This week is likely to be potentially tumultuous due to the meeting and subsequent press conference by the Federal Reserves and the announcement by the Japanese central bank of any potential quantitative easing measures. We recommend a sideline stance for any new position (s). Wait until after the announcements by both central banks before entering new positions.
October live cattle gained 1.075 cents on reduced volume of 48,194 contracts. Volume was the weakest since August 26 when the October contract lost 2.175 cents on volume of 49,851 contracts and total open interest increased by 4,125. On September 16, total open interest declined on the rally, down 114 contracts. The October contract lost 2,861 of open interest.
The COT report released on Friday showed that managed money added 282 contracts to their long positions and also added 4,298 to their short positions. Commercial interests added 5,023 to their long positions and also added 3,295 to their short positions.. As of the latest report, managed money is long live cattle by ratio of 1.36:1, down from the previous week of 1.46:1 and the ratio two weeks ago of 1.59:1.
As this report is being compiled on September 19, the October contract is trading close to unchanged on the day and will not generate a short term buy signal on September 19. Stand aside.
Gold: On September 16, December New York gold generated a short term sell signal, which reverses the September 7 short term buy signal. December gold remains on an intermediate term buy signal.
December gold lost $7.80 on light volume of 152,236 contracts. Total open interest declined by 5,080 contracts, which is the seventh total open interest decline in a row.For the past seven sessions beginning on September 8, total open interest has declined every day bringing the cumulative decline to 32,927 contracts. This is a healthy development because of the lopsided long position of managed money, who entered the gold market at the wrong time. Many of these speculators are leaving the party as prices trade at the low end of the three month trading range.
The COT report released on Friday show that managed money liquidated 20,061 of their long positions and added 6,497 to their short positions. Commercial interests added 2,226 to their long positions and liquidated 2,743 of their short positions. As of the latest report, managed money is long gold by ratio of 9.48:1, down sharply from the previous week’s ratio of 13.17:1, but up from the ratio two weeks ago of 7.66:1.
Tomorrow is the tabulation date for the COT report to be released this coming Friday and based upon the liquidation of the past four days, the long to short ratio will be reduced substantially in the upcoming report. This puts gold on a much healthier footing, setting the stage for the rally to resume down the road. For now, stand aside.
December silver lost 17.9 cents on light volume of 44,385 contracts. Total open interest declined by 978 contracts, which relative to volume is approximately 10% below average. The COT report released last Friday showed that managed money liquidated 5,206 of their long positions and added 3,928 to their short positions. Commercial interests added just 5 contracts to their long positions and also added 303 to their short positions. As of the latest report, managed money is long silver by a ratio of 4.09:1, down sharply from the previous week of 5.20:1 and the ratio two weeks ago 4.53:1.
As this report is being compiled on September 19, the December contract is trading sharply higher, up 44.3 cents or +2.35% versus gold +0.56%. We continue to recommend a stand aside posture, and it should be noted that December silver has not generated a short term sell signal as yet.