Bull and Bear Market

China got smoked overnight -5.6%, following a 6% correction over the last 2 weeks. Copper was an interesting tell over the last 2 weeks as well – down 6.5% from its April high, suggesting there was some risk on deck in the market. The NFP report Friday was very strong, however, Macro markets did not like President Trumps tweet over the weekend of raising tariffs to 25%: 


“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….”

“….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

Interesting enough, the Chinese cycle and data is suggestive of a Growth Accel/Inflation Accel environment for China – we’ll monitor the direction of the Chinese data because the Shanghai has broken it 3-6 month trend line. 

U.S. equities: the S&P 500 futures tapped the low end of our range last night (2890) on the Trump tweet.  Funny that all we heard out of D.C. for the past 4 months was about super, awesome, fantastic trade deals and now we get to the 11th hour and we find out that’s not the case.  Total market volume on Friday was -7% vs the prior day, and -6% mo/mo.  The immediate-term trade line broke last night, but we’re bouncing hard off the open.  The bullish trend line remains firmly in tack.  

Gold: 1270-75 is our buy area.  We’ll likely be getting in at some point relatively soon. 
Bonds: We own(ed) bonds – we’re covering some today with yields at the low end of the range. 
US Dollar: bouncing slightly this morning, but may very well be in a topping process.  The upside down of the dollar is Euro, and is carrying the 2nd largest short position (VIX is #1) in CFTC reported positioning. 

Feel free to reach out to John Caruso at jcaruso@rjofutures.com or 1-800-669-5354 if you’d like to get a 2 month free trial of our proprietary trade recommendations by email. 

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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