WTI crude oil:
April WTI advanced 6 cents on light volume of 798,726 contracts. Total open interest increased by 13,312 contracts, which relative to volume is approximately 35% below average. The April contract accounted for a loss of 1,442 of open interest. As this report is being compiled on February 28, the April contract is trading 72 lower or -1.33%.
Because the April contract has been unable to make a daily low above our pivot point and has not generated a short term sell signal, we have recommended a stand aside posture. For the rally to continue, the low of the day must be above OIA’s pivot point for February 28 of $54.34. A short term sell signal will be generated if the daily high is below OIA’s key pivot point for that February 28 of 53.30.
The low thus far in trading has been 53.18 in the high 54.23. Tomorrow, the EIA will release it storage report and this may give us a sell signal. As we pointed out in yesterday’s report, managed money is long by a stratospheric 10.31:1 and if a sell signal is generated, wholesale liquidation could hit the market. Continue to stand aside.
April natural gas lost 9.4 cents on surprisingly light volume of 289,219 contracts. However, total open interest increased explosively, up 15,832 contracts, which relative to volume is approximately 120% above average. The March contract, which goes off the board shortly lost 31 of open interest. As this report is being compiled on February 28, the April contract is having a rally and trading up 7.1 or +2.64%. On February 22 the April contract made its low for the move of 2.641. On January 4, OIA announced that natural gas generated short and intermediate term sell signals. Stand aside.
Canadian dollar: The March Canadian dollar will generate a short term sell signal if the daily high is below OIA’s key pivot point for February 28 of 76.08.
British pound: March British pound will generate a short term sell signal if the daily high is below OIA’s key pivot point for February 28 of 1.2444.
Mexican peso: In yesterday’s report, we recommended that clients liquidate bullish profitable positions originally recommended on January 30 and move to the sidelines. As this report is being compiled February 28, the March contract is trading 30 pips lower on the day.