April 12, 2019

Volume 13, Issue 15

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Metals - Gold

June Gold Points to Lower Prices

Joshua Graves

June gold futures has struggled to maintain any meaningful rally above 1350 in recent months. The most recent run to 1330 once again proved the car was out of gas once positive economic and jobs data came out showing unemployment at 50-year lows and strong jobs data the week before. Yesterday gave the bulls a jolt as gold saw a $20 washout below 1300.

To understand where gold prices are likely to head you must look at the overall sentiment in the market, the fundamental economic data, and the overall technical indicators of a chart. Right now, sentiment in the market points to more risk on attitude, and strong confidence in the economy as whole. Clearly, there is no fear of inflation as that’s been in check and just below the Fed’s target of 2%. There is no fear of geopolitical turmoil or North Korea situation like in the past. There is no real catalyst that out there right now that could push gold to new contract highs, in my opinion. There is also enough uncertainty with how much farther the stock market can go and traders are likely on the sidelines waiting to buy gold immediately following a stock market correction.

The technicals of the chart show that 1285-1290 is an area that needs to be broken to push the bulls to cover long positions. A close above 1330 (most recent high) would push bears to cover longs and give them pause to be short. June gold is currently up $5 on what could just be the usual price action between a weaker dollar and more money put to 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 Jun '19 Daily Chart

Gold Jun '19 Daily Chart

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Metals - Silver

Silver on Sale?

Eli Tesfaye

July ’19 silver futures started the day with sharp downward momentum following the weak international equities data and a jump in the U.S. dollar. Global equity markets demonstrated weakness overnight except for the Russian market. Expectations of a continued delicate approach in U.S. Fed policy and possible soft economic data is feeding the fear of poor earnings ahead.

The lack of confidence in the global equities may be responsible for the early gains in the U.S. dollar with safe-haven play favoring the dollar over metals. The strength in the U.S. dollar inflicted chart damage in silver; therefore, the metals continue to be vulnerable for near term correction.

The technical outlook looks to favor the bear market with the price looking to extend into mid-14.00. The bulls wouldn’t have momentum in their favor unless July contract jumps near 15.30. As of last Friday, the commitment of traders with options (COT) showed the non-commercial and non-reportable traders held net long near 33K contracts. With current price action, weak longs probably eased out of silver.

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 Daily Chart

Silver Daily Chart

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Energies - Crude Oil

Crude Oil Futures Continue to Show Strength

Phillip Streible

On a year to date performance, the energy sector continues to dominate four of the top five spots with gasoline up 56%, WTI up 42%, Brent up 33% and Heating oil up 24%. The main fundamental highlights have been increasing demand as we approach the summer driving season while OPEC has maintained its cuts. Although U.S. oil production has continued to outperform pressing through 12 million barrels per day this has barely impacted the price of crude oil. So, the key levels you want to watch are $65 on the upside where an extension to $70 could be possible. Where yesterday’s low (April 11th) at $63.31 should act as critical support and any violation of this number on a closing basis could led to a washout down to the 200 DMA at $60.74.

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 May '19 Daily Chart

Crude Oil May '19 Daily Chart

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Softs - Sugar

Sugar Chops Higher on Roll

Joe Nikruto

This week’s comment finds sugar contracts, both May and July, chopping higher into breakout territory.  With sugar camped out squarely in the technical middle ground of the range established in late Feb and early March it seems like a move in either direction swings the chart picture from bullish one day and to bearish the next. Fundamentally, today’s Hightower comment highlights what I believe to be the dominant fundamental at this moment. RBOB futures continue to climb. Fuel prices in Brazil provide favorable margin for processors converting cane to ethanol. This conversion to fuel of cane that would otherwise be turned into sugar, according to Hightower, can result in a sugar market deficit for 2019/2020. 

I continue to have doubts and will be watching the numbers closely but also don’t see the merit in fighting the chart.  The commodity trading funds hold a sizeable short position in sugar, much like corn, and it isn’t going to take much in the way of a technical move to get them to cover that short position. An upside violation of the 13.10 level in May or 13.28 in July, a mere 30 points from where the market is now will cause speculative funds to begin to cover short positions.  Is there fundamental justification for a move higher? That remains to be seen. Point is, there is enough kindling here for a fire.  The July contract has rallied above the short and intermediate- term moving averages. There is resistance at 13.03 and participants are switching out of May contracts into July. With so much of the trade activity being rolling of contracts it is difficult to assign much directional weight to what I see on the chart. Be nimble.  There are moves to catch for traders with a plan. It just doesn’t make sense to get locked into a position here.

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 Jul '19 Daily Chart

Sugar Jul '19 Daily Chart

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Softs - Cocoa

Can Cocoa Futures Keep Pushing Higher?

Eric Scoles

July ’19 cocoa futures recover from a correction yesterday and close with a slight rise in price for 13th straight day of gains. Prices corrected downward early Tuesday after pressure from long liquidation. Prices rallied back to a positive gain with optimistic Brexit sentiment and near-term demand looking strong from Europe. However, a Brexit solution remains elusive which only allows for brief optimism before uncertainty returns without any clear progress. The outlook for cocoa’s mid-crop is still unstable with dry soil conditions in the Ivory Coast and high winds threatening the trees ability to flower, but attention should be paid to demand fluctuations from Europe causing volatility. This morning sees cocoa trading in consolidation, and folks are wondering can cocoa futures keep pushing higher? The near term appears to be bullish until any notable supply or demand shifts, but caution is advised due to potential for a pull-back with futures being in overbought territory.

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

Cocoa Jul '19 Daily Chart

Cocoa July '19 Daily Chart

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Agriculture - Grains

Grain Futures Update w/Stephen Davis - 04/12/2019

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

Weather Once Again Impacting Cattle Markets

Peter McGinn

Weather is again the focus this week in the cattle markets. A storm is expected to come through the northern plains, this will bring support to the market at the 50-day moving average or the 119.600 price level. With the June contract trading at a $5-$6 discount to the cash market, when compared to the 5-year average of $14 discount, the seasonal break that usually occurs is not there due to the poor feedlot conditions and rising pork prices. Cash prices in Nebraska yesterday traded at $126.00 and that was up $1 from Monday.  The USDA estimated cattle slaughter came in at 120,000 head yesterday. This brings the total for the week so far to 240,000 head, up from 235,000 last week and up from 238,000 a year ago.USDA boxed beef cutout values were up 30 cents at mid-session yesterday and closed 35 cents lower at $228.32. This was up from $225.73 the prior week. Overall, I suspect slow trading due to the focus being on outside markets throughout this week. Technically there have been bearish signals triggered with the daily stochastics crossing over, including momentum studies continuing to decline to oversold levels and a possible head and shoulders. The downside objective would be the 119.600 today while if we see a break through the neckline of the head and shoulders, the downside objective is 118.000

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 Jun '19 Daily Chart

Live Cattle Jun '19 Daily Chart


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Down Goes the Dollar: Currencies Forecast

John Caruso

Global currencies are making ambitious moves Friday morning as a wave of bullish sentiment is priced into the economy. Most notably, expectations for China have improved as Chinese exports in March jumped an impressive 21.3%. This news in conjunction with additional “bottoming” signs in emerging market economies is deflating some of the safe haven appeal to the USD, as it dropped over 40 points in morning trade and hit a new 12 day low. I believe this may be the beginning of the end for the dollar, as its recent high is lower than the previous and it appears to be in a topping formation. It is also our view that domestic growth is likely to continue to slow year over year from its cycle peak seen in Q3 2018 which will also continue to weigh on the dollar as real interest rates may continue to decline. This should be a positive for other global currencies, as they trade against the dollar.

This morning, the British pound opened at 1.3096 and has ranged up to 1.3165 in morning trade, while the gains in the euro are even more substantial. From a fundamental standpoint, these currencies could benefit from the British exit being delayed until October, which lessens the odds of a no-deal exit. The June pound is seeing local resistance at this level, but a breach above it could cause a run up to 132.10. Should the dollar continue weakening on slower US growth and further dovish Fed reports, the pound and the euro are likely to continue climbing. In contrast to European currencies, the yen has washed out this morning, deepening bear tracks on safe haven liquidation as economic outlook elsewhere increase.

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.

British Pound Jun '19 Daily Chart

British Pound Jun '19 Daily Chart


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"Dimons" Are a Dow's Best Friend

Jeff Yasak

U.S. stock futures rose this morning with the release of stronger than expected earnings from J.P Morgan Chase.  The banking giant’s number vaulted more than 2.5% before the bell and the Dow gained 230 points at the open.  The better than anticipated number was attributed to the impact of higher rates. In recent months, U.S. banks have underperformed with looming fears of a recession.  Bank executives have been side-stepping these concerns by emphasizing the current loan growth.  Business Insider had published this Jamie Dimon quote today. "In the first quarter of 2019, we had record revenue and net income, strong performance across each of our major businesses, and a more constructive environment," CEO Jamie Dimon said in the earnings release "Even amid some global geopolitical uncertainty, the US economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy, and consumer and business confidence remains strong."

Resistance is showing 289900 and 291000 with support being 288400 and 287500.

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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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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