April 5, 2019

Volume 13, Issue 14

Feature Article

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Metals - Gold

Is Gold Trending Lower?

Nicholas DeGeorge

In the early morning trade, June gold is trading slightly in the green at $1,295.5. Overnight weakness in the U.S. dollar has not yet pushed gold back above the $1,300 an ounce handle like it should have, which may be a sign of vulnerability in the gold market. Furthermore, with a better than expected non-farm payroll number this morning with 196K new jobs added last month should cause the U.S. dollar to strengthen some and may cause June gold to trade down to at least the 200-day moving average which reads at $1,267 an ounce today. The thought process on this from traders and investors alike is that with the strong jobs number signals a strong U.S. economy which should result in money flowing back into the U.S. dollar because it offers the best relative growth prospect. A disappointing number would cause money to flow back into gold acting as a safe-haven for economic uncertainty.

If you take a quick look at the daily June gold chart, you can see that the bullish trend that gold has enjoyed since mid-November broke through that at the very end of February and has had a hard time staying above the $1,300 handle since. Also, gold is trading close to the lows or bottoms it’s been making over the past couple of months; therefore, if it breaks below this week’s low of $1,284, then look for gold to test the 200-day moving average at $1,267 an ounce.

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 Jun '19 Daily Chart

Gold Jun '19 Daily Chart

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Metals - Silver

Silver Futures Look Vulnerable to a Setback

Frank J. Cholly

Silver futures seemed to be basing a bottom, however the chart is beginning to slant negative again. Strength in the U.S. dollar Index is providing just enough pressure with silver testing a pivotal support level at $15.00. It now leaves $14.75 as a reasonable target on the way down. Outside markets, other than the almighty dollar, need to be watched. The equity markets are now within reach of all-time highs. That does not support the price of silver. While I do recognize that the path of least resistance for silver is down, I also believe that the “bullishness” of the U.S. dollar and the strength in U.S.  equities markets can quickly reverse as both run into some headwind resistance levels up here. If the on-again-off-again China negotiations suddenly fall apart or any other unforeseen event reverses the equity markets, then silver will also reverse. It may just be a level on the chart that turns any of these markets around.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or fcholly@rjofutures.com.

Silver May '19 Daily Chart

Silver May '19 Daily Chart

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Energies - Crude Oil

Oil flat between EIA and Employment

Michael O'Donnell

As of Thursday, the front month May crude oil contract is trading 33 cents lower and somewhat flatly compared to most of the daily ranges pictured in the chart below. This is not surprising considering the upcoming employment situation aka jobs number tomorrow, following last month’s tepid, potentially precarious number of 20,000 non-farm payrolls. However, the market shook off the surprise build in the EIA number Wednesday, which had a build of 7.2 million barrels in contrast to expectations of a slight draw. In addition to tomorrow’s jobs number, markets may also factor in the status of U.S. Chinese Trade developments, OPEC and OPEC+ compliance, and the commitments of traders as there continue to be

Technically, the market is now trading at the year’s highs and above the 50, 100, and 200-day moving averages.  While there is the possibility of mean reversion and back and fill to the down side, the market is also trading at a level not traded at since last August 15th. While further downside price action could create an island reversal, the previous two days trading has yet to trade outside of Tuesday’s low.

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 May '19 Daily Chart

Crude Oil May '19 Daily Chart

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Energies - Natural Gas

Natural Gas Continuing Downward Trend

Jeff Ratajczak

The trend in Natural Gas for May delivery is down today. This week has seen trading within a range between $2.6500 and $2.700.  Tuesday’s inside day keeps a continuation of the current downtrend.  Yesterday’s lower high and low, keep downward pressure on the price action today. Today’s lower high sets up a sell-off, if the lows close below $2.656. $2.600 for the down side is not out of the question.   The moving averages and momentum studies are both in agreement and are pointing to lower prices in the coming future. 

Spring has arrived, and normal temperatures are being recorded in most of the USA.  A small dip is expected late in the week, but only for a day or so. The weekend should be back to normal to higher temps.  A small draw of 2 bcf is expected today. The season is still between heating and cooling, so the demand is still not there. Shale wells continue to produce, even though prices are low. Continuation of the current trend is expected, and a sell-off to January’s low of $2.570 is not out of the question.  A close above $2.780 would be needed to reverse the trend.

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 May '19 Daily Chart

Natural Gas May '19 Daily Chart

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Softs - Cocoa

Bullish Supply and Demand News Come Together to Boost Cocoa Futures Prices

Peter Mooses

Looking at the May cocoa futures chart, you will see one of the most bullish commodities over the past two weeks. You can see that prices in the soft have rallied over ten percent. The contract is also testing 2400, a level many traders have been waiting for. Bullish supply and demand news have finally come together to give the market the boost it has been anticipating. Asian demand provided strong support. Chinese PMI came in stronger helping the cause. If demand can continue to strengthen in N. America and Europe we could see 2450 tested in the short-term.

Technically, a continued close above the 9-day moving average will prop prices up too at these levels. Fundamentally, there are some concerns on the crop in growing regions, West Africa mainly. If rainfalls don’t amount to much, these areas could see production drop as dry heat is expected. With the Brexit news in our rearview temporality, the currencies have also been able to support cocoa and other softs. Continue to monitor the technicals as overbought levels are reached, the reversal from a strong rally like this one could leave many longs hurting with support down at 2280.

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

May Coffee Continues Downward

Adam Tuiaana

May coffee prices have continued to drop on high open interest and volume, sparking at short covering rally today. The key fundamentals precipitating this continued down is the forecasted wet weather of key growing areas of Vietnam. The Hightower Group has reported that “Vietnam’s top producing province of Dak Lak may see higher than normal precipitation during the first half of April”.  In addition, the number one producer, Brazil, also has wet weather forecast in key growing areas, which will also add continued pressure to May coffee prices. We’ve also continued to see strong U.S. dollar over the past week, which has inversely put pressure on commodities over all, especially those that are already fundamentally weak.

On the technical side, a formidable dive below the 100 level in May coffee prices has yet to see a strong return move to that area, so the market is telling us that prices are currently fair sub 100. Furthermore, a challenge of the 9100 level is on the horizon (both yesterday and today), and we will likely see a violation of this area.  For those looking to trend trade May coffee to the downside, look for a bounce back to the 9650 level before engaging. With such volatility on the horizon, I would advise using options to manage risk and gain exposure to a potentially large move in May coffee prices.

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 May '19 Daily Chart

Coffee May '19 Daily Chart

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Agriculture - Grains

Grain Futures Update w/Stephen Davis - 04/05/2019

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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Powering the Pound: Global Currencies Forecast

Ian Bannon

The June dollar opened at 96.620 on Thursday and has moved higher in morning trade. It seems the dollar has found some support through safe haven buying as yesterday’s optimism towards global sentiment dwindles. Adding to the upside today is the fact that jobless claims came in below expectations by 10,000, bringing the 4-week average back to its historic low seen in October. However, my belief is that this upside will be short lived as the tone of the Fed has been increasingly dovish over the past few months – the probability of a December rate cut is on the rise – the dollar is unlikely to keep up its strength.

From a technical standpoint, both the recent high and the recent low in the dollar are lower than the previous, hinting at weakness ahead. Since foreign currencies move against the dollar, we expect them to strengthen throughout the year as investors look to alternative outlets for their money. In particular, the British pound stands to benefit from a turning of the American business cycle. It has showed relative strength compared to the yen and the euro over the last few weeks. Fundamentally, the “Brexit” situation is weighing on the pound. As parliament wraps up this decision and moves toward a soft exit, I believe it will advance in its charts. Even in the face of a hard or no-deal exit, the intermediate to long term outcome should remain the same after the dust settles. For now, the trend in the pound is sideways, and resistance is seen at 1.3210, and a break through this level should cause a run toward 133.

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

British Pound Jun '19 Weekly Chart

British Pound Jun '19 Weekly Chart

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Interest Rates

U.S. Treasury Prices to Move Higher

Alexander Turro

U.S. government bond prices are oscillating between gains and losses but are holding firm after forming a quasi-double bottom in the early session. This comes amidst an initial jobless claims report that fell to the lowest level in fifty years, as well as overnight reports of German manufacturing goods falling 4.2% in February, only further exacerbating European growth concerns. The focus will remain on Friday’s jobs report, as well as average hourly earnings, especially after only 20k jobs were added in February. If late cycle wage inflation continues to accelerate and global and domestic growth decelerate then you will a see a rotation into domestic stagflationary conditions, which will impact peak corporate profitability moving forward. The benchmark 10-yr note remains bearish trend with the current range seen between 2.33 – 2.54%. Initial support for the June bonds comes in at 147-10 with the next upside target around 148-01.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-1120 or aturro@rjofutures.com.

30-Yr T-Note Jun '19 Daily Chart

30-Yr T Note Jun '19 Daily Chart


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Stocks Open Higher Following Jobs Data

Bill Dixon

The bar was set pretty low, but this month’s non-farm payrolls came out considerably better than last month’s number.  Traders were looking for something in the neighborhood of 180K.  The number came out at 197K.  They also revised last month’s abysmal reading of 20K up to 33K, which I suppose is better than nothing.  Stocks are up slightly following the news.  For those looking for a test of October’s all-time highs, it appears they’ll have to rely on other news to really get us moving.

The market is a bit overbought, but the trend remains strong to the upside.  The mini S&P has now closed above the critical 2820 level in six consecutive sessions.  We’ve also heard some positive developments in the ongoing China negotiations, and I think that that has eased traders’ concerns.  We’ve heard plenty of optimism from President Trump on the negotiations, but we’re actually starting to hear the other side echo his statements for the first time.  That said, we’re still likely another 3-4 weeks out at a minimum on anything concrete.

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 Jun '19 Daily Chart

E-Mini S&P 500 Jun '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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