On August 15, the Chicago Mercantile Exchange released the volume and open interest report late in the morning and therefore this report will be truncated.
November soybeans lost 2.25 cents on surprisingly light volume of 232,018 contracts. Total open interest declined by 4,254 contracts, which relative to volume is approximately 25% below average. The USDA released its monthly WASDE report on Friday and the November contract made a low of 9.62 1/2, which is the lowest print since 9.57 made on August 5.
As this report is being compiled on August 15, the November contract is rocketing higher, up 27.25 cents and has made a daily high of 10.11, which takes out the August 1 print of 10.00. The November contract will generate a short term buy signal if the daily low is above OIA’s key pivot point for August 15 of 10.02 3/8. No recommendation.
WTI crude oil: September and October WTI crude oil will generate short term buy signals on August 15, but remain on intermediate term sell signals.
September WTI crude oil advanced $1.00 on surprisingly light volume of 980,804 contracts. Volume fell dramatically from August 11 when the September contract gained 1.78 on huge volume of 1,275,974 contracts and total open interest skyrocketed by a massive 74,112.
On August 12, total open interest declined by 12,331 contracts, which relative to volume is approximately 40% below average. The September contract accounted for a loss of 26,735 of open interest and there were not enough open interest increases in the forward months to offset the decline in September. Friday’s action was distinctly negative and the combination of low volume with a decline of open interest indicates that the market is becoming stretched on the upside.
However, as this report is being compiled on August 15 the September contract is rocketing higher again, up $1.18 and has made a daily high of 45.75, which takes out Friday’s print of 44.78 and is the highest price since 46.09 made on July 21.
Now that WTI is on a short term buy signal as of August 15, clients should look for a pullback lasting 1-3 days and this will be the opportune time to initiate bullish positions if you are so inclined. The fundamentals for crude oil are negative, but very often markets do what is counter intuitive.
The COT report released on Friday showed that managed money was long WTI crude oil by ratio of 1.32:1, which was up only slightly from the previous week of 1.28:1 and down from the ratio two weeks ago of 1.53:1. In other words, there is a substantial amount of firepower on the sidelines if managed money gets bullish on crude oil.
Brent crude: On August 12, October and November Brent crude oil generated a short term buy signals, and remain on intermediate term sell signals.
Heating oil: On August 12 September and October heating oil generated short term buy signals, and remain on intermediate term sell signals.
December gold lost $6.80 on volume of 261,029 contracts. Total open interest declined by 1,892 contracts, which relative to volume is approximately 65% below average. The August contract accounted for a loss of 1,127 of open interest. As this report is being compiled on August 15 the December contract is trading $3.20 above Friday’s close and has made a daily high of 1349.10, which is substantially below Friday’s print of 1362.50. On Friday, the December contract made a low of 1338.00 in the low on August 15 has been 1340.90.
The COT report revealed that managed money liquidated 7,046 of their long positions and added 2,431 to their short positions. Commercial interests liquidated 30 contracts of their long positions and also liquidated 10,096 of their short positions. As of the latest report, managed money is now long gold by ratio of 7.77:1, down from the previous week of 8.53:1 the previous week and the ratio two weeks ago of 8.89:1.
The current ratio is the lowest in at least six weeks and clearly indicates that managed money has substantially trimmed their net long exposure. This puts gold market into better balance and sets the stage for a rally, which will take out the July 6 high of 1384.40 made on July 6.