WTI crude oil:
February WTI crude oil lost $2.03 on substantial volume of 1,205,292 contracts. Total open interest increased only 1,080 contracts, but the February contract lost 40,204 of open interest, which means there were enough open interest increases in the forward months to offset the decline in February and increase total open interest slightly. This is bearish.
As this report is being compiled on January 10, the February contract is trading 46 cents lower and has made a daily high of 52.37,which is slightly above our pivot point of $52.21 for the generation of a short term sell signal. The high of the day must be below the pivot point for a sell signal to occur. We have no strong feelings about the market at this juncture and recommend a stand aside posture.
Heating oil: February New York heating oil will generate a short term sell signal on January 10 provided the high of the day remains below OIA’s key pivot point for January 10 of 1.6554.
February natural gas lost 18.2 cents on volume of 513,136 contracts. Total open interest declined by 12,573 contracts, which relative to volume is average. The February contract accounted for a loss of 10,680 contracts and though prices declined to a new low for the move of $3.098, which is approximately a 45 day low, open interest has not increased. Still, the liquidation in natural gas has been rather tame considering the magnitude of the decline.
As this report is being compiled on January 10, February natural gas is trading 18.6 cents above yesterday’s close or +5.99%, which is the first major rally day seen during the past week. On January 4, OIA announced that February and March natural gas generated short and intermediate term sell signals. Based on the massive net long position of managed money, rallies will be stymied by longs holding losses looking to trim those losses as prices rise. Stand aside.
Euro: For the March euro to generate a short term buy signal, the low of the day must be above OIA’s key pivot point for January 10 of 1.0581 and the low thus far in trading has been 1.0579.
Yen: For the March yen to generate a short term buy signal, the low of the day must be above OIA’s key pivot point for January 10 of .8633 and the low thus far in trading has been .8614.
Dollar index: For the March dollar index to generate a short term sell signal the high of the day must be below OIA’s key pivot point for January 10 of 102.047 and the high thus far and trading has been 102.090.
S&P 500 E-mini:
The March S&P 500 E-mini lost 6.50 points on volume of 1,026,263 contracts. Total open interest declined just 1,354. Yesterday, the March contract made a high of 2275.25, which is slightly below the January 6 print of 2277.00, the all-time high.
Contrary to most in the financial press, we have been unimpressed with the so-called Trump rally thus far. The reason: the performance for 2016 was substantially below the average of the past several years. During 2016 the S&P 500 gained 9.54%, However, this was below the average of eight years from 2009 through 2016 of +12.41%.
To put a finer point on this consider that in 2009 the S&P 500 gained 23.45%, 2010 +12.78%, 2011 -0.17% 2012, +13.41%, 2013 +29.60%, 2014 +11.39%, 2015-0.73%. While we think the rally can continue to inch forward slowly, much of this will depend upon the quality of earnings from the fourth quarter as the announcement season begins. Values are stretched, but there are some interesting options strategies for the E-mini, which are neutral to slightly bearish. Also, there may be an opportunity in Amazon for a bullish option play. Amazon reports its earnings on January 26. Call or email with any question.
Copper: March New York copper will generate a short term buy signal if the daily low is above OIA’s he pivot point for January 10 of $2.5729. This could occur as early as tomorrow.
Silver: March New York silver will generate a short term buy signal on January 10. On January 5, February and April 2017 New York gold generated short term buy signals.