September 28, 2018

Volume 12, Issue 39

Feature Article

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Trading Agricultural Futures

Trading Agricultural Futures

Wednesday, October 3 at 11 a.m. CT

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Metals - Gold

Gold Remains Bearish

Nicholas DeGeorge

In the early morning trade, December gold is slightly in the green and trading at $1,199.0 an ounce. After gold’s technical breach and sell-off yesterday, it is not really showing any kind of weakness or follow through so far this morning. Furthermore, some might see this as a positive for gold because the U.S. dollar has been on an absolute tear to the upside over the last two trading sessions. However, after December gold’s failure to hold the $1,200 an ounce handle, the shiny one is now open to retesting the August low of $1,167.1. Why did it fail to hold the $1,200 an ounce handle? I believe is because of the Feds action on Wednesday which caused the dollar to shoot up and metal across the board to come down.

In the short-term, gold’s next move might be based on the technicals, so let’s take a quick look at a December gold daily chart. You’ll clearly see that gold is in a long-term downtrend and this week it failed to hold onto and break above the $1,200 handle. Now, the shiny one is trading at its lowest level in 3 weeks and is prone to retest the August low of $1,167.1. If you’re just looking at the daily gold chart, you’ll clearly see the bearish downtrend and bearish chart patterns which I highlighted below.

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 Dec '18 Daily Chart

Gold Dec '18 Daily Chart

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Metals - Silver

Silver Up as Rest of Metal Market Suffers

Joshua Graves

Metals are suffering due to a stronger U.S. Dollar index, posting an interest rate rise of .25 after the FOMC meeting that took place on Wednesday afternoon. With the economy acting strong recently and having such a great year, safe-haven markets have suffered. We have a short term negative bias from here and have our technical levels listed below:

Silver had been flat on the week, however is up .22 cents this morning on a lot of talk that silver is cheap in relation to Gold.  The gold/silver ratio, which is simply gold divided by silver is sitting at 82 as of Friday morning. There have only been 7 times in history where the gold/silver ratio has exceeded 80.  Silver is near a trend-line breakout and could have a short-term pop, like this morning. However, we still think we need more news in the following month ahead from FOMC and we will keep a close eye on the dollar and any news of tariffs between the U.S. and China.

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

Gold-Silver Ratio Chart Dec '18 Daily Chart

Gold Silver Ratio December '18 Daily Chart

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Energies - Crude Oil

Crude Oil Remains in Upward Trend

Michael O'Donnell

As of Thursday morning, the crude oil market has been interesting to watch as the market remains in an uptrend over the long term. The recent day’s downward price action has occurred with a build in inventories and a significant drop in the refinery operating rate and lower volume in the November contract.

While the market has traded above highs of the year recently, at around $72.00 per barrel, it has since stalled ahead of possible continuation of the longer-term bull trend or an overbought reversal. Should the market continue to resist trade above the $72.50 level, it will be interesting to see if the previous highs act as support.  Furthermore, it may be noted that the bear side of the market has had little in terms of consecutive days downward since early in the month.

Along with the build in inventories and lower refinery capacity rate, there are numerous factors such as: supply from OPEC, the US Special Reserve, upcoming Iran sanctions, and how effective they will be; not to mention demand and inflation from strong stock markets and a number of reflationary elements at work.

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 Nov '18 Daily Chart

Light Crude Oil Nov '18 Chart

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Energies - Natural Gas

Natural Gas Trending Up Heading into Heating Season

Jeff Ratajczak

Natural gas storage saw another build in the EIA report  with an injection of 46 bcf for the week ending September 21. Gas stocks still remain lower than a year ago, off 20%. Even with the drop in price, the general trend is still up.  The prices are creeping toward the consolidation of nearly a month ago, and close above $3.050 would be needed to take prices to the next range.  Until we see that prices should languish between $2.925 and $3.000.  A close below $2.900 may shift the momentum back to a range from $2.900 to 2.800.  Momentum studies are hard to read because of acceleration in price due to the hurricane aftermath in the greater South East portion of the country.  Over 800,000 were without power at the storm’s peak, we’ll have to sit it out and wait as much of the region comes back on line.  The start of heating season is right around the corner but not affecting price yet.  Shorter term MA’s are trending upward while mid-term, and longer term averages are moving sideways. Resistance is at $3.000, and far out support comes in around $2.775-2.750, but I don’t think it will go there.

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 Nov '18 Daily Chart

Natural Gas Nov '18 Daily Chart

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Softs - Cocoa

Global Market Concerns Affecting Cocoa

Peter Mooses

Trade wars, global tension and volatility in the currencies all lead to consolidation in many commodities. Traders are seeing the world news carryover first hand in cocoa futures. Supply concerns in cocoa should be providing support but it hasn’t been strong enough to add any follow-through on moves higher over the past few trading weeks. Traders won’t get a good read on Africa’s production for a few weeks – expectations are showing the 18/19 data could help futures’ prices grow. But it does appear that Ivory Coast and Ghana numbers should provide support to the market, especially into the December and March cocoa contracts. There are also reports of pod disease and mold issues in key areas of Africa. This time of year these issues could lead to short-term rallies and adjustments in production levels. Bullish traders should continue to wait on the global volatility and monitor movement in the British Pound. In the meantime, pricing out puts could give traders a short-term view of where prices are headed and exposure if the cocoa market moves lower.

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

Cocoa Dec '18 Daily Chart

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Softs - Coffee

December Coffee Selloff Continues

Adam Tuiaana

Bearish forces have, and likely will continue to, control coffee prices. Fundamentals that seem to keep pressure on coffee prices include the ongoing awareness of massive crop production from both largest coffee producing countries, Brazil and Vietnam. On top of this, continued weakness in the Brazilian currency perpetuates selling from major coffee producers. We have seen a nice pullback and consolidation, but weakness is still underway. Traders who continue to look for a bottom to this falling market should stand aside, as the bears are in full control.

On the technical side, a clear violation (and subsequent rally) of the 9860 low from September 4th was in fact bearish, complete with follow-through selling that lead December coffee prices down to the 9500 level. We’ve since seen a rally back to the 10075, where December coffee prices were met with firm resistance. Consider using put options to take a bearish position and 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 Dec '18 Daily Chart

Coffee Dec '18 Daily Chart

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Agriculture - Grain

Daily Market Update - Grain Futures - 09/28/2018

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 - U.S. Dollar

Don't Expect Current Currency Trends to Reverse

Tony Cholly

The USD is in a clearly defined uptrend and it looks to remain that way to finish the week, with a possible return to the September highs of 9528.  The U.S. scheduled data, and the Fed commentary this week were both supportive of the USD, especially against ongoing global geopolitical uncertainty.  A new record low in German unemployment and suggestions from both Chinese negotiators and the Canadian Prime Minister hinting at ongoing negotiations.

Clearly the fresh record low in the German unemployment and an uptick in euro zone flash inflation are not capable of arresting the slide in the euro. Near-term downside targets are seen around 16100, especially if there is solid U.S. data.

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 Dec '18 Daily Chart

U.S. Dollar Index Dec '18 Daily Chart

Euro FX Dec '18 Daily Chart

Euro FX Dec '18 Daily Chart

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Equities

Stocks Open in the Red

Bill Dixon

Stock indices are all about a quarter percent lower to kick off today’s session.  Since printing a new all-time high last Friday, the S&P has put in a downward sloping channel of lower highs and lower lows.  That said, we seem to have found some measure of support around the 2908.00 level.  We have bounced off that level for a third time prior to today’s opening bell and have recouped a good portion of the overnight losses. Data has been supportive and it seems as if trade deals with China and Canada are still possibilities, which have lent support to the indices. There were no surprises from the FOMC meeting on Wednesday, so it is not surprising to see the market maintain these lofty levels. 

Next week’s news will be highlighted by PMI, ISM, and the jobs data.  It will also feature a number of members of the FOMC speaking on various topics, but I’m not sure their remarks will move the needle much more than anything we heard on Wednesday. 

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 Dec '18 Daily Chart

E-Mini S&P 500 Dec '18 Daily Chart

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Interest Rates

T-Notes on Verge of Resuming Secular Bear Trend



Overnight's break to new lows below Thur's 118.14 low reaffirms the developing downtrend and leaves Fri's 118.235 high its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to confirm a bullish divergence in short-term momentum, stem the slide and expose at least an interim corrective rebound.  Per such we are identifying 118.24 as our new short-term risk parameter from which our bearish policy and shorts from 120.175 recommended in 27-Aug's Trading Strategies Blog can be objectively rebased and managed by shorter-term traders with tighter risk profile.

To read the full article RJO Futures clients may login here to the client portal and access all RJO Market Insights.10-Year Note Dec '18 240 Minute Chart

 

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