June 28, 2019

Volume 13, Issue 26

Feature Article

RJO Futures PRO Online Trading Platform


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Metals - Gold

Where is Gold Going Next?

Nicholas DeGeorge

In the early morning trade, August gold is trading slightly in the green for the day and currently trading at $1,413 an ounce. The headlines overnight suggest that the U.S. and China are both standing strong on their trade stances before this weekend’s meeting between the two world super powers at the G-20 meetings in Osaka, Japan. At best, it sounds like more tariffs may just be delayed which would cause more economic uncertainty and some more gold buyers to come into the market. Furthermore, gold bulls and bears will be watching very closely at Q2 earnings which starts in just a couple of weeks and is expected to show companies growth slowing big time, so watch if gold can get more anxiety buying off any bad data.

If you take a quick look at the daily August gold chart, you’ll clearly see the strong up trend along with maybe a short-term top on the shiny one. Gold bulls should look for support at between the trendline of $1,385 and the 20-day moving average at $1,365. Gold bears should look for resistance at this week high of $1,442 an ounce or a break below $1,365. I highlighted levels below on my RJO Pro daily August gold chart.

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 Aug '19 Daily Chart

Gold Aug '19 Daily Chart

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Metals - Silver

The Trend in Silver Remains Up!

Frank J. Cholly

The short-term trend in silver futures is still up. Silver futures bottomed out in late May and have since the added $1.20 in premium. However, silver is woefully behind in the precious metals rally. The silver to gold ratio is at a 27-year high of ninety-two to one! I think that silver has a lot of catching up to do. I think that if silver can get a good punch through the $16.00 level then silver bugs can get excited about the $18.00 to $20.00 range. It’s going to take a breakout above $16.00 to wake up the silver bulls, but traders should be paying attention to this wide spread between the top two metals. This differential has just gotten way too wide. It does not matter whatever excuse or explanation you attribute to the gold market rally…silver is a proxy for gold! If you believe in gold strength you should be buying silver. The silver market is explosive and the “real” rally in silver is yet to come.

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 Jul '19 Daily Chart

Silver Jul '19 Daily Chart

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Energies - Crude Oil

Crude Oil Reaching Critical Levels

Michael O'Donnell

As of Thursday, the August crude oil contract is little changed on the day following this week’s draws in inventory in both the API and EIA reports, possibly as the market anticipates any developments at the G20 and with Iran and the Strait of Hormuz.

Also, of note, at $59.35, the market is not far from the psychologically important $60 level and a number of key moving averages, pictured below. In addition to this week’s reports and any developments this weekend, the politics around the next OPEC meeting, with the date already having been changed, could provide further uncertainty in addition to the changes in U.S. production and any further infighting between OPEC and non-OPEC members.

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 Aug '19 Daily Chart

Crude Oil Aug '19 Daily Chart

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Energies - Natural Gas

Natural Gas Finally Trending Up

Jeff Ratajczak

August natural gas is in a technical uptrend, but seems to be capped by the $2.300 handle. Resistance is at $2.300, but further out $2.378 is the level that seems likely.  If these levels are broken, is not out of the question for gas to hit $2.600. Gas is cheap now comparatively and might have the buying side come in trying to pick bottoms.  Down side risk is around $2.200, but I don’t believe it will go to those levels though. A standard pivot calculator puts support around $2.251 and $2.181. 

A cool start to the Summer and an abnormally large amount of precipitation has many people on the short side of the market. Above average temperatures are forecast for the coming week and may change that outlook.  I wouldn’t want to go home short over the weekend.

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 Aug '19 Daily Chart

Natural Gas Aug '19 Daily Chart

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Softs - Sugar

Sugar Correction Continues, Defines New S-T Risk



Yesterday's break below Mon's 12.38 initial counter-trend low reaffirms the still-developing slide from 14-Jun's 12.95 high that we believe is just a correction of May-Jun's rally and an eventual buying opportunity.  For the moment however at least the intermediate-term trend remains down with yesterday's resumed weakness leaving Tue's 12.66 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage interim non-bullish decisions like long-covers and cautious bearish punts.

To read the full article RJO Futures clients may login here to the client portal and access all RJO Market Insights.

Sugar Oct '19 240 Min Chart

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Softs - Cocoa

Cocoa Consolidation - Will It Lead To a Breakout or Fall?

Peter Mooses

Cocoa’s storyline this year has been very repetitive – supply/demand, currencies, global risk, all remain the main drivers of this market. Currently, demand is rising. N. American demand appears to be strengthening – long-term this should be supportive to prices since that region’s data has been typically weaker. With production levels(supply) being somewhat of a non-factor the demand side of the equation has taken center stage.

The currencies are also moving the cocoa market in the short-term. A strong dollar, weaker euro and pound have held the September contract at these levels. Traders are wondering if we are headed for consolidation over the next week.

With Wednesday’s trade ending the day near unchanged – speculators are wondering if we are finding a new range. 2550 has been resistance, 2450 has been support and in-between depends on the day. Look for supply/demand to guide us the rest of the week followed by the technicals. If buyers aren’t convinced the longer-term outlook is as bullish, we may see a pullback to 2400. But with the current weather, currency volatility and risk on (and off) sentiment, a consolidated range is more realistic leading to a breakout.

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 Sep '19 Daily Chart

Cocoa Sep '19 Daily Chart

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Softs - Coffee

September Coffee Showing Strength

Adam Tuiaana

A recent rally on news of colder temperatures on the horizon throughout key growing areas of Brazil have prompted some major short-covering to take place in September coffee. Although there seems to be a huge question mark upon how cold temps will get, many shorts have stepped aside for the time being, allowing the bulls to step in.

September coffee prices are quickly approaching a critical resistance area of 10860, the high from June 4th, which should slow rising prices down a bit. In support of those with bullish bias, a noticeable “higher-low” was put in by September coffee on June 19th. This higher-low may be suggesting that a temporary bottom has been put in place for September coffee. We’re also noticing rising momentum as the price action moves higher.

The Hightower Group has reported today that “stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out”. A key area of resistance will be the aforementioned 10860 high from June 4th. If this level is taken out, we could see a revisit to highs not seen since February of this year.

Although this rally is noticeably admirable, and will no doubt tempt many bullish traders to cast their lines up river, the existing large supply of coffee on the world market will continue to be the huge “white elephant” in the room. Until a major threat of said supply gluttonies are realistically challenged, I remain neutral on September coffee prices and would expect some resistance at the 10860 level in the near term.

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 Sep '19 Daily Chart

Coffee Sept '19 Daily Chart

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Agriculture - Grains

Grain Futures Update w/Stephen Davis - 06/28/2019

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 and Soybeans Awaiting Today's Reports

Tony Cholly

The average estimate for today’s planting intentions report is 84.68 million acres compared to 84.62 million acres in March. Grain stocks estimate is 1.865 billion bushels and compared to 1.219 billion last year.  The forecast has improved for the central and southern Midwest, but the extended forecast models are not as hot and turned a bit more wet than previous runs.  As of June 23rd, Illinois soybean emergence was 67% compared to a 5-year average of 93%, Indiana was 56% vs 92%, and Ohio at 45% vs 93%, so there is obviously still some issues in the way.  Resistance comes in at 919 and support at 904.

Without a bearish surprise from the USDA today, the potential extreme tightness ahead on any sign of abnormal weather should hold the corn market in an uptrend due to major uncertainties.  There will not be any absolute clear picture until August when we get some better guesses on planted acres. The USDA is not typically aggressive at this time of the year because of how much time is left for the crop to improve, but this year seems to be different.  The report is at 11am CST.  Resistance comes in at 454 and support at 447.

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.

Soybeans Nov '19 Daily Chart

Soybeans Nov '19 Daily Chart

Corn Sep '19 Daily Chart

Corn Sep '19 Daily Chart

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Currencies

Shifting Macroeconomic Tides Reverse Currency Trends

Ian Bannon

Currencies have been one of the more volatile sectors over the last couple of weeks as the Fed and the ECB both rolled out rhetoric regarding cutting interest rates in the back half of this year. Central bank rate cuts are bearish for their domestic currency, which is why we have seen such a large downturn in the dollar. The Fed has not yet acted on rate cuts, but have simply provided the dialogue, so there is reason to believe more downside is ahead in the dollar. After such a heavy collapse last week, it would not be unusual to see an upside retracement in the dollar, but any bounce is not suspected to last long. The greenback’s interest as a safe-haven asset seems to have been reallocated to the Swiss franc, the Japanese yen, and the metals markets. Scheduled data this week continued to show signs of depressed growth, with an uptick in jobless claims, a sizeable miss in durable goods orders, and a draw in crude inventories. Q2 GDP growth came out at 3.1%, in line with expectations; however, stagnant inflation provides a boost to GDP figures because the deflator remains low. In short, slowing growth will add to downside action in the dollar. Going forward, I like the Australian dollar, as their economy is currently one of few developed economies still showing signs of accelerating growth. The Swiss franc is attractive on a pullback because of its safe-haven qualities. The euro stands to benefit as the dollar pulls back, but likely has less upside potential because of increasingly slow growth in Europe, particularly Germany.

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.

U.S. Dollar Index Sep '19 Daily Chart

U.S. Dollar Index Sep '19 Daily Chart

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Interest Rates

U.S. Government Yields Rebound Below 2% Low

Alexander Turro

U.S. government bond yields have rebounded off Tuesday’s close below 2% on reinvigorated hopes of a potential trade agreement ahead of a scheduled meeting between President Trump and Chinese President Xi at the upcoming G-20 summit in Japan. Tuesday’s close below 2% on the benchmark ten-year note followed comments by the Fed President of St Louis stating that a 50-basis point cut is not warranted, and comments by Chairman Powell that the central bank is “mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment.” Yields have fallen in recent weeks in anticipation of lower interest rates but have edged higher today on a plunge in U.S. Durable Goods Orders with a 3.3% decline on a YoY basis, the most since July 2016. Near term resistance for Sept bonds comes in around the 156-00 handle at the double high with the yield on the ten-year note remaining bearish trend with today’s range seen between 1.98 -2.13.

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-Year Bond Sep '19 Daily Chart

30-Year Bond Sep '19 Daily Chart

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Equities

Stocks Push Against All-Time Highs into the G20

Ian Bannon

Stock futures have been mixed this week as global uncertainties continue looming ahead of the long-awaited G20 meeting in Japan this weekend. On the docket are issues ranging from oceanic stability, to reforming the WTO, and empowering women. Arguably as important are the bilateral agreements scheduled to take place between world leaders. The world’s eyes will be on President Trump and President Xi from China, as this proclaimed tariff war is weighing on Asian manufacturing. Neither side wants to appear weak. President Xi came out on Thursday making heavy demands regarding the concessions he must see from Trump to conclude a trade deal. Xi is demonstrating the same hard-headedness displayed by Trump, given the American president’s knack for strong-arming his political adversaries and publicly boasting about “winning” international deals. Considering the intensity of the demands (all tariffs dropped, US to halt export pressure, and to sell American tech to Huawei), I am not overly optimistic about the results of the G20, and it seems stock investors have a similar view. At best, I would hope for a civil “detante” between the two economic powers, meaning they will continue talks and halt additional trade restrictions. but President Trump has a reputation for unpredictability, and I would not be surprised to see profit-taking into this weekend’s events.

 The trade war (along with more cyclical factors) are working to slow the global economy. Data coming in from China, Europe, and the U.S. has been soft over the last couple of months and it is pushing central banks around the world to adopt a dovish attitude and lay out a path to rate cuts. Slashing interest rates is the simplest form of monetary easing, and stock markets like that. The most recent rally was triggered based on discussion from the Fed, but was led to all-time highs by defensive stocks, warning of possible turmoil ahead. Safe-haven assets are elevated, central banks are cutting rates, and there is no shortage of geopolitical turmoil, yet stocks are pushing against new highs. Investors beware, we are navigating uncharted waters.

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.

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

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

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