Corn: On March 14, May corn generated a short-term buy signal, but remains on an intermediate term sell signal. An intermediate term buy signal will be generated if the daily low is above OIA’s key pivot point for March 15 of 3.67.
WTI crude oil:
May WTI crude oil lost $1.25 on light total volume of 971,907 contracts. Volume was the weakest since February 29 when WTI gained 97 cents on volume of 899,284 contracts and total open interest increased by 13,267. On March 14, total open interest declined by 15,412, which relative to volume is approximately 40% below average and a total open interest decline on yesterday’s loss is positive open interest action. The April contract accounted for loss of 28,969 of open interest.
As this report is being compiled on March 15, the May contract is trading 94 cents lower on low-volume and has made a daily low of 37.71, which is the lowest print since 38.03 made on March 8. In the research note of March 13, we said that the May contract should find support in the 38.69-39.41 range and obviously this was too conservative. However, crude is not trading like it’s in a bear market, more like a market undergoing a correction.
Additionally, the crude oil volatility index (OVX) is making new lows on March 15 as crude oil trades lower. Usually, the volatility index increases as prices decline and on March 15 has fallen to a new low for the move of 48.49, which is the lowest print since 48.78 made on January 6. On January 6, the May contract traded in a range of 37.21-39.55, which is close to the current range of 37.21-39.08. This is positive.
Although, we think May WTI will test the March 11 high of 40.48, we are also cautious because of crude’s fundamentals. The first sign of trouble would be if May crude makes a daily high below OIA’s pivot point of 37.82. A close below 37.14 would increase the likelihood of a new short-term sell signal.
The American Petroleum Institute will release its report this afternoon and the Department of Energy will release the EIA report tomorrow morning. This will most likely determine the course of the market for the rest of the week.
April gold lost $14.30 on strong volume of 251,052 contracts. Total open interest declined by 6,653 contracts, which relative to volume is average. As this report is being compiled on March 15, the April contract is trading $13.20 lower and has made a daily low of 1226.00, which takes out yesterday’s low of 1229.90 and is the lowest print since 1225.10 made on March 2.
April gold is getting precariously close to generating a short-term sell signal, and this will occur if the daily high is below OIA’s key pivot point for March 15 of $1225.60. There have been reports about heavy purchases of the gold and silver ETF’s, by the public and according to the latest COT report, which was released on March 11, managed money is long gold by a ratio of 4.87:1, up from the previous week of 4.54:1 and the ratio two weeks ago of 4.38:1.
In summary, there is potential for substantial selling pressure if prices continue to move lower. From a seasonal point of view, the next couple of months are not strong for the precious metals. Though gold remains on short and intermediate term buy signals, we recommend a stand aside posture.
The June dollar index advanced 43.8 points on very light volume of 16,613 contracts. Total open interest increased by 110 contracts, which is approximately 65% below average. The March contract accounted for a loss of 175 of open interest. There is very little speculative interest in the dollar index and yesterday’s price and open interest action along with low volume confirm it. The June dollar index remains on short and intermediate term sell signals. Stand aside.
Euro: The June euro will generate a short-term buy signal on March 15 if the daily low remains above OIA’s key pivot point for March 15 of 1.1091. On March 11, the June euro generated an intermediate term buy signal.
The June euro lost 63 pips on light volume of 165,368 contracts. Total open interest declined by 23,440 contracts and this was due to the imminent expiration of the March contract which lost 23,049 of open interest. As this report is being compiled on March 15, the June contract is trading 13 pips above yesterday’s close. We have no recommendation.
British pound: On March 14, the June British pound generated a short-term buy signal, but remains on an intermediate term sell signal.
The June British pound lost 89 pips on volume of 69,131 contracts. Total open interest declined by 3,894 contracts, which relative to volume is approximately 120% above average meaning liquidation was extremely heavy on yesterday’s decline. The March contract lost only 941 of open interest, which means there was liquidation in the forward months as well.
As this report is being compiled on March 15, the pound is trading sharply lower, down 1.46 cents and has made a daily low of 1.4146, which is the lowest print since 1.4122 made on March 10. We think the pound is likely to test its contract low of 1.3835 made on February 29, and we are awaiting confirmation signals to recommend bearish positions. We expect to see the short-term buy signal reversed during the next couple of days.