of 2018) is still a very important “break out higher” indicator for the market.  Price action over the last several months has continued to hold the market above this key line in the sand and justifies keeping sights on higher prices in the near-term.  The fight over trend seems to be all but won by the bulls, which has continued to take the market price higher since June of 2017.  The recent pullback is currently testing supportive price levels that suggest bulls are still buying this market in pullbacks to continue trends higher.  The trend is still up until it’s not, and I believe a break below the $64.60 price level would constitute a reversal at this time.  Technical upside targets were hit, which has resulted in profit taking from the $75.00 to $76.00 inflection zone, and the market has simply pulled back into its next supportive price level, into $66.00.  With WTI Crude prices above prior multi-year highs, the trend is up until it’s not (and I like to think, trend is my friend).  When a market speaks, you must listen, and WTI crude may be telling us this is the beginning of a much larger trend being born.

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 Daily Chart

Crude Oil Daily Chart

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Softs - Sugar

Sugar has Potential for Corrective Rally in Down Market

Joe Nikruto

This week’s comment finds October sugar marking time after a brief short covering rally last week. Summer doldrums and lack of new news may be conspiring to leave sugar without sponsorship and unable to attack overhead resistance. Technically, the October futures contract is laying on the short-term moving averages. The 10 and 18- day moving averages, 10.79 and 10.93 respectively, have fenced price action for the last few days. Without further travel to the upside commodity funds will be presented with no reason to exit short trades. However, the fund short position, shy of a record but still sizeable, does represent potential for higher prices. Sometimes fund short covering is a ‘chicken and egg’ scenario. Does higher price action lead to funds covering short positions or do funds covering short positions lead to higher price action? The trend is still down but the technical picture shows sugar potentially bottoming, or at least setting the stage for a corrective rally. The 50-day moving average comes in at 11.66 so there is room to rally even if only correcting in a larger downtrend.  Fundamentally, sugar remains burdened by the surplus of supply, but it won’t take much more upside price action to inspire funds to cover, summer doldrums or not.  This fundamental situation vs technical picture has been a theme for a while now and hasn’t led to higher prices, yet. That could change quickly.  Aggressive traders can position for what could be a jump over the 50-day by using call options that don’t have a lot of time value and therefore cost less to own. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-453-4494 or

Sugar Oct ‘18 Daily Chart

Sugar Oct '18 Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 08/09/2018

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 Slide Nears Historic Lows, Defines New Key Bear Risk Levels

Wednesday's resumed slide below the past week's 49.35-area support reaffirms the major bear trend and leaves 01-Aug's 52.22 high in its wake as the latest smaller-degree corrective high the market needs to sustain losses below to maintain a more immediate bearish count. Its failure to do so will confirm a bullish divergence in momentum that would at least stem the slide and expose an interim correction higher. But given the market's headline plunge to historically low levels. currently, even a smaller-degree momentum failure cannot be ignored as the trigger for a more protracted base/reversal-threat environment.

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

Lean Hogs Oct '18 60min Chart

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Daily Market Update - Currency Futures - 08/09/2018

John Caruso

RJO Futures Senior Market Strategist John Caruso discusses the currency futures markets. If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5354 or

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Bulls Still in Control of Equity Market

Jeff Yasak

The overnight global markets were mostly weaker with the Shanghai and Australian markets which managed impressive gains being the exceptions.  The concerns overnight centered on sanctions that will now weigh on the Russian economy and the sharp declines in the Turkish and Russian currencies.  This is creating some fear of a potential financial crisis developing in Western Europe.  From the US/China trade front, it also appears as if the war is escalating daily with the Chinese media outlets reiterating that they have many weapons to utilize against the US.

While the geopolitical events continue to increase, the E-mini Thursday morning appears to be heading for a potential move to all-time highs.  While positive earnings seem to be part of the bull case, it is possible that the trade thinks the tariff situation will ultimately be solved or will not be a definitive impact.  Resistance comes in at 286000 and 286600 while support comes in at 285050 and 284700.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-861-1656 or

E-mini S&P 500 Sep ’18 Daily Chart

E-mini S&P 500 Sep ’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.


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