WTI crude oil: June WTI crude oil is getting close to generating a short term sell signal and this will occur if the daily high is below OIA’s key pivot point for April 20 of $50.61. The June contract remains on an intermediate term sell signal.
June WTI crude oil lost $2.00 on heavy volume of 1,504,973 contracts. Volume was the strongest since April 7 when WTI advanced 54 cents on volume of 1,583,292 contracts and total open interest declined by 21,179.
On April 19, total open interest increased 6,342 contracts, which relative to volume is approximately 80% below average, but a total open interest increase on yesterday’s major decline indicates that new short-sellers were willing to enter the market and drive prices lower ($50.51). The May contract lost 47,899 of open interest, which means there were enough open interest increases in the forward months to offset the decline in May and increase total open interest.
Still, the total open interest increase was tepid. In our view, it indicates a reluctance on the part of new short-sellers to aggressively sell the market in the low $50 range. As this report is being compiled on April 20, the June contract is trading 6 cents lower and has not taken out yesterday’s low. Another concern is that gasoline has been relatively weak, especially compared to heating oil. Typically, this is the time (summer driving season) when gasoline strengthens and heating oil weakens. Also, it appears that gasoline is headed toward a short term sell signal. Stand aside in crude oil, heating oil and gasoline.
Gasoline: June New York gasoline will generate a short term sell signal if the daily high is below OIA’s key pivot point for April 20 of $1.6736. Currently, the high for the day is 1.6820 and last price is 1.6658.
Dollar index: On April 19, the June dollar index generated a short term sell signal, which reversed the April 10 short term buy signal. The June contract remains on an intermediate term sell signal.
Yesterday, the June dollar index advanced 23.4 points on volume of 17,950 contracts. Total open interest increased by 163 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on April 20, the June contract is trading nearly unchanged on the day.
Looking at the moving averages for the cash dollar index, they definitely show a bearish setup: the 20 day average stands at 100.236, 50 day: 100.746, 100 day: 101.0 69. The anomalous number in the sequence is the 200 day moving average which stands at 99.023, below the three previously named moving averages.We see no compelling reason to be involved in the dollar index.
Euro: The June euro will generate a short term buy signal, if the daily low is above OIA’s key pivot point for April 20 of 1.0778. An intermediate term buy signal will be generated if the daily low is above OIA’s key pivot point for April 20 of 1.0761.
The June euro lost 12 pips and traded in an extremely narrow range of 37 pips (1.0767 – 1.0730) on lackluster volume of 130,019 contracts. However, the main feature of the day in yesterday’s trading was the massive decline of open interest: down 6.477 contracts, which relative to volume is approximately 105% above average, which indicates that market participants are heading for the hills in advance of Sunday’s election. We strongly advise clients to stand aside in the euro until after Sunday’s election.
The June Canadian dollar lost 60 pips on light volume of 69,655 contracts. However, total open interest exploded higher, up 10,839 contracts, which relative to volume is approximately 410% above average. The massive increase confirms the bearish set up for the Canadian dollar and as the April 12 note reveals, the Canadian dollar was unable to generate a short term buy signal on April 12, though it came close.
The COT report revealed that leverage funds liquidated 10,666 of their long positions and also liquidated 6,513 of their short positions. As of the April 11 tabulation date, leverage funds were short by a massive 4.28:1, up dramatically from the previous week of 2.70:1 and the ratio two weeks ago of 3.14:1. In summary, the short side of the Canadian dollar is a very crowded trade. We recommend a stand aside posture.
From the April 12 note on the Canadian dollar:
“Canadian dollar: the June Canadian dollar will generate a short term buy signal on April 13 provided the daily low remains above OIA’s key pivot point for April 13 of 75.19. The low thus far in trading has been 75.16.”
Corn: July corn is getting close to reversing the short term buy signal of April 13 and this will occur if the daily high is below OIA’s key pivot point for April 20 of 3.67 1/4.
July corn closed unchanged in yesterday’s trading on volume of 498,861 contracts. Total open interest declined by 17,341 contracts, which relative to volume is approximately 25% above average. The May contract lost 29,587 of open interest.
As this report is being compiled on April 20 before the close of trading, the July contract is trading 3.50 cents lower on the day and much of this is the result of a very weak wheat market. Currently, the July contract is trading below the sell signal pivot point into the close and this increases the likelihood that a sell signal will occur in tomorrow’s trading.
This means a test of the March 27 low of 3.61 3/4 and penetration of this to make further new lows is likely. As a consequence, we recommend paring back bullish positions and tightening up exit points. Our view of corn is not changed, but as all experienced speculators know, the market’s role is to fool as many people as it can at any one time. Please call or email with any question.
S&P 500 E-mini: The June S&P 500 E-mini is getting close to generating a short term buy signal and this will occur if the daily low is above OIA’s key pivot point for April 20 of 2356.60.
The June S&P 500 E-mini lost 3.50 points on volume of 1,256,480 contracts. Total open interest increased by 14,307, which relative to volume is approximately 45% below average. As this report is being compiled on April 20, the June contract is rocketing higher, up 23.25 points and has made a daily high of 2358.25. The real test will come tomorrow and possibly early next week as to whether the June contract can make a daily low above our pivot point. Much of this may depend upon the forecast/result for the outcome of Sunday’s election.