August soybeans lost 45.25 cents on volume of 388,613 contracts. Total open interest declined by 11,675 contracts, which relative to volume is approximately 10% above average. As this report is being compiled on July 14, the August contract is trading 13.25 cents higher on the day. We have advised clients to stand aside in soybeans, especially as the prime growing season begins in August. There is no telling which way the market will go and much of this will depend upon weather. August and November 2017 soybeans remain on short and intermediate term buy signals.
September corn lost 15.75 cents on heavy volume of 628,248 contracts. Total interest declined by 25,919 contracts, which relative to volume is approximately 65% above average meaning liquidation was heavy on yesterday’s strong decline. As report is being compiled on July 14, corn is having a bit of a rally along with soybeans and is trading 4.50 cents higher on the day. September corn remains on short and intermediate term buy signals. Similar to soybeans, we advise against trading this market. Trading corn or soybeans would be a sub-optimal trade: it is to easy to lose money regardless of the position taken.
Live Cattle: On July 13, August and October 2017 live cattle generated short term buy signals. Both contracts remain on intermediate term sell signals.
August live cattle closed unchanged on heavy volume of 121,850 contracts. Total open interest increased by 1,845 contracts, a number that is 50% below average. The August contract accounted for a loss of 13,696 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in August.
As we said in yesterday’s note, we like the long side of live cattle with one caveat: The recent COT report revealed that managed money is long live cattle by a stratospheric ratio of 12.54:1, up from the previous week of 11.99:1 and the ratio two ago of 12.43:1. This means to move live cattle prices higher, new buyers must be willing to enter the market, which will expand the net long position, and make cattle vulnerable to sharp setbacks.
However, from the seasonal point of view, live cattle prices begin to strengthen from July through October. Now that both August and October live cattle are on short term buy signals, we recommend waiting for a pullback to enter bullish positions. The moving average set-up is bullish: 20 day 118.161, 50 day 122.999, 100 day 122.407, 200 day 116.110.
S&P 500 Index: On July 13, the S&P 500 index generated a short term buy signal,which reverses the July 6 short term sell signal. It remains on an intermediate term buy signal. Currently, the index is making a new all-time high.
Nasdaq 100 E-mini: On July 13, the September Nasdaq 100 E-mini generated a short term buy signal, which reversed the June 16 short term sell signal. It remains on an intermediate term buy signal.
Mexican Peso: On July 13, the September Mexican Peso generated a short term buy signal, which reversed the July 6 short term sell signal. The Peso remains on an intermediate term buy signal.