Futures Now: Blog


  Thursday, 16 May 2013 | 2:01 PM ET

A Japanese Crisis Will Spike Gold: Pro

Posted By: Alex Rosenberg

Peter Schiff of Euro Pacific Capital has been bullish on gold for a long time, but now he has a new reason to buy: Japan.

That nation's sweeping plan to boost its economy has seen the Bank of Japan pledge to buy 7.5 trillion worth of government bonds a month (about 70 percent of new Japanese issuance), and Japan is embarking on stimulus in the form of government spending.

Japan's first-quarter gross domestic product data showed that its economy grew by 0.9 percent on a quarterly basis (3.5 percent annualized), which has led to a degree of optimism that Prime Minister Shinzo Abe's policies are working.

But Schiff was steadfast in his belief that Abe's plans will come to grief and that the prime minister has an unsustainable situation on his hands in aiming for a 2 percent inflation rate.

(Read More: Japan's Economy Boosted by Consumption, Exports)

In an April blog post, Schiff wrote that "the idea that informs Abe's plan, that rising prices entice consumers to buy before prices go up, is clearly suspect as economic law dictates that demand increases when prices fall."

Thus, he said, the plan is destined to fail—and quickly.

"Japan will unleash an inflation tsunami if it tries to keep its bond bubble from popping with more qualitative easing," Schiff said. "If it shows restraint, the bubble will burst, eventually taking stocks down with it."

In other words, Japan is doomed to inject increasingly more money into the system, spurring inflation, which will in turn dramatically boost the price of gold, according to Schiff.

"Gold is a buy, and the Federal Reserve and Bank of Japan policies will drive the metal to new highs," he said. "So will the easy-money policies of other central banks that are joining the currency war."

Given that gold's record price is more than $1,900 and the metal now sits below $1,400, Schiff has good reason to pick up a few ounces.

»Read more
  Wednesday, 15 May 2013 | 3:06 PM ET

Traders Agree: Gold Will Keep Dropping

Posted By: Alex Rosenberg

Wednesday was a tough day for gold as it dropped below $1,400 for first time in nearly a month. But traders foresee more pain for the precious metal.

"Once we broke that support at $1,418, you have to look at that as resistance," said Anthony Grisanti of GRZ Energy. "If we settle below $1,400, we're going to take a shot at $1,300."

It ultimately comes down to the dollar, according to iiTrader CEO Rich Ilczyszyn. "The dollar is the tallest midget in the room right now," he said on "Fast Money: Halftime Report." Because the currency has been strong relative to others, gold has suffered from the lack of inflation, the trader said.

"For years, gold was a great hedge against purchase power, and now that comes into check," Ilczyszyn said. "Gold will continue to go down until the price is attractive against stocks," he wrote on CNBC.com.

Gold, stocks, and the dollar are more intertwined that it initially appears, according to George Gero, RBC precious metals strategist. In a Wednesday morning note, he wrote that "the recent decline in gold prices is a result mainly of strong stocks using up dollars, as international investors participating in the 14 percent up move this year in stocks have to pay for them with dollars."

That would mean that the rally in U.S. equities makes gold less attractive for two reasons: One, it has strengthened the dollar; two, it has made gold a major relative underperformer.

How far can gold drop?

"If we get through the $1,300, gold can hit $1,100," Grisanti said.

»Read more
  Wednesday, 15 May 2013 | 10:59 AM ET

Was Gold in a Bubble?

Erin Patrice O'Brien | Stone | Getty Images

On Tuesday, gold dropped below $1,400 for the first time in a month. That aligns pretty well with what Fortress Investment Group President Michael Novogratz told "Squawk Box" on Tuesday morning: "Gold's bubble has burst," he said. "You've tried everything you can to make it go higher and it won't go higher. Therefore, it will go lower."

»Read more
  Tuesday, 14 May 2013 | 3:05 PM ET

Why This Chart Means S&P 2,400: Technician

Posted By: Alex Rosenberg

Is the market's run done, or is there 40% more upside from here?

According to RBC U.S. Market Technical Strategist Robert Sluymer, the answer is "both." It just depends on an investor's time frame.

Sluymer said the market is a bit overdone in the short-term, but over a three-to-five year horizon he sees the S&P 500 taking 2,300 to 2,400.

How does he arrive at that target? Simple math.

»Read more
  Tuesday, 14 May 2013 | 8:02 AM ET

Pain at the Pump? Gas Prices Will Rise, Says Pro

Posted By: Anthony Grisanti
Getty Images

As we head into Memorial Day, drivers are experiencing the lowest gasoline prices since 2008. So what explains the weakness?

Refiners are running strong, strong demand for gas has yet to materialize, and supplies outside of the Northeast are good. Couple that with weak numbers out of China on Monday, and you can see why demand for crude will be lagging.

I do not foresee low prices all summer long. After all, demand is expected to increase, and refiner problems are always at risk of cropping up. But by the same token, I do not see $4 gas on the horizon. Sure, we might get a few pockets around the country, but overall, it looks like smooth sailing (or driving).

So what levels am I looking at?

On the downside, I would buy at the $2.75 to $2.70 level. Indeed, gasoline has found solid support here. And as far as the upside goes, I would sell out of my position at $2.90.

»Read more
  Monday, 13 May 2013 | 8:41 AM ET

New Range Emerges for Gold

Posted By: Rich Ilczyszyn
Getty Images

Gold bears want to see a close below $1,418 Monday.

Gold sold off on Friday, reaching the lowest level since April 24 ahead of May options expiration. All week, gold was hitting a wall just below $1,480, and after reaching stops below $1,455, it picked up momentum to the downside and broke the major $1,437.50 support level.

The low on Friday was $1,418.50; however, the market found support against a trend line and was able to rally into the close. Gold reached $1,436.60 upon the floor close, and surprisingly reached the major $1,447 pivot level upon the electronic close, putting shorts on edge as the market failed to follow through.

»Read more
  Friday, 10 May 2013 | 11:25 AM ET

Gold Gets Gutted: Here’s Why

Posted By: Alex Rosenberg

Gold dropped three percent Friday, suffering the worst decline of any widely followed commodity as it plunged to a two-week low.

Many experts blamed the weakness on the U.S. dollar. The Dollar Index, which compares the dollar to a basket of foreign currencies, has risen nearly two percent over two days, to levels it had not seen in over a month. A rising dollar tends to hurt gold, because it makes gold relatively less expensive in dollar terms.

That's how George Gero, precious metals strategist at RBC, explained it. "Dollar moves were attracting sellers to gold as a strong dollar priced gold higher," he said.

But Friday fear is also hurting the gold market, Gero said. "Short-term investors unwilling to hold positions over the weekend left sellers with few buyers, so support levels have been breached," he wrote in a Friday note.

On the other hand, Carter Worth, Oppenheimer's chief market technician, said the chart tells you all you need to know. "A multiyear bull market has transitioned to a bear market," he told CNBC.com. "The backing and filling of late is the normal setup for the next leg down."

In other words, the tight range that gold was trading in was a precursor to the selloff—and it's nothing he hasn't seen before, Worth said. "After an initial plunge, and then a partial snap-back, any instrument usual goes quiet ... only to drop again, resuming its downtrend," he said.

»Read more
  Friday, 10 May 2013 | 9:22 AM ET

Pro: Time to Sell Gold

Posted By: Rich Ilczyszyn

Friday's close will be critical for gold.

Although gold was able to recover from the lows it made toward the end of Thursday's session and into Friday's, the nearly $20 selloff took a lot of wind out of the sails for the bull camp. Gold has continued lower, as it tried to hold major support at $1,437.50 to $1,438.80 once again, but as the old saying goes, the third time's the charm.

After recovering above resistance to reach a trading high of $1,461.20 Thursday night into the pocket of that day's initial lows, outside markets helped to add to the downside pressure.

»Read more
  Thursday, 9 May 2013 | 9:47 AM ET

Sell Stocks and Buy Bonds: Pro

Posted By: Jim Iuorio
Trader on the floor of the NYSE
Getty Images
Trader on the floor of the NYSE

In the week since Friday's better-than-expected jobs numbers, the stock market has been buoyant. Oddly, the Treasury market has also stabilized, and has been able to attract buyers.

The return of this positive correlation between stocks and bonds is due to the realization that the Federal Reserve has no immediate intention of slowing Treasury note purchases, so stocks will continue to move higher along with bonds.

That being said, it's difficult to argue against the theory that the stock market rally is approaching its expiration date. In the last five years, the S&P futures have had five significant rallies before a correction. If we ignore the first rally, based on the highly unusual oversold condition in which it occurred, the remaining four rallies have seen gains of between 16 and 27 percent.

The current rally has brought us up 22.9 percent from November. From a technical standpoint I believe we are about to embark upon a down move that could easily turn into the correction we have been waiting for.

(Read More: Smartest Money in US Is Dumping Bonds)

I am adopting a bearish bias in the June S&P E-mini futures at current levels, with a downside objective of 1,606. If we see the market trade 1,637, I will throw in the towel.

In the event that this downtrend occurs, I believe that the June 10-year Treasury futures will shoot up to 133.10.

»Read more
  Wednesday, 8 May 2013 | 9:11 AM ET

Now Is the Time to Buy NatGas: Analyst

Posted By: Anthony Grisanti
Natural gas production platform.
Getty Images
Natural gas production platform.

Don't let the recent slide in natural gas fool you. This is a strong market with dynamics that have changed immensely over the past year.

The main reason that the market has been strong is that the rig count for natural gas has hit an 18-year low. Now, plenty of fracking is going on around the country, but the oversupply that we enjoyed just a few months ago is gone. Blame that on a winter that never seemed to end.

The second reason is one that I am sure everyone is well aware of: There are more uses for natural gas: from cities converting their buses and utility vehicles, to truckers retooling their rigs to run on nat gas instead of diesel, to coal-fired electrical generating plants being converted to natural gas.

The recent slide is a result of us being between seasons. In this time of year, natural gas is not widely used for cooling or heating, so demand is lower. But make no mistake—as soon as the weather heats up, look for the natural gas market to do the same.

I am looking to buy nat gas at $3.88, and I would buy more at $3.75. On the upside, once we trade above $4.20 again, look for a move up to $4.50.

»Read more

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