Bloomberg Access:{OIAR<GO>

Live cattle:

October live cattle lost 1.575 cents on volume of 61,350 contracts. Volume declined considerably from September 2 when the October contract lost 1.975 on volume of 81,865 contracts and total open interest increased by 1,383. On September 6, total open interest increased by 3,441 contracts, which relative to volume is approximately 120% above average meaning aggressive new short-sellers were entering the market in large numbers and driving prices to a multiyear low of 99.375, which is the lowest print since 97.100 made by the December 2010 contract during November 2010.

As this report is being compiled on September 7 the October contract is experiencing one of its rare counter trend rallies and is trading up 2.475 cents. Much damage has been done to the cattle contract and for the market to mount a sustained advance, a basing process needs to occur. Stand aside.

WTI crude oil:

October WTI crude oil advanced 39 cents on very heavy volume of 1,471,667 contracts. Volume was the strongest since July 13 when 1,447,908 contracts were traded and the October contract closed at 46.07. On September 6, total open interest increased by 28,605 contracts, which relative to volume is approximately 20% below average. It cannot be determined whether the open interest increase occurred during the rally or when the market fell after the rumor of a Saudi Arabian-Russian alliance to curb oil production was dashed.

As this report is being compiled on September 7, the October contract is trading 54 cents above yesterday’s close and has made a daily high of 45.58, which is slightly below yesterday’s print of 45.62.On September 1 the October and November contracts generated intermediate term sell signals and short term sell signals on September 2. Stand aside.

Dollar index:

The September dollar index lost 1.021 points on volume of 30,810 contracts. Total open interest increased by a massive 1,738 contracts, which relative to volume is approximately 110% above average meaning aggressive new short-sellers were entering the market and driving prices lower (94.755). As this report is being compiled on September 7, the September contract is trading nearly unchanged on the day. For a short term sell signal to occur, the daily high must be below OIA’s key pivot point for September 7 of 94.905. Stand aside.

Gold: December gold will generate a short term buy signal on September 7 provided the daily high remains above OIA’s key pivot point for September 7 of $1346.80. The December contract remains on an intermediate term buy signal.

December gold advanced $27.30 on heavy volume of 305,622 contracts. Total open interest exploded higher, up by 28,791 contracts, which relative to volume is approximately 275% above average. As this report is being compiled on September 7, the December contract is trading $6.20 lower and has made a daily low of 1346.90, 10 cents above the pivot point and may not hold above the pivot point with several hours left in the session. Wait for the buy signal to occur, then enter bullish positions only when the market has had a pullback lasting 1-3 days.

Silver: December silver will generate a short term buy signal on September 7 provided the daily low remains above OIA’s key pivot point for September 7 of $19.604. The December contract remains on an intermediate term buy signal.

December silver skyrocketed by 77.2 cents on heavy volume of 103,574 contracts. Total open interest increased by massive 5,838 contracts, which relative to volume is approximately 125% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of 20.220, which is the highest print since 20.235 made on August 12.

It appears likely that December silver will generate a short term buy signal on September 7, and we recommend waiting for the market to pullback further, perhaps for another 1-3 days before initiating bullish positions.