January 4, 2019

Volume 13, Issue 1

Feature Article

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Metals - Gold

February Gold, Get Ready for $1400

Joshua Graves

The gold market continues to catch a bid from a plethora of outside bullish news. In short, you have extreme volatility in the U.S. equity markets, weak manufacturing data out of China, and a much weaker U.S. dollar that continues to look toppy. This morning, the U.S. non-farm payroll number showed a blowout 312,000 jobs created vs 176,000 created and the Dow is currently up around 300. Even if U.S. equities do march higher, it’s likely that gold will be unphased on its move higher as market sentiment in general shows a clear “risk off” mentality.

From a technical perspective, February gold did in fact move up past 1300 this morning as it hit a high of 1300.4. The next major area of gold’s willingness to move higher is around 1325. This is where we spent about a month back in the May/June time frame. The trend is still clearly up, and always remember “overbought” and “oversold” mean nothing, as markets can remain in both for months, even years at a time. Just because gold has rallied $100 since mid-November doesn’t mean it can’t go right through 1300 all the way to 1400. In my opinion, it’s likely to have a little more chop on the march to that level, but the biggest push from a macro-economic perspective is going to be U.S. tariffs biting the Chinese economy and slowing their economic growth which in turn stokes a push into safe havens such as gold.

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 Feb '19 Daily Chart

Gold Feb '19 Daily Chart

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Metals - Silver

Silver Shining in the New Year

Eli Tesfaye

Front-month March silver is trading 15.795 up 14 cents on the day. As per the weekly chart below, silver has broken out of the consolidation that I talked about a couple weeks. Any retest of the consolidation area would be an opportunity as a buy rather than a sell in my view. 

With the equity market breaking to the downside in the new year with “safe-heaven” investments, momentum favors the upside in markets. U.S. government shutdown continues, and it is in day 13. No resolution is in sight so far. As a result, the metals are firm as equities and the U.S. dollar index is under pressure. In the last blog, I said, “So far, silver is weak just like any other commodity but if the battle over government funding heats up, more upside likely.” 

The Gold/Silver ratio is sitting at 82.05 from a recent high of 86.16 suggesting that “bid” for silver is improving relative to Gold. 

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

Silver Weekly Chart

Silver Weekly Chart

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Energies - Crude Oil

Oil Futures Targeting $50

Phillip Streible

After falling over 25% in 2018, crude oil futures have posted a sharp recovery to start 2019. Recent news that OPEC is considering extending cuts beyond the 1.2 mb as well as a milder winter is allowing the driving season to get off to an early start. Gas Buddy, which researches over 150,000 gas stations with real time fuel price information, is expecting gasoline prices could surge to over $3.00 per gallon by May. This could easily increase demand for crude oil to be cracked in to more petroleum. Keep an eye out for $50 a barrel, this is a critical level that once we break through a new trend could be starting to the upside. Here is a chart of the daily February crude oil.

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.

Crude Oil Feb '19 Daily Chart

Crude Oil Feb '19 Daily Chart

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Softs - Coffee

Coffee Searches for a Low

Tyler Herrmann

The coffee market has been trending lower since its recent high of 129.20 on October 19th, but looks to be searching for a low with sideways trading the past couple weeks. Coffee’s recent strength has come from increases in the Brazilian currency, despite a large increase in Brazilian exports for December, an increase of 59% from last year. India experienced a decrease due to heavy rains and flooding in key growing regions. Short covering today could cause us to see the second weekly close higher in a row. Overall the market is seeing support above its most recent lows even with supply in the short term being bearish. Support comes in at 100.75 and then down around 99.30. Resistance is at 103.95 and a close over 105.15 would reverse the trend back to the upside. In the short-term the market should continue to see pressure but hold support, with short covering causing a reversal of the trend back to the upside

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.

Coffee Mar '19 Daily Chart

Coffee Mar '19 Daily Chart

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Agriculture - Grains

Daily Market Update - Grain Futures - 01/04/2019

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 - Livestock

February Live Cattle Signaling Downturn

Peter McGinn

Futures are expected to open moderately higher today but, in the February live cattle contracts, we saw a key reversal from the contract highs of 124.950 and I would expect to see a further break down to the 124.000 support level set back in the month of October. The slow stochastic is signaling for a downturn and break-through of the 124.000 support level and a possible sell-off to the 50-day moving average at the 121.525 price range. Fundamentally the cattle market is showing signs of stronger demand with choice cutouts up 0.94 (215.35) and select up 3.16 (210.66) from Monday’s trading day. Cash cattle from Friday were showing a $3-$4 dollar raise after the winter storm that moved through the plains but with the storm being much milder than what was expected, we could see this have a bearish effect on the market. 

As commercial and spec traders position themselves around the early year cash potential, we are seeing the lean hog market in deep oversold territory. Any trade news that comes out of China will have a positive tone on hogs as the African Swine Flu has decimated the pork supply in China, giving the expectation that China will be big buyers of U.S. pork in 2019. The market is past the peak production point of the year but for the remainder of the week we should we production rise slightly due to slaughter numbers being back at full kill. The CME Lean Hog Index was down a penny from the previous day at $53.11 on December 27th. The USDA pork carcass cutout value was down $.27 at $70.19 on good movement of 352 loads. Estimated packer margins were $43.19/head for non-integrators and $14.41/head for integrators vs. $46.27 and $15.49 the previous day.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or pmcginn@rjofutures.com.

Live Cattle Feb '19 Daily Chart

Live Cattle Feb '19 Daily Chart

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Japanese Yen Trending Bullish

John Caruso

The Japanese Yen has now officially moved to bullish trend.  For those of you following me for the past few months, this was a currency that we’ve had on our radar for a bearish to bullish phase transition. Aside from the Yen’s safe haven status, we could be in the beginning stages of the unwinding of the Japanese carry trade (borrowing yen at extremely low Japanese interest rates and investing in outside foreign currencies, typically the U.S. Dollar). We’ve heard little hints out of the BOJ, since the summer months, that they could be on the brink of allowing the yields on the JGBs (Japans 10yr Treasury Note) to float marginally higher, albeit still at accommodating levels.  The BOJ has also been quoted as saying “the ultra accommodative monetary policy of the the past decade has begun to have negative impact on Japanese economic conditions).  The market is clearly overbought at the moment, but I’d consider scaling into a Long Yen position on pull backs to the low end of our trading range ( .009150 to .009100 in the futures OR the upside down of 111.00 USD/JPY in the F/X).

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5354 or jcaruso@rjofutures.com.

Japanese Yen Weekly Chart

Japanese Yen Weekly Chart

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An Apple a Day Keeps the Investors Away

Jeff Yasak

The overnight equity markets were mostly lower from an overbought market from a quick worldwide collapse of Apple product sales. Apple announced Thursday morning that it will greatly miss the quarterly sales forecast because of trade tensions and a weakening economy in China. AAPl, one of the world’s most held stocks, dropped over 10% and fell to fourth behind AMZN, MSFT and GOOGL as the biggest public company.  The tech giant’s warning also dragged down others doing big business in China with Caterpillar and Boeing trading down 1.5% and 2% respectfully. Support today is 274600 and 243000 while resistance comes in at 254500 and 256700.

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 Mar '19 Daily Chart

E-Mini S&P 500 Mar '19 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.


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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