April 18, 2019

Volume 13, Issue 16

Feature Article

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CME Group New Micro E-mini!

Micro E-mini Futures

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Metals - Gold

Gold Continues its Recent Sell-Off

Nicholas DeGeorge

In the early morning trade, June gold has continued its sell off, currently trading at $1,276, which began last week on the 11th after a strong 51-year low jobless claims number. Gold has struggled recently with global equity markets signaling risk off with a possible U.S./China trade deal near and along with continued strong macro-economic data overnight. The U.S. dollar continues to strengthen off strong economic news which has caused more pressure to gold and the news overnight that a South Africa gold mining company will be back up and running again after a five-month strike won’t help the shiny one either. Furthermore, with the Fed indicating yesterday a possibility still for another rate hike later this year one would think the bear camp has clear control for now.

If we take a quick look at the daily June gold chart, you’ll clearly see that on Tuesday it broke below the previous three lows which acted as support. Moreover, now it sets up a sell off down to its 200-day moving average which rest at $1,267 an ounce or even lower.

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

Bottoming Action in Silver Futures

Frank J. Cholly

In my last article, I identified $14.75 as the next downside level to watch. This week’s low, so far, is $14.795 for the May silver. The U.S. equity markets continue to move higher and the dollar is still relatively strong. Silver and metals in general will have a tough time moving higher with so much strength in the equity markets. While the Fed remains dovish, they should also remain data dependent on Fed policy decisions. Recent data on CPI and PPI have been somewhat inflationary. Any hint of a rate hike in 2019 and the silver market will rally, and the equities will correct to the down side.

While the short-term trend in silver is still technically down, a little punch over $15.00 will quickly reverse the trend to sideways. While recent trade has been choppy the market doesn’t have downward momentum and therefore I see it as basing a bottom.

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 Sideways on Fundamentals

Michael O'Donnell

As of Wednesday, the crude oil market is only slightly up with the May 2019 futures contract trading just above $64 per barrel.  The weekly EIA reported today crude oil inventories were down 1.4 million barrels to 455.2 million, 6.5 percent above their level a year ago.

As the market trades near the $65 level, which it has not traded at since late last year, traders may consider whether we are looking at a bull flag prior to legging higher. Traders may also consider pausing and potentially turning or profit taking as the market has had a strong year and is trading near the year’s highs amid a number of managed money traders and hedge funds add to bullish bets in what could become a crowded trade.

For me, in addition to fundamentals, outside markets should be a consideration as the demand for energy is directly related to global economic health and risk on sentiment.  While equities trade near all time highs and gasoline is strong, these should be bullish factors for crude.  Should these markets turn, especially equities akin to the end of last year, then it is another story.

It is also interesting to note reports from Reuters showing:

-record gasoline to the U.S. West Coast from Western Europe amid refinery outages

-possible extensions on Iranian waivers for Turkey

-mixed reports with higher exports from Iran, UAE and Qatar and lower exports from Saudi Arabia, Oman and Iraq

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: Proceed With Caution

Jeff Ratajczak

Today’s trend in May natural gas is decidedly down. The support levels have been breached, and the last seven days have lower highs and lows. The pivot point today is $2.55, resistance comes in around $2.59 then $2.69 and $2.74. Support has been broken at $2.59 has been as low as $2.517.  Support now rests at $2.50 and $2.41. The short-term MA’s and the momentum studies are all pointed toward down.  Is the bottom in?  The last daily bar looks like a reversal to me, but no technical or fundamental reasons are evident.  

Higher temperatures are in the forecast, spring has finally arrived, and in Chicago we had snow Sunday.  Monday and Tuesday were back in the 70’s.  It is almost, but not quite cooling season, so demand there has not gained footing. There are other reasons gas is very cheap.  Foreign production is up and Russia suggests a slight uptick in production as well. Gas received a 25 bcf injection last week. Tomorrow’s numbers are not in yet, but caution is advised going forward. A close above $2.60 is needed to change the trend, anything else will keep the market going in the same direction.

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

European and Asia Grind Data Leads to Volatile Few Trading Days in Cocoa

Peter Mooses

On the 16th, after European grind data came in bullish, reporting a number of 3.3% against an expected 1-3% rise – prices had a volatile day. After a move higher, the market sold off – overbought techinals pushed prices even lower. 2314 was touched, the lowest level reached after the recent rally. Since the ECA started recording data in 2000, this week’s first quarter level is the highest to start a year.

Asia reported grind data at 9.5%, well above the 3-5% range that traders were anticipating. Economic data in this part of world also remains supportive for a move higher in commodity prices, especially in cocoa.

Port arrivals in Ivory Coast continue to come in high and weather in the region remain bullish for prices. Lower rain falls, dryer weather have producers concerned about output levels. Ghana’s production levels may also come in down, as expectations are being lowered.

Technically speaking, overbought levels have been reached, but with the recent demand news, grinding numbers are very positive for prices to remain at these levels or higher. If the market can erase the loses put in on the 16th look for the chart to continue its path. Also, with continued cuts in production levels in West Africa, look for prices to test 2450 in the July contract.

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 July '19 Daily Chart

Cocoa July '19 Daily Chart

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Softs - Coffee

May Coffee Selloff Continues

Adam Tuiaana

While many believe that May coffee prices are oversold, we have yet to see any solid bullish supply news to reverse this falling market. The best a coffee bull can hope for is dry weather in major growing areas, a weakening Brazilian currency which hasn’t yet happened, or as The Hightower Group has reported “fresh signs of lower than expected output from the upcoming Brazilian and/or Vietnamese crop.”

In addition, we need to consider the fact that the U.S. dollar is still holding support above the 9600 level and remains in an uptrend, adding selling pressure many of the worlds commodity prices.

Volume levels continue to remain high while the selloff in May coffee prices continues, showing now real divergence. A convincing dive below the 100 level in March saw a strong return move subsequently, and shortly thereafter another leg down was made. In my last article I pointed out that “a challenge of the 9100 level is on the horizon (both yesterday and today), and we will likely see a violation of this area.”

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 - 04/18/2019

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 - Grains

Corn is Reaching Extreme Oversold Levels, but Still No Sign of a Low

Tony Cholly

In order for the corn market to see some sort of rally, it is going to take the large net short position to start covering, otherwise known as a short-covering rally. Unfortunately for farmers, there has been no reason for this to happen yet. Demand remains sluggish and traders still see ample supply ahead, despite flooding and slow planting in major areas of the corn belt. Temperatures look to warm up in the Midwest over the next 10-14 days, but there is still precipitation in the forecast as well, which is just as bad if not worse than temps remaining cold. February exports were down 4% from last year, this was the smallest monthly total since December of 2017, but year to date exports are seen at 28.7 million tonnes, up 43% from a year ago.

Brazil and Argentine summer month FOB offers continue to slide as production continues to be revised higher and higher.  A trade deal with China could help, but no announcements are expected soon.  Resistance comes in at 368 and 370 with support at 365 and 363.

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.

Corn Jul '19 Daily Chart

Corn Jul '19 Daily Chart

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Currencies

Currencies Reverse Trend as Global Sentiment Improves

Ian Bannon

Currencies around the world seem to be reversing their trends as economic data continues to surprise markets and global sentiment improves. The dollar opened on Wednesday at 96.730 and has slid lower in morning trade. It appears the USD is falling victim to safe haven liquidation as Chinese GDP figures outperformed and European housing and construction numbers beat forecasts earlier this week. Technically speaking, the dollar continues to make lower highs, and recovery will be difficult in the face of a dovish Fed. However, I am not expecting a landslide in the greenback, as U.S. economic conditions are still looking relatively bright. On a bullish note, the weakening dollar is having positive effects on the euro. Investors are forecasting that the beaten up and belittled European economy has the most to gain from improving sentiment, as euro charts are showing signs of a bottom. The delay in the British exit, in conjunction with positive data, is acting as a catalyst for the improving euro. However, the pound is struggling to keep up. UK inflation has remained below central bank targets and growth in housing prices fell to a six year low. Even though British wage growth reached a new decade high earlier this week, the pound is still entrenched in its recent bear tracks. Looking to the east, safe haven liquidation has affected the yen as well due to improved outlook for the Chinese and European economies. Adding to the downward pressure is that Japanese industrial production was only half of what was expected which signals that Japan’s macro-economy is failing to keep up with the rest of the world. As support in the yen is seen at 89.60, safe haven liquidation may be exhausted and further downward action in the dollar could cause a trend reversal in the yen.

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

Euro FX Jun '19 Daily Chart

Euro FX Jun '19 Daily Chart/p>

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Interest Rates

U.S. Treasury Prices Rebound

Alexander Turro

U.S. government prices are bouncing back after the yield on the benchmark 10-year note hit as high as 2.614% following the release of positive economic data from China in the overnight. Chinese GDP came in above estimates at +6.4% Y/Y with retail sales accelerating 50 bps to +8.7% Y/Y and industrial output accelerating +280 bps to +8.5% Y/Y (vs. +5.0% est), which is the fastest pace of growth since 2014. The data continues to support the expectation of Chinese growth to have bottomed in Q1, transitioning into more sustained acceleration. Yields have risen higher with stocks nearing all-time highs coupled with Fed optimism on growth and more tolerant expectations of inflation. The latest FOMC beige book is set to be released later this afternoon. The yield on the 10-year note remains bearish trend with the current range seen between 2.44 – 2.61%. The next downside target in June bonds is seen around 145-25 with near term resistance around 146-27.

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 Bond Jun '19 Daily Chart

30-Yr T Bond Jun '19 Daily Chart

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Equities

Equities

Bill Dixon

The big news of the day is the release of Robert Mueller’s report that sums up his investigation into whether the President and his campaign colluded with Russia. The news has basically been out there for weeks now, so I don’t think there will be a great deal to pull from in a slightly redacted report about the findings. I’m sure the politicians and media will find a way to spin it into something bigger than it actually is, but the market doesn’t seem to care.  The morning has been spent chopping around unchanged for the most part in the indices. The Dow has been a bit stronger than the rest of the pack and is up nearly half a percent.  There has been some renewed optimism regarding a trade deal with China, but we still don’t have anything set in stone.  It appears it will be several more weeks at best on that front. 

All the indices are approaching their all-time highs. The Nasdaq actually printed a new one intraday yesterday. If earnings can continue to come in in line or relatively strong, it appears we’re going to bust through the swing highs. Markets are closed for the holiday tomorrow, but next week features a decent slate of news.  Highlights will be Existing Home Sales on Monday, New Home Sales on Tuesday, Durable Goods on Thursday, and GDP on Friday.

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 Jun '19 Daily Chart

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

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