WTI crude oil:
July WTI crude oil lost $1.73 on very heavy volume of 1,934,607 contracts. Volume was the strongest since June 7 when the July contract lost 2.47 on exchange record-setting volume of 2,303,620 contracts and surprisingly total open interest increased only 5,063 contracts. On June 14, total open interest increased by 25,056 contracts, which relative to volume is approximately 45% below average. Considering the magnitude of the decline of June 7 and June 14 ($4.20), total open interest on those two days increased only 30,119 contracts. This indicates a reluctance by potential market participants to become bearish at multi-month lows.
As this report is being compiled on June 15, the July contract is trading 26 cents lower and has made a daily low of 44.32, which takes out yesterday’s print of 44.54 and is the lowest since 44.13 made on May 5. On June 2, OIA announced that July WTI crude oil generated a short term sell signal and remains on an intermediate term sell signal. We see no reason to be involved in this market.
July corn lost 4.00 cents on light volume of 398,985 contracts. Volume was the weakest since June 6 when the July contract gained 4.25 cents on volume of 462,190 and total open interest increased by a massive 17,433. On June 14, total open interest declined by 5,395 contracts, which relative to volume is approximately 40% below average. The July contract accounted for a loss of 14,260 of open interest. Considering the magnitude of the decline, the total open interest loss was minor and volume contracted, which is positive
In yesterday’s research note on corn, we suggested the exit for bullish positions could either be the low made on June 12 or penetration of the 20 day moving average 3.74 7/8. As this report is being compiled June 15, both of these conditions been fulfilled and therefore we recommend moving to the sidelines for now. The rally will resume again if the July contract makes a daily low of above our pivot of 3.78 1/4. The last time July was able to accomplish this was on June 9 when it made a low of 3.80 3/4.
From the June 13 note on corn:
“We are troubled by substantial drop off in volume on yesterday’s advance and the lack of a total open interest increase. Also of concern the dollar index is trading sharply lower on June 14, but this is not giving corn a bid. Undoubtedly, somewhat weaker ethanol prices are weighing on corn and currently the July contract is down 1.15%, but is trading above its 20 day moving average of 1.533.”
“As this report is being compiled on June 14, the July contract is trading 3.00 cents lower on the day and has made a daily low of 3.77, which is the lowest print since 3.76 1/4 made on June 12. Depending upon your risk tolerance, the exit for the July contract should be the June 12 low of 3.76 1/4, or the penetration of the 20 day moving average of 3.74 7/8.”
“In the research note on June 9, written on June 12, we recommended the initiation of bullish positions when corn was trading in our buying range of 3.75-3.78. Additionally, we advised that positions be liquidated upon the penetration of the 20 day moving average.”
Live cattle: On June 14, August 2017 live cattle generated a short term sell signal and remains on an intermediate term buy signal.
Yesterday, August live cattle fell by the daily limit of 3.00 cents on light volume of 59,345 contracts. The likely reason for low volume was that August was locked limit down for a major portion of the session. On June 14, total open interest declined by 3,901 contracts, which relative to volume is approximately 160% above average. The June contract accounted for a loss of 1,826 of open interest can there were additional open interest declines in the forward months.
The COT report of last Friday revealed that managed money added 439 contracts to their long positions and also added 4,166 to their short positions. Commercial interests liquidated 2,005 of their long positions and added 731 to their short positions. As of the June 6 tabulation date, managed money was long live cattle by 9.54:1, down sharply from the previous week of 13.23:1 and the ratio two weeks ago 10.95:1.
As this report is being compiled on June 15, the August contract is trading lower, down 50 points and has made a new low for the move of 116.975, which is the lowest since 116.775 made on May 16. With the massive long position held by managed money they will exert a considerable amount of selling pressure, which will keep a lid on rallies. Wait for a rally before initiating bearish positions.
Gold: August gold will generate a short term sell signal on June 15 and it remains on an intermediate term buy signal. The August contract is trading sharply lower, down $20.80 or -1.63%. Tomorrow, we will have a full report on today’s action.
Dollar Index: The September dollar index is getting close to generating a short term buy signal and will likely occur in tomorrow’s trading. The key pivot point for today’s trading is 97.097 and the daily low must be above the pivot. We will have a report on today’s action tomorrow.
Euro: The September euro is likely to generate a short term sell signal in tomorrow’s trading. The key pivot point in today’s trading to generate the sell signal is $1.1255. The daily high must be below the pivot point for the sell signal to be generated. We will have a full report on today’s activity tomorrow.
Yen: The September yen may generate a short term sell signal in tomorrow’s trading. The key pivot point in today’s trading to generate the sell signal is .9044. The daily high must be below the pivot point for the sell signal to be generated. We will have a full report on today’s activity tomorrow.