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• What you need to know about futures
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Register now to join us on May 2, 2012 at 7pm CDT for the Begin Trading Futures Like a Pro webinar.

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• Swing trading vs. Day trading
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Register now to join us on May 16, 2012 at 7pm CDT for the Trading Opportunities for Busy People webinar.

As part of our ongoing series, we are pleased to introduce the Hudson Capital Group in this issue's CTA Spotlight. Hudson Capital Group LLC is located in New York, NY with a trading program of Fundamental Strategy.

RJO: We'd like to thank the Hudson Capital Group for joining us. Would you be so kind as to give us a little biographical background on your CTA?

HCG: Hudson is a team of seven professionals led by: Todd J. Gross, Chief Investment Officer and Managing Member, Joanne S. Machida-Spears, Principal, Chief Operating Officer and Head Trader and Tony Corso, Chief Risk Officer

Todd Gross, principal and co-founder of Hudson Capital Group, LLC, has the role of Chief Investment Officer. Mr. Gross has maintained a successful record of trading and risk management in Energy derivatives, both proprietarily and for investors, since 1993. He directs all trading, risk management, research and development for HCG.

Prior to forming Hudson Capital Group, Mr. Gross was Head Options Trader, Global Commodities Division, for Morgan Stanley & Co. He began his career at Cooper, Neff and Associates, where he became Head Trader for Commodities in New York.

Mr. Gross graduated from the Management & Technology Program at the University of Pennsylvania. In1988, he received both a Bachelor of Science in Economics from Wharton and a Bachelor of Applied Science in Systems Engineering from the Moore School of Engineering.

RJO: Please give us a brief description of your trading program – Fundamental Strategy.

HCG: Hudson Capital Group’s strategy is Energy Sector-specific and 100% discretionary. Investments are based on fundamental analysis of petroleum and natural gas supply/demand balances. Strategies are executed in highly liquid Energy futures, exchange cleared swaps, and options on the CME/Nymex and ICE exchanges. In general, the distribution of trades is: short-term 80%, medium-term 15%, long-term 5%. The current team commenced the strategy in January 2008.

RJO: What makes Hudson’s approach different from other CTAs?

HCG: Our core objective is to produce competitive, risk-adjusted returns using alpha-generating events and alpha-generating strategies. The firm’s strategic edge is its unique interdisciplinary approach which combines current fundamentals with seasonal tendencies and market oriented weather analysis.

RJO: What is your minimum capital requirement for your program(s)?

HCG: The minimum capital requirement is $1,000,000 USD for the CPO and $5,000,000 for separately managed accounts.

RJO: What specific markets does your Fundamental Strategy program focus on?

HCG: Our investments are Energy sector specific, and are concentrated in highly liquid / highly transparent Exchange-traded futures and options inNatural Gas, Brent/WTI Crude Oil, and Refined products.

RJO: Have you ever changed your trading model? If so, when and why?

HCG: The strategy we launched in 2008 is an outgrowth of collective trading experience in the Energy markets. Prior to 2008, we relied heavily on weather-driven events; we now incorporate market oriented weather signals into our overall market evaluation. We also migrated to a net long optionality bias as opposed to long only strategies, and increased the number of investments per month which has provided greater upside potential and dispersed risk.

Our overall strategy has not changed since January 2008. We continuously upgrade our supply/demand model. We analyze the fundamental supply/demand balance sheet of petroleum and natural gas, identify market benchmarks, and look for opportunities to exploit our edge against that fundamental backdrop. We are fundamental discretionary traders, so risk allocations change opportunistically.

RJO: In your professional opinion, what is the single most important reason an investor should consider adding Managed Futures to their portfolio?

HCG: Not only as a diversifier to an overall portfolio, but historically managed futures have been anti-correlated to Equities. The space performed well as a whole during the equity meltdown of 2008.

RJO: Would you say your trading program is better suited to be a stand alone or part of a multi-CTA portfolio?

HCG: The answer is investor specific, and our statistics show us to be uncorrelated to equity, hedge fund and commodity indices. Because our strategy it is sector specific, I would either incorporate it into a basket of CTAs, or if the underlying investor is building a basket of Energy via equity names, it should work to diversify that book as well. Finally, if one wants pure energy exposure, then it can stand alone as an energy leg.

RJO: In regards to selecting a CTA or composing a portfolio of multiple CTAs, what piece of advice would you offer to a client?

HCG: I believe the most important parts of constructing a portfolio of CTAs are twofold. First, is to put together uncorrelated CTAs, in the aim of reducing the overall standard deviation and to increase the overall Sharpe. Second is to get to know, and communicate face to face with the management team. Know your manager.

RJO: Again we’d like to thank the Hudson Capital Group for sharing their thoughts and providing some insight for their Fundamental Strategy trading program.

For information on Hudson Capital Group, please contact: Andrew Kaplan, Chief Marketing Officer at 646.291.6871 or akaplan@hudsoncapitalgroup.com.

As always, we encourage everyone to check out the website: http://www.rjofutures.com/managed-futures/

In upcoming issues, we will spotlight each CTA to feature their particular area of expertise and the concepts behind their trading program(s). Anyone interested in more information regarding Managed Futures may feel free to contact me at CPeck@rjofutures.com or (312) 373-5338.

In early morning trade, the yellow shinny one is showing modest strength on speculation central banks around the world will add more stimulus to their economies. Once again, gold seems to be trading higher as recent economic data domestically and globally continues to disappoint. Also, June gold has broken through some good technical resistance back around $1660.0 an ounce. Furthermore, the dollar has reached a four-week low versus the euro and looks like it is going to fall off a cliff; therefore, I believe it has a good possibility of continuing its recent downtrend. In order for gold to extend its recent rally and pick up some more steam/momentum, I believe we will have to look towards the monthly non-farm payroll numbers due out this Friday. If the non-farm payroll numbers fall short of expectations again, then Big Ben might be forced to use his bazooka and have to really consider another round of stimulus/QE3.

As we look to the charts, I believe on Friday that a negative non-farm payroll number can send the yellow one rallying all the way up to $1700.0-$1720.0 an ounce. The 200-day moving average comes in at 1702.0 an ounce which is highlighted below on my RJO Vantage daily candlestick chart. Also, I attached the daily June US Dollar daily chart; so that you can clearly see that it just broke below its 200-day moving average.

If you'd like to learn more about futures trading or the Metals market specifically, please contact RJO Futures Trading Broker Nick DeGeorge at 312-373-5316 or ndegeorge@rjofutures.com.

After two days of rallying, natural gas continues to try and find momentum to trade through 2.350. A combination of cooler weather forecasts and reduced production data have aided in this short-term rally.

Extended forecast models are calling for below average temperatures across much of the Eastern half of the U.S. through mid-May. Earlier models called for average to above average temperatures, so this shift in the model may increase demand. It would, however, take an enormous increase in demand during the month in order to make a dent in the supply situation.

The EIA released February production data on Monday that showed production decreasing 0.6% to 72.32 bcf per day. January production figures were also revised downward to 72.74 bcf per day from 72.85 bcf per day. Production during the month of February was 10.4% higher year-over-year. While January production was revised lower, it was still 8.9% higher year-over-year.

Supply continues to hang over this market and will limit any rallies. Many producers of natural gas also produce liquids. The EIA has said “if you are getting liquids you are less likely to cut back production.” With oil trading over $100.00/barrel liquid production will continue, and natural gas production will also continue. The question remains, will the U.S. run out of storage capacity before the end of injection season?

June natural gas should find resistance at the 2.380 – 2.400 level. The fundamental supply glut will keep prices from rallying. Injections into inventory and working gas in inventory will be watched closely going forward for further price direction.

If you'd like to learn more about futures trading or the Energies market specifically, please contact RJO Futures Senior Trading Broker Kevin Craney at 312-373-5354 or kcraney@rjofutures.com.

In the last eView article, I told everyone to look for the sell in crude the following day. I had mentioned that we could see a morning squeeze, and then you should sell it. You had to adjust to the minor difference in price. Adjusting price targets is what trading is all about. If I could pick the exact prices of tomorrow’s markets, then I wouldn’t be writing this article for you. Today’s recommendation is no different than the last time. You should look to sell today’s rally into tomorrow’s crude number. I would recommend setting a risk level, if you plan on falling asleep tonight. I like 108.75 as a stop for the night session. I don’t think it will attempt to go any higher. The wider stop level should give equal larger profits on this trade. Crude should be on its way to the $100 level after tomorrows energy report at 9:30 A.M. Central time. That means it will spark the run lower, which could take a few days to get to $100. You should judge your exit by tomorrow’s strength and consider taking the trade off around 11:00 A.M. Central time, or hang on to it for a few days. Today is the anniversary of Osama Bin Laden’s Death. The physiological affect of retaliation seems to hold us higher today along with a few other market related items. Take a look at the crude chart and you will see how strong selling has been for the first week of May over the past couple of years. Last year we fell over $20 on the same week.

If you'd like to learn more about futures trading or the Energies market specifically, please contact RJO Futures Senior Trading Broker Timothy Haberkorn at 312-373-5087 or thaberkorn@rjofutures.com.

Sugar futures remain under pressure. In the last month or so the July sugar futures have dropped from a high of 25.00 on March 20 to a low print of 20.77 so far today, the first day of May. Oversold technically, and nearing a 50% retracement area sugar has many technicians looking for a bounce. The fundamentals still lean negative with no sign of aggressive Chinese buying or really much mention of China across the futures newswire whatsoever. The Hightower group, a widely read futures research service, this morning pointed out that weather issues in Brazil could be the fundamental that sets fire to a technical bounce. Until that point it is difficult to see what known fundamental could be the catalyst for higher prices. We feel like the Peanuts gang waiting for the Great Pumpkin to appear in regards to Chinese interest in sugar.

So we go to the chart, and like any chart where the market in question has been going down for most of the last month, it looks horrible. In preparation for writing this piece one must stare at a chart of sugar futures for minutes on end moving the periodicity in and out waiting for the message that all technicians hope will arrive: This is the way the market is going to go! The message that the chart is sending now is that sugar is potentially headed much, much lower. Whether you see a head and shoulders top or a downside violation of an extended channel, there is no bottom in sight on this chart. We have been of the mind that our theme of Chinese interest in the sugar market and investors willingness to own these futures for diversification ( long only index funds ) and alpha capture (Jim Rogers et all seeking potential profit ) would win out over the technical weakness we have been clearly seeing on this chart for the last two weeks. We are not currently correct, also known in some circles as ‘wrong.’ We continue to believe the Chinese slowdown has been engineered and the Chinese economy is like a beach ball held under the water, soon to surface with a pop. We are oversold and the 50% level referenced earlier comes in near 20.70 basis the July contract. Aggressive knife catchers could look for areas to get long using sell stops below 20.00 for risk management purposes. For the longer term position trader we look for this market to eventually test the 19.00 level and possibly lower. The fund trader is still long upwards of 85k contracts according the Hightower group. If the fund trader continues to liquidate we expect this market will continue southward.

If you'd like to learn more about futures trading or the sugar market specifically, please contact RJO Futures Senior Trading Broker Joe Nikruto at 800-453-4494 or jnikruto@rjofutures.com.

Jul ‘12 Sugar Daily Chart

Source : CQG, Inc. (c) 2012. All rights reserved worldwide.

Since the last eView cotton has had a decent rally to 9284 before selling off to yesterday’s low of 8787. If you’re still holding the 1x2 95/100 call spread the system is giving this spread a value of $145, roughly where it was last eView. There’s still 46 days until expiration so a trader could still hang on to this for a rebound. If cotton doesn’t trade higher you're only risking the remainder of the premium paid. For those out there that are aggressive you can sell the 95 call that you’re long to bring that money into the account. If you do this, you have unlimited risk if cotton trades above 100. If cotton trades lower you’re looking for an extra $330 (est. worth of these options). If you do this I would advise to have your RJO broker set an alarm to notify you when the options double their value, or whatever risk parameter you set. As far as bringing premium into the account either hold onto these until expiration, otherwise cover near 10 ($50) to remove the position.

India made its way back into the news last week when it decided to reverse its export ban put in place in March. Reported on businessweek.com, "That has raised questions about how much cotton is in India's existing stockpiles and what the expectations are for the upcoming growing season." This could lead to lower prices since we'll be looking at more cotton in the marketplace.

If you'd like to learn more about futures trading or the cotton market specifically, please contact RJO Futures Trading Broker Mike Rataj at 800-453-4494 or mrataj@rjofutures.com.

July ’12 Cotton Weekly Candlestick Chart

Source RJO Vantage

Yesterday's session gave us a range of 2146 to 2333. We opened at 2309 and then saw a drop off, as shown in the chart below. Cocoa prices were down on a positive tone towards the Dollar, lower equity prices and profit-taking from the recent rally. Resistance is at 2319 and 2419 and support is at 2132 and 2045. Technically, we are receiving bearish signals as we closed below the 9-day moving average. We are also at overbought levels which should continue to pressure prices. As we try to rebound today, outside markets are not helping the case. If we can get some supportive news from the supply/demand outlook we may gradually be able to climb back.

If you'd like to learn more about futures trading, please contact RJO Futures Trading Broker Peter Mooses at 312-373-5361 or pmooses@rjofutures.com .

July ’12 Cocoa (ICCN12) Daily Chart

Source RJO Vantage

Coffee has been in a downtrend all of 2012, so far going from $2.40 all the way down to $1.74. Fundamentals have been bearish, but we may be finding a bottom. Coffee exports have been decreasing which typically is bearish, but in this scenario it may not be. We’re seeing producers holding onto their crop waiting for higher prices rather than exporting it. If they continue to do this it could drive prices higher, at least short-term. Importers will be forced to pay higher prices in order to receive the coffee. Also, there are reports of drier than normal weather in Brazil, which could hurt future supply. With all that being said, I believe that we will see a sideways to higher market. Aggressive traders should look to get long July coffee at 1.75 with a stop below 1.69. Key resistance levels are going to be $1.8580, $2.00 and $2.07. Major support comes in $1.74. I believe a move above $1.90 would indicate a breakout to the upside with $2.20 being my longer term price objective. Option traders should be looking at buying calls or call spreads for July or later months expirations, with aggressive traders shorting out-of-the-money puts to pay for the calls.

If you'd like to learn more about futures trading or the coffee market specifically, please contact RJO Futures Trading Broker Frank D. Cholly at 800-826-1120 or fdcholly@rjofutures.com.

Happy May Day! Many world markets are closed for May Day. Better than expected U.S. planting progress and technically overbought markets produced a profit taking, selloff overnight at the CME. Corn is 53% planted across the US and 50% planted in Iowa. Iowa is up 41% in one week – that is 10% a day. It is just incredible the planting that can get done with the machinery and technology today. All along the trade was focused on 50% corn planted by May 1st and we got it. Now we can have knee high corn by Memorial Day.

The next USDA crop report is next Thursday, May 10th and we think what you will hear is where did all these acres come from. We are just off to an excellent start to planting, perhaps the best ever. There is a 20-week cycle low due in the middle of May for corn, so look to consider buying corn next month. The last four summers we have had $100 plus rallies in corn. Statistically there is a high probability for corn to rally this summer.

Soybeans are in a different atmosphere. With the drought in South America this past year these high prices in soybeans look like they will be around for awhile. Every time the soybeans sell off the funds come in and buy and the short sellers cover their trades late in the session. This has been going on for weeks and weeks and will continue until we see changes. With higher prices comes volatility. It is a fact that these higher prices for soybeans has the attention of the South American producer. They will plant a lot of soybeans next year at the expense of corn. That is next year. It seems it will take a few years to replenish these soybean reserves. With corn acreages the largest since 1937 ,there are only so many acres we can plant to soy in the U.S. The trade that has worked all spring is long SX12 and short Cz12 or long SMZ12 and short CZ12. Consider getting involved in trades like these this summer!

If you'd like to learn more about futures trading or the agricultural market specifically, please contact RJO Futures Senior Trading Broker Stephen Davis at 800-367-7181 or sdavis@rjofutures.com.

Jul ’12 Soybeans Daily Chart

Source CQG, Inc. (c) 2012. All rights reserved worldwide.

Dec ’12 Corn Daily Chart

Source CQG, Inc. (c) 2012. All rights reserved worldwide.

June bonds are down a point on the heels of an unexpectedly high ISM manufacturing number. The month of April clearly belonged to the bulls; perhaps this will set the tone for a much needed reversal. The ever present concern over European debt has not been an issue today and China and Australia have only aided to the overall growth of the economy. Those looking for upside exposure should be weary of the 144 resistance point that was such a predominant road block for the bonds. Key factors this week will come in the form of jobless claims, employment reports, ISM non manufacturing and treasury refunding/purchasing. From a technical side, we are above the 10, 50 and 200-day moving averages but this market is still overbought. Resistance comes in at 143-00. Support is at 142-12.

If you'd like to learn more about futures trading or the Interest Rates market specifically, please contact RJO Futures Trading Broker William Moore at 312-373-5404 or wmoore@rjofutures.com.

Jun’ 30-Year T-Bond Daily Chart with RSI and Moving Averages

Source: RJO Vantage

The June British Pound rejected 1.6300 on Monday, posting a high of 1.6298. Weaker than expected GDP, and follow thru weakness in UK manufacturing seems to have the market on guard for follow thru weakness throughout the remainder of the trading week. The current uptrend in the June Pound remains intact, but with the Bank of England closely monitoring UK economic conditions, it would not come as a surprise to see additional monetary easing in the UK. First level of support in the June British comes in at 1.6195 and then again at 1.6154. I’m looking to sell into any strength in this market with a downside target at 1.6100. Also consider selling June 1.6400 Calls for approximately 70 pts or $437.5/contract.

If you'd like to learn more about futures trading or the Currencies market specifically, please contact RJO Futures Trading Broker John Caruso at 312-373-5286 or jcaruso@rjofutures.com.

Jun ‘12 British Pound Daily Chart

Source RJO Vantage

Do you have any questions or comments on this issue of eView—or anything else you'd like to discuss with our brokers?

When it comes to futures trading, what do YOU want to learn more about? If we already have a resource, we'll personally provide you access to it. If not, we might make it the topic of our next trading resource project.