August 31, 2018

Volume 12, Issue 35

Feature Article

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Metals - Gold

Can Gold Extend Last Week's Gain

Nicholas DeGeorge

In the early morning trade, October gold is currently trading slightly in the green at $1204.0, but still trading below last Friday’s weekly close of $1,207.5. Gold pushed higher over night mostly due to President Trump’s talks of an additional $200 billion in Chinese imports which has caught the bull camp’s attention. Furthermore, some of his rhetoric on trade from last night’s speech in Indiana might have increased anxiety that these trade wars will continue for longer than expected and therefore, has also created some safe haven buying support for gold. The U.S. is going into a long weekend and a lot could happen, so it might be hard going home short, which gives the bull camp a slight advantage here in the short-term.

If you take a quick look at the daily October gold chart, you’ll see that last week gold broke and held above it. Two weeks ago in my last article, I stated October gold would have to break above this bearish trendline in order to caught some real momentum buying, which it did. However, I also mentioned that gold would have to close above $1,210.0 a couple times in order to see further upside, but that has only happened once in the last week. Since it’s Labor Day Weekend here in the U.S. there has been very low volume across the commodity markets, so that is probably a key reason for poor follow through. We’ll just have to wait until next week to see how this market plays out.

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 Oct '18 Daily Chart

Gold Oct '18 Daily Chart

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Metals - Silver

Weaker Silver Prices Continue

Phillip Streible

Silver futures are continuing to remain under pressure taking cues from markets like copper and gold. The biggest headwind silver faces are the 200 billion dollars in tariffs imposed on China. This has essentially crushed the scrap metal business causing inventories to pile up in the United States. In addition, business expansion and growth in China has come to a complete halt. Keep an eye on the dollar index and rising interest rates. I still expect two more interest rate hikes this year with the first in September and second in December then two more in 2019. Looking at the technical on a daily silver chart it still looks like the path of least resistance is lower with $14.40 as a target. Looking at momentum indicators, stochastics are turning lower and MACD confirm the downtrend is in place. Silver remains below most major moving averages and ADX indicates that silver is in a strong downtrend. Where the bear market took control was back on August 15 where di- crossed over di+ giving you a strong signal.

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 Dec 18' Daily Chart

Silver Dec '18 Daily Chart

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Energies - Crude Oil

Crude Oil Near Top of Recent Channel Change

Michael O'Donnell

As of Thursday afternoon, the October Crude Oil contract was trading around $70 per barrel after trading as high as $70.50 earlier in the day.  The market has been strong lately given a number of developments, including bullish inventory reports, possible Canada & United States trade deal progress, a respite from dollar strength and a number of geopolitical factors including Venezuela, Iran and more.

Moving forward, it will be interesting to see if the highs from this year hold, pictured in the chart below, especially considering outside markets such as the Dollar and equity indices at highs.  For instance, it is worth considering if the equity indices remain at or near all time highs if it will be a bullish, risk on, demand factor.  Also, should the interest rate differentials in the dollar lead to dollar strength, this could be a bearish factor and possibly coincide with a risk off environment.

On the other hand, if the year’s highs hold, it could present an opportunity for those looking at the short side to participate with a swing to the middle of the last half year’s range.  The recent prices and proximity to the year’s highs also may present a good time for hedgers to consider protection.

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 Oct '18 Daily Chart

Crude Oil Oct '18 Daily Chart

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Energies - Natural Gas

October Natural Gas Trending Sideways

Jeff Ratajczak

The short term trend in the October natural gas is sideways. The contract price seems to be settling between $2.800 and $2.900. 

A close below $2.799 will rekindle bear forces, while a close above $2.900 may turn the bull forces on and run back up toward the $3.000 mark.

Cooling season is ending in the United States. The market is being supported by warmer than normal weather throughout the Northeast and Midwest through the long Labor Day weekend. The momentum indicators are at mid-levels and starting to trend downward. A downward trend can signal a move towards lower gas prices.

The EIA storage report for today shows an increase of 58 bcf today. 

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 Oct '18 Daily Chart

Natural Gas Oct '18 Daily Chart

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Softs - Cocoa

Key Technicals Could Reinforce Recent Cocoa Rally

Peter Mooses

The December cocoa contract has surpassed 2300 – after Wednesday’s move higher, the next level of resistance was also broken, 2355. With a close of 2358 Wednesday, this recent reversal could continue. Although the market hit overbought levels, bullish long-term traders think there is enough long-term fundamental concerns in the crop to add to positions. Supply/demand news has been volatile but there is very little chance that production numbers will recoup enough to pressure the market. If transportation blockage starts to affect key growing areas’ ability to move their cocoa, prices may reflect this short-term issue. Weather premium may also be added to the equation this time of season. Look for 2400 to be the next target level. After the COT data is released Friday, we will have a better idea of how traders are positioning themselves heading into September. Demand releases from corporations will also play a factor into cocoa prices as we enter the end of Q3.

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 Dec '18 Daily Chart

Web OE Dec '18 Daily Chart

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Softs - Coffee

December Coffee Continues Downward

Adam Tuiaana

Coffee fundamentals are the major driver to this incredibly bearish situation. Say what you will about September coffee being oversold, but you cannot ignore the fact that the supply/demand situation continues to suffocate coffee prices. The Hightower Group has reported “record high production from Brazil and a likely record high crop from Vietnam”. In addition, we’re seeing some added pressure on the Brazilian currency while the US dollar continues to show signs of strength.

On the technical side, coffee struggles to hold support at 105, and reached sub 100 levels this past week. We’re now seeing a short-covering rally, but expect some solid resistance at the 105 area now. For now, we’ll continue to hold a bearish outlook but hold off on new positions until we see a rally back to approximately 10550. Consider using put options to manage risk effectively.

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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Agriculture - Grains

Daily Market Update - Grain Futures - 08/31/2018

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

Weak U.S. Data Leaves Bias Leaning Lower on USD

Tony Cholly

Ideas of a trade solution leaves the safe-haven liquidation of the dollar in place for another trading session today.  While the US has set a Friday deadline for a deal that would seem to provide the bear camp with ongoing ammunition.  Talks that North American auto agreement has already been constructed suggests that progress has been made and the universe of issues is shrinking.  It should also be noted that US scheduled data this week has been mixed too slightly soft and that could leave a minimal downward track in the USD in place. Support is seen at 9430, resistance comes in at 9467.

The upward trend in the euro remains intact with a higher low and higher high put in already today. German employment numbers reaching all time highs should be giving support to the Euro, but the 11750 level has shown to be psychological resistance. Support comes in at 11693 and resistance at 11752.

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.

U.S. Dollar Index Sep '18 Daily Chart

U.S. Dollar Index Sep '18 Daily Chart

 

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Equities

Indices Mixed After Open

Bill Dixon

The Nasdaq is off to a strong start this morning, while the rest of the indices are lagging a bit.  That said, the S&P, Dow, and Russell are all off the lows by a decent margin and are now trading slightly above unchanged.  After seeing new all-time highs in all but the Dow, markets have backed off a little due to talk of tariffs and trade talk.  The markets don’t seem to be entirely concerned about these factors, as the uptrends on the charts remain firmly intact. 

Chicago PMI came out in line at 63.6 vs. an expected 63.8.  While that should be considered a great reading, it comes in below last month’s showing of 65.5.  Consumer Sentiment came in above expectations at 96.2 (95.5 exp).  Markets are closed for Labor Day on Monday, but the rest of the week will feature plenty of news. 

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 Sep '18 Daily Chart

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

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