March 15, 2019

Volume 13, Issue 11

Feature Article

RJO Futures PRO Online Trading Platform

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Metals - Gold

Gold Setting Up for Another Rally?

Joshua Graves

April gold has seemingly put the brakes on the recent breakdown from highs of 1350 to the lows of 1280. There were a number of factors that caused the sell-off, but right now there could be a big looming reason for gold to rally back to highs and then some. U.S. equity markets could be in for a severe pullback over the coming months, and it’s time that investors start paying attention to the data that comes out over the coming weeks. We have already started to seen some of the data slip, with a recent jobs report coming in well below expectations of 180,000 at 20,000 for February. If we start to see more data with misses as big as this, or even a string of data that comes in below expectations we could very well see another panic selloff that we saw in December of last year which in turn could propel gold into new high territory of toward 1400.

If you look at gold from a technical perspective, the move back above 1300 is clearly a bullish sign, and with today’s move as I write this up $10 at 1305 the next level to watch for a breakout is 1312. If this recent high is taken out I would be looking for the next level to takeout at 1330. If this is taken out new highs in April gold is more likely than not. If you would like to know how I would be playing gold, given the recent price action please contact me directly.

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 April '19 Daily Chart

Gold Apr '19 Daily Chart

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Metals - Silver

Silver Trading Up, Tracking Equities

Eli Tesfaye

Front-month May silver is trading at 15.330, up 16 cents on the day. Silver is tracking equities this morning to the upside. Per the chart below, it looks as though silver is looking to put bottom. With dollar trading lower this morning, metals are getting the additional lift needed to continue to hold positive territory. Silver needs to trade and close above 15.45 for the near-term lows to be in. On the charts, silver is working inside day from yesterday’s sell-offs. In other words, silver has just as good chance of taking out yesterday’s highs and lows. Given the long-term chart attached, it looks like the bulls will continue to hold advantages. Again, trade deal between U.S. and China will likely foster positive global growth and be supportive for silver since its tracking equities at this time.  

Silver/Gold ration is back to 85.10 from recent highs of 85.56, giving silver a bit of an edge over gold. I do not expect real near-term weakness; however, a close below 15.00 most likely signal near term high, otherwise we are just looking at a consolidation for more potential upside.

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

New Defined Crude Oil Levels

Phillip Streible

Crude oil futures continue to surprise to the upside as three major factors remain the bullish catalyst. First, from the supply side, we are seeing continued drops in week inventory data as well as in rig counts. This could lead to a rebalancing in the total U.S. supply and bring it back to more normalized levels. Secondly, once the U.S. and China come to an agreement on trade negotiations, this should ignite the Chinese economy and therefore boost demand. Finally, from a technical perspective, there is an upside breakout on the charts which could clear the way to the 200-day moving average. I have outlined some key levels of support and resistance below as well as a chart.

Two Key Levels of resistance are $60.00 and $60.93

*$60.00 Key psychological level

*$60.93 is the 200 DMA

Two Key Levels of support are $57.86 and $54.52

*$54.52 was the washout low from March 8th

*$57.86 was old resistance and is now new support

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 Apr '19 Daily Chart

Crude Oil Apr '19 Daily Chart

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Softs - Sugar

Sugar Set to Rally, but Watch 12.70 in the May Contract

Joe Nikruto

This week’s comment finds sugar attempting to consolidate. The chart below shows a little something for everyone. Clearly, yet another failure at the upper end of the recent range. Downside breakout brought to a halt.  Commodity trading funds are short and likely getting shorter. Index funds hold a big chunk of open interest on the long side and aren’t going anywhere anytime soon. Fundamentally, the trade, and the trade related press coverage, continues to focus on declining supply. With prices for unleaded gasoline marching higher processors in Brazil are incentivized to turn sugar cane into ethanol.

Technically, if the May sugar futures contract is rolling over traders could be patient and wait for a test of the 18-day moving average, currently 12.70. Failure to post closes and hold above that level could signal this market is gathering for a move below 11.50 and lower. Hightower, in a comment this morning, highlighted the start of the new harvest begin in April.  If word of increasing supply begins to filter out I continue to believe sugar will have to find a lower equilibrium price. 

Aggressive futures traders could look at the long side in anticipation of a run into the 18-day. More patient traders can wait to see if the market fails at the 18-day and explore the short side ultimately looking for a move to 11.50.

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

Sugar May '19 Daily Chart

Sugar May '19 Daily Chart

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Softs - Cocoa

Brexit, Currencies, and Cocoa Supply/Demand Support

Peter Mooses

Initially, after the UK Parliament decided not to put a deal in place for the Brexit and delay it for another 3 months – the currencies mainly affected by this decision, the Pound and Euro moved higher. The risk tone was lowered in the UK and Europe leading to traders taking this news as a possible positive for the demand in cocoa. This demand idea was countered by the supply levels anticipated in West Africa, which provided a bearish feel. These two sides created a trading day which left us almost where we started the session.

Technically, now we must watch the 9-day moving average, a continued close above this level will help this short-term trend to continue. For this market to gain some follow-through, a close above 2265 is needed over the next few days.

Traders will now monitor the COT data release Friday as well as the upcoming grinding data. These releases should give us more guidance on the demand in the soft.

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 May '19 Daily Chart

Cocoa May '19 Daily Chart

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Softs - Coffee

Coffee Reaches Extreme Oversold Levels; Could Bring Short Covering Rally

Tony Cholly

May Coffee was slightly higher in the overnight session, but still well off Thursday’s spike highs.  It shouldn’t take much in the way of positive news to see a major short covering rally and higher trade ahead.  Good weather for Brazil in the new crop season seems to be priced into the market already, which is when we saw those sharp lows.  On top of that, last summer’s record crop has also helped to pressure the market recently, and the market has yet to find much support from the outlook for 2019/2020 global production deficit.  Total sales for the years so far are estimated at 50.78 million bags, while their total output is projected at 63.7 million bags.  Managed money fund traders are holding a net short position of 75,075 contracts as of the last commitment of trader’s report on March 5th, and open interest has increased another 12,000 contracts since that date, which suggests the market could be in position to see short covering.  Resistance comes in at 9815 and 9945 with support at 9600 and 9540.

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.

Coffee May '19 Daily Chart

Coffee May '19 Daily Chart

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Agriculture - Grains

Grain Futures Update w/Stephen Davis - 03/15/2018

Stephen Davis

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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

April Hogs on The Run

Peter McGinn

April lean hogs have been on a run the past few days due to the positive trade talks with China paired with the most recent outbreak of ASF (African Swine Flu) in China which caused demand to increase. The breeding herd in China was down 15% from one year ago. As of Tuesday, China’s cash pig prices were up 11.8% on the day and up a total of 35.2% for the year. USDA pork cutout values, released after the close yesterday, came in at $65.25, up $1.96 from Friday and up from $61.33 the previous week. The USDA estimated hog slaughter came in at 475,000 head yesterday. This was up from 465,000 last week and up from 459,000 a year ago as this time. With fund traders short, it did not take much in the way of positive news on prices in China to support a significant rally. Overall the market is bullish, and it signals a drive up to the $65 level.

In April live cattle, there are still bullish fundamental forces even though it failed to support any of the aggressive sell-off that happened due to the overbought condition and the high open interest in the market yesterday. The sell-off caused the April contract to now start trading at a discount to the cash market even as the supply continues to dip because of the lower weights. USDA boxed beef cutout values were up $1.48 at mid-session yesterday and closed 86 cents higher at $228.22. This was up from $224.04 the previous week, and was the highest the cutout had been since May 30th of last year. Yesterday's selling pushed the April cattle down to their lowest level since February 15th. The USDA estimated cattle slaughter came in at 120,000 head yesterday. That brings the total for the week so far to 239,000 head, up from 236,000 last week at this time and up from 232,000 a year ago.

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.

Lean Hogs Apr '19 Daily Chart

Lean Hogs Apr '19 Daily Chart

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Currencies

Currencies: A Race to the Bottom

John Caruso

Last night the BOJ left monetary policy UNCH and downgraded its outlook for the Japanese Economy.  JGB Yields are expected to stay tucked in around 0% and asset purchases will remain at 80T yen annually. The BOJ has been at this for a while now and there seems to be no end in sight for its devaluing of the yen and interest rates. The yen is trading higher this morning, as its our contention that this was widely expected by market participants and likely priced into the market as the yen has slid over 400 ticks from its Jan 3rd high vs the Dollar of 0.009458.  The yen is trading 0.009030 +16 ticks on the day. We do believe this could set off a short covering bounce or a “sell the rumor, buy the fact” type trading action. Furthermore the yen carry trade is something we’re carefully watching as the U.S. Fed statement (due next Wed) will likely confirm their “wait and see” i.e. dovish approach to monetary policy.  It’s our contention that the yen can stage a recovery over the next few months vs the USD. 

Similarly to the BOJ this morning, the ECB downgraded their outlook to the European economy as well as struck an increasingly dovish tone towards forward guidance in monetary policy adjustments. Mario Draghi (ECB Chairman) also mulled the idea of additional stimulus – even in light of ending its QE asset purchases this past Dec.  This set off a nearly 200pt sell off vs the USD, but has since recovered as the US FOMC is now in the forefront of what traders are focusing on.  It our contention to continue to look at trading the Euro vs USD with a bearish bias in the near-term. 

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.

Euro FX Jun '19 Daily Chart

Euro FX Jun '19 Daily Chart

 

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Equities

S&P 500 in Flux

Jeff Yasak

U.S. stock futures are trading slightly higher this morning, as investors are closely watching the progress in the ongoing U.S.-China trade talks and the latest Brexit developments.  The market focus is centered on global trade developments with improved sentiment based on a report that progress is being made by the world’s two largest economies.  A Chinese news agency reported that Chinese Vice Premier He spoke via phone with U.S. Treasury Secretary Mnuchin.  Tesla’s introduction of its new model Y provided some positive vibes which were quickly offset with news that the SEC filing charges against Volkswagen on emissions fraud.  Traders are also anticipating the release of economic data led by industrial production numbers and consumer sentiment data later this morning.

Support coming in today at 280400 and 279800, with resistance showing 282000 and 283100.

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 Jun '19 Daily Chart

E-Mini S&P 500 Jun '19 Daily Chart

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