June 30 Weekend Wrap

Soybeans:

For the week, July soybeans gained 71.25 cents, August +17.25, November -21.50. The COT report showed that managed money liquidated 7,615 contracts of their long positions and also liquidated 12,382 contracts of their short positions. Commercial interests liquidated 30,314 of their long positions and also liquidated 2,564 contracts of their short positions. As of the latest report, managed money is long soybeans by a ratio of 4.67:1, which is up substantially from the previous week of 3.68:1 and the ratio of 2 weeks ago of 4.29:1.

Soybean meal:

For the week, July soybean meal gained $42.60, August +15.30, December -3.50. The COT report showed that managed money liquidated 1,198 contracts of their long positions and added 4,501 contracts to their short positions. Commercial interests added 7,327 contracts to their long positions and also added 795 contracts to their short positions. As of the latest report, managed money is long soybean meal by a ratio of 3.44:1, which is down from the previous week of 4.25:1 and down substantially from the ratio of 2 weeks ago of 5.39:1.

Soybean oil:

For the week, July soybean oil lost 1.60 cents, August -1.68, December -1.54. The COT report showed that managed money liquidated 2,130 contracts of their long positions and added 2,701 contracts to their short positions. Commercial interests added 2,028 contracts to their long positions and liquidated 4,941 contracts of their short positions. As of the latest report, managed money is short soybean oil by a ratio of 1.52:1, which is up slightly from the previous week of 1.42:1 and the ratio of 2 weeks ago of 1.33:1.

Corn: On June 28, September corn generated a short-term sell signal and has been on an intermediate term sell signal 

For the week, July corn advanced 17.50 cents, September -44.75, December -45.25. The COT report showed that managed money added 4,296 contracts to their long positions and also added 5,797 contracts to their short positions. Commercial interests liquidated 13,242 contracts of their long positions and also liquidated 13,185 contracts of their short positions. As of the latest report, managed money is long corn by a ratio of 1.67:1, which is down slightly from the previous week of 1.71:1 and the ratio of 2 weeks ago of 1.78:1.

Wheat:

For the week, July wheat lost 49.50 cents, September -47.25, December -45.50. The COT report showed that managed money added 2,746 contracts to their long positions and liquidated 11,097 contracts of their short positions. Commercial interests liquidated 13,149 contracts of their long positions and also liquidated 1,669 contracts of their short positions. As of the latest report, managed money is short by a ratio of 1.24:1, which is down from the previous week of 1.41:1 and the same as the ratio of 2 weeks ago of 1.24:1.

Cotton:

For the week, July cotton lost 2.44 cents, December -0.63. The COT report showed that managed money liquidated 7,074 contracts of their long positions and also liquidated 1,347 contracts of their short positions. Commercial interests liquidated 5,975 contracts of their long positions and also liquidated 11,319 contracts of their short positions. As of the latest report, managed money is long cotton by a ratio of 7.79:1, which is up from the previous week of 7.41:1 and the ratio of 2 weeks ago of 3.13:1.

As the table below demonstrates, during the past 2 weeks of COT reporting periods, December cotton has been trading lower in the 2 week timeframe as well is the most recent one week period. The second table shows the COT tabulation date, COT ratio and the closing price on the date of tabulation. From June 11 when  the COT ratio was 3.13:1 and December cotton closed at 85.18 to June 25 when cotton closed at 84.95, the COT ratio has more than doubled, which indicates that managed money has been getting very bullish. However, December cotton prices changed little from June 11 to June 25. In short, managed money bullishness has not been moving prices higher. On June 24, cotton generated a short-term sell signal, and has been trading poorly ever since. We recommend that speculators initiate bearish positions on a rally of 75 points or more from Friday’s close of 84.01.

 COT Report June 19-June 25       COT Reports June 12-June 25     Year to Date
December cotton -2.71%                       -0.27%                                                 +6.69% 

COT Tabulation Date         Closing Price   Long to Short Ratio
June 25                                      84.95               7.79:1
June 18                                      87.32                7.41:1
June 11                                       85.18                3.13:1
June 4                                        85.44                3.57:1
May 28                                       81.42                 5.20:1
May 21                                        83.86                9.01:1
May 14                                        86.92               13.41:1
May 7                                          87.15                 8.76:1

Live cattle: On June 27, August cattle generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, June live cattle lost 3.10 cents, August +0.42, October +0.55. The COT report showed that managed money liquidated 6,264 contracts of their long positions and also liquidated 15,657 contracts of their short positions. Commercial interests liquidated 7,103 contracts of their long positions and also liquidated 178 contracts of their short positions. As of the latest report, managed money is long cattle by a ratio of 1.49:1, which is up from the previous week of 1.28:1 and the ratio of 2 weeks ago of 1.34:1.

Crude oil:

For the week, August crude oil gained $2.87. The COT report showed that managed money liquidated 22,046 contracts of their long positions and liquidated 1,681 contracts of their short positions. Commercial interests added 8,230 contracts to their long positions and also added 5,864 contracts to their short positions. As of the latest report, managed money is long crude oil by a ratio of 9.78:1 which is down slightly from the previous week of 9.99:1, but up substantially from the ratio of 2 weeks ago of 7.62:1.

Brent crude oil: On June 24, August Brent crude generated a short-term sell signal, and has been on an intermediate term sell signal.

For the week, Brent crude oil gained $1.17, or 1.16% versus crude oil, which gained 2.76% for the week. Year to date, Brent is 4.48% lower while August crude has gained 2.97%.

Heating oil:

For the week, August heating oil gained 1.54 cents. The COT report showed that managed money liquidated 5,540 contracts of their long positions and added 3,491 contracts to their short positions. Commercial interests added 3,767 to their long positions and liquidated 13,284 contracts of their short positions. As of the latest report, managed money is short heating oil by a ratio of 1.49:1, which is up from the previous week of 1.14:1, but down from the ratio of 2 weeks ago of 1.78:1.

Gasoline:

For the week, August gasoline lost 3.11 cents. The COT report showed that managed money liquidated 12,966 contracts of their long positions and added 3,296 contracts to their short positions. Commercial interests added 2,102 contracts to their long positions and liquidated 17,842 contracts of their short positions. As of the latest report, managed money is long gasoline by a ratio of 2.13:1, which is down substantially from the previous week of 3.30:1 and the ratio of 2 weeks ago of 3.00:1.

Natural gas:

For the week, August natural gas lost 22.8 cents. The COT report showed that managed money liquidated 1,698 contracts of their long positions and added 4,943 contracts to their short positions. Commercial interests liquidated 7,138 contracts of their long positions and also liquidated 7,119 contracts of their short positions. As of the latest report, managed money is short natural gas by a ratio of 1.03:1, which is a reverse from the previous week when managed money was long by a ratio of 1.06:1 and the ratio of 2 weeks ago when they were long by 1.11:1.

Copper:

For the week, September copper lost 4.25 cents. The COT report showed that managed money added 150 contracts to their long positions and also added 3,738 contracts to their short positions. Commercial interests liquidated 4,747 contracts of their long positions and also liquidated 11,466 contracts of their short positions. As of the latest report, managed money is short copper by a ratio of 2.21:1, which is up from the previous week of 2.08:1 and up substantially from the ratio of 2 weeks ago of 1.72:1.

Palladium:

For the week, September palladium lost $14.05. The COT report showed that managed money liquidated 2,772 contracts of their long positions and added 557 contracts to their short positions. Commercial interests added 256 contracts to their long positions and liquidated 2,185 contracts of their short positions. As of the latest report, managed money is long palladium by a ratio of 13.43:1, which is a dramatic drop from the previous week of 24.19:1 and the ratio of 2 weeks ago of 25.02:1.

Platinum:

For the week, October platinum lost $33.70. The COT report showed that managed money liquidated 228 contracts of their long positions and added 1,504 contracts to their short positions. Commercial interests added 552 contracts to their long positions and liquidated 286 contracts of their short positions. As of the latest report, managed money is long platinum by a ratio of 2.31:1, which is down from the previous week of 2.61:1, and down dramatically from the ratio of 2 weeks ago of 3.48:1.

Gold:

For the week, August gold lost $68.31. The COT report showed that managed money liquidated 2,974 contracts of their long positions and added 5,990 contracts to their short positions. Commercial interests added 8,237 contracts to their long positions and also added 7,163 contracts to their short positions. As of the latest report, managed money is long gold by a ratio of 1.39:1, which is down from the previous week of 1.55:1 and the ratio of 2 weeks ago of 1.90:1. The current ratio is the lowest since the beginning of the bear market.

Silver:

For the week, September silver lost 53.1 cents. The COT report showed that managed money added 1,792 contracts to their long positions and also added 1,189 contracts to their short positions. Commercial interests liquidated 1,773 contracts of their long positions and also liquidated 897 contracts of their short positions. As of the latest report, managed money is long silver by a ratio of 1.01:1, which is a reversal from the previous week when they were short by a ratio of 1.02:1 and the ratio of 2 weeks ago when managed money was short by a ratio of 1.03:1.

Canadian dollar: The the Canadian dollar is on a short and intermediate term sell signal.

For the week, the September Canadian dollar lost 38 points. The COT report showed that leveraged funds added 10,575 contracts to their long positions and liquidated 4,088 contracts of their short positions. As of the latest report, leveraged funds are short by a ratio of 2.13:1, which is down dramatically from the previous week of 5.73:1 and the ratio of 2 weeks ago of 5.66:1.

Australian dollar: The Australian dollar is on a short and intermediate term sell signal.

For the week, the September Australian dollar lost 83 points. The COT report showed that leveraged funds liquidated 8,332 contracts of their long positions and also liquidated 8,902 contracts of their short positions. As of the latest report, leveraged funds are short the Australian dollar by a ratio of 1.49:1, which is up slightly from the previous week of 1.43:1, but down substantially from the ratio of 2 weeks ago of 2.03:1.

Swiss franc: The Swiss franc remains on a short and intermediate term buy signal,

For the week, the September Swiss franc lost 1.11 cents. The COT report showed that leveraged funds liquidated 1,637 contracts of their long positions and also liquidated 1,437 contracts of their short positions. As of the latest report, leveraged funds are long the Swiss franc by a ratio of 2.20:1, which is up from the previous week of 1.99:1 and a complete reversal of the ratio of 2 weeks ago when leveraged funds were short by a ratio of 3.23:1.

 British pound: The British pound is on a short-term sell signal, but remains on an intermediate term buy signal.

For the week, the September British pound lost 2.16 cents. The COT report showed that leveraged funds liquidated 14,051 contracts of their long positions and also liquidated 19,928 contracts of their short positions. As of the latest report, leveraged funds are short the British pound by a ratio of 1.20:1, which is down slightly from the previous week of 1.26:1 and down dramatically from the ratio of 2 weeks ago of 2.81:1.

Euro: The euro remains on a short and intermediate term buy signal.

For the week, the September euro lost 1.23 cents. The COT report showed that leveraged funds liquidated 776 contracts of their long positions and also liquidated 1,957 contracts of their short positions. As of the latest report, leveraged funds are long the euro by a ratio of 1.49:1, which is up slightly from the previous week of 1.45:1 and a complete reversal from the ratio of 2 weeks ago when leveraged funds were short by a ratio of 1.04:1.

Japanese yen: The yen generated an intermediate term sell signal on June 28, but remains on a short-term buy signal.

For the week, the September Japanese yen lost 147 points. The COT report showed that leveraged funds added 1,524 contracts to their long positions and also added 351 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 2.37:1, which is about the same as the previous week of 2.38:1, but up from the ratio of 2 weeks ago of 1.87:1.

Dollar index: The dollar index generated an intermediate term buy signal on June 26 which reversed the sell signal on June 7. The dollar index has not yet generated a short-term buy signal .

For the week, the September dollar index gained 86 points. The COT report showed that leveraged funds liquidated 2,679 contracts of their long positions and also liquidated 411 contracts of their short positions. As of the latest report, leveraged funds are short the dollar index by a ratio of 2.68:1, which is up from the previous week of 2.20:1 and a dramatic reversal from the ratio of 2 weeks ago when leveraged funds were long by a ratio of 1.16:1.

The action during the past several trading sessions has been interesting to say the least. Beginning on June 19, the September dollar index has rallied nonstop and made a new high on June 28 of 83.595, which is its highest price since June 3 when it reached 89.670. This represents an advance of 2.403 points, or 2.91% The fascinating aspect of the rally is that open interest has barely changed. For example on June 18 (one day before the rally) open interest stood at 51,036 contracts and on June 27 (the latest data published by the exchange), open interest totaled 51,858, or total increase of 822 contracts.

The COT report shows that leveraged funds are stubbornly short by a ratio 2.68:1, which has increased during the rally. The modest increase in open interest and the high short to long ratio indicates that professional money managers are digging in and refusing to cover short positions.This provides a terrific opportunity for speculators because these imbalances can be profitably exploited. Since the September dollar index is on the verge of generating a short-term buy signal, the question is: will a pullback occur before the buy signal, or after. If the index pulls back prior to the generation of a buy signal, we think approaching the dollar index on the long side with a small position would be a fairly low risk proposition because many key currencies that comprise the index are on sell signals or very close to it. Our preference would be for the index to generate a short-term buy signal, then pull back for 1-2 and possibly 3 days. Another factor bolstering the strength of the dollar is that the euro has a hefty number of net longs. Since it comprises approximately 57% of the weight of the dollar index, the strength of the dollar rally could take many shorts by surprise. 

S&P 500 E mini:

For the week, the September S&P 500 E mini gained 15.20 points. The COT report showed that leveraged funds liquidated 44,322 contracts of their long positions and also liquidated 283,051 contracts of their short positions. As of the latest report, leveraged funds are short by a ratio of 1.53:1, which is down dramatically from the previous week of 1.96:1 and the ratio of 2 weeks ago of 1.78:1.