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Soybean oil:

July soybean oil lost 17 points on volume of 154,976 contracts. Total open interest increased by 1,168 contracts, which relative to volume is approximately 60% below average. The July contract lost 12,966 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in July. We consider the open interest action on June 9 to be constructive. As this report is being compiled on June 10, the July contract is trading 11 points lower. July soybean oil generated in short-term buy signal on April 16 and an intermediate term buy signal on May 5.

Chicago wheat: On June 9, July Chicago wheat generated an intermediate term buy signal after generating a short term buy signal on May 15.

July Chicago wheat advanced 4.25 cents on heavy volume of 208,690 contracts. Volume exceeded that of June 8 when the July contract gained 11.00 cents on volume of 186,683 contracts and total open interest increased by 3,574.On June 9, total open interest increased again, this time by 2,166 contracts, which relative to volume is approximately 50% below average. The July contract lost 7,130 of open interest, which makes the total open interest increase more impressive (bullish).

The fundamentals for wheat on a global basis are bearish and we essentially view the rally as a move to chase out short-sellers.Thus far, they seem to be digging in and refusing to liquidate. Now that Chicago wheat is on an intermediate term buy signal, the market should pull back for the next day or two and then make an attempt to test the high for the move of 5.37 1/2, which is the high made on June 10. This is fractionally above yesterday’s high of 5.37 1/4.We think there are opportunities on the bearish side of the trade, but prefer to see more short-sellers liquidate before recommending positions.

Live cattle:

August live cattle advanced 1.275 cents on volume of 51,692 contracts. Total open interest increased just 808 contracts, which relative to volume is approximately 60% below average The June contract lost 2,202 of open interest and although there were sufficient open interest increases in the forward months to bring total open interest to a positive number, the number itself is a disappointment.

During the past two sessions, the August contract gained 2.30 cents, but total open interest has actually declined by 929 contracts in the two day time frame. As this report is being compiled on June 10, the August contract is trading 1.375 cents above yesterday’s close and has made a new high for the move of 1.53400, which is the highest print since 1.55075 made on January 7, 2015. As we pointed out in yesterday’s report, the rally would resume if the August contract were able to make a low above our key pivot point, which for June 10 is 1.52120. Today’s low of 1.53,000 is above the pivot point. August live cattle remains on a short and intermediate term buy signal.

Lean hogs: August lean hogs will generate an intermediate term sell signal if the daily high is below OIA’s key pivot point for June 10 of 80.025. On June 4 August lean hogs generated a short term sell signal.

August lean hogs lost 1.250 cents on volume of 60,515 contracts. Total open interest increased by 499 contracts, which relative to volume is 55% below average, but an open interest increase on yesterday’s price decline is bearish. The June contract lost 1,990 of open interest, July 2015 -2,216, which means there were sufficient open interest increases in the forward months to bring total open interest to a positive number. This confirms the bearish open interest action relative to the price decline. As this report is being compiled on June 10, the August contract is trading 5 points higher on the day.

WTI crude oil:

July WTI crude oil advanced $2.00 on heavy volume of 809,801 contracts. Volume was the strongest since June 5 when the July contract gained $1.13 on volume of 919,382 contracts and total open interest declined by 8,747.On June 9, total open interest declined by 5,186 contracts, which relative to volume is approximately 55% below average. The July contract accounted for loss of 43,818 of open interest and though total open interest was reduced substantially, there were insufficient numbers of new market participants willing to make commitments to bring total open interest to a positive number. Market participants have been liquidating on the rally and this is bearish trade activity for both June 5 and 9.

As this report is being compiled on June 10, the July contract is trading 65 cents above yesterday’s close and has made a daily high of 61.82, which is above yesterday’s print of 60.68 and takes out the May 18 high of 61.71. For the July contract to generate a short-term buy signal, which would reverse the May 20 short-term sell signal, the low of the day must be above OIA’s key pivot point for June 10 of 60.82 and the low on June 10 has been 60.45. However, the July contract remains on an intermediate term buy signal.

Brent crude oil:

August Brent crude oil advanced $2.23 on strong volume of 805,866 contracts. Total open interest increased by 1,985 contracts, which relative to volume is approximately 85% below average. The July contract lost 19,685 of open interest. Although total open interest increased on June 9 in the Brent contract, the number was tepid even taking into account the loss in the July contract. All in all, price and open interest action in WTI and Brent has been disappointing on recent advances, although it has been more positive for Brent.

As this report is being compiled on June 10, the August contract is trading 71 cents above yesterday’s close and has made a daily high 66.94, which takes at yesterday’s print of 65.75. For the August contract to generate a short term buy signal, which would reverse the May 20 short-term sell signal, the low of the day must be above OIA’s key pivot point for June 10 of 66.62.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.8 million barrels from the previous week. At 470.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 2.9 million barrels last week, but are in the upper half of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 0.9 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.7 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 0.6 million barrels last week.

Natural gas:

July natural gas advanced 14.1 cents on huge volume of 571,795 contracts. Volume was the strongest since May 14 when natural gas advanced 7.3 cents on volume of 561,666 contracts and total open interest increased by 2,327 and July natural gas closed at $3.063. On June 9, total open interest declined by 9,213 contracts, which relative to volume is approximately 35% below average, but an open interest decline on yesterday’s sizable advanced is bearish. The July contract accounted for loss of 29,016 of open interest.

In yesterday’s report, we commented that short-sellers were not covering positions, but this changed on June 9 and we suspect there is more liquidation ahead. As this report is being compiled on June 10, the July contract is trading 3.9 cents above yesterday’s close and has made a new high for the move of $2.922, which takes out the May 27 high of 2.915. For July natural gas to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for June 10 of $2.869 and today’s low of 2.825 is below the pivot point.

From the June 8 report:

“The total open interest increase in yesterday’s trading indicates that short sellers were not covering positions, which is only adding fuel to the fire on June 9. As of the latest COT report released last Friday, managed money was massively short natural gas by a ratio of 1.72:1, which is just shy of the record short ratio of 1.75:1 recorded from the May 12 COT report.”

Dollar index: On June 10, the September dollar index will generate a short-term sell signal after generating and intermediate term sell signal on June 4.

The June dollar index lost 15.1 points on heavy volume of 74,725 contracts. Volume was slightly above that of June 8 when the June contract lost 1.038 points on volume of 73,936 contracts and total open interest increased by 1,811. On June 9, total open interest increased again, this time by 773 contracts, which relative to volume is approximately 50% below average. The June contract lost 6,813 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in June. This confirms the bearish set up in the dollar index. As this report is being compiled on June 10, the September dollar index is trading 48.2 points lower on the day and has made a new low for the move of 94.660.

Euro:

The June euro advanced 4 pips on heavy volume of 415,495 contracts. Volume was the strongest since June 3 when the June contract advanced 83 pips on volume of 432,944 contracts and total open interest declined by 5,503. On June 9, total open interest declined by 3,267 contracts, which relative to volume is approximately 55% below average. The June contract lost 46,998 of open interest as it approaches expiration, and there were substantial open interest increases in the forward months to reduce total open interest below average.

As this report is being compiled on June 10, the September contract is trading 25 pips higher and has made a daily high of 1.1401, which takes out the June print of 1.1395. We expect the euro to continue its upward trajectory until it has blown out a hefty number of speculative short-sellers. On June 4 the September euro generated a short and intermediate term buy signal.

British Pound:

The June British pound advanced 41 pips on heavy volume of 153,199 contracts. Volume was the strongest since May 13 when 161,716 contracts were traded and the September contract closed at 1.5735. On June 9, total open interest increased by 5,644 contracts, which relative to volume is approximately 25% above average, meaning that new aggressive buyers were entering the market in large numbers and driving prices higher. The June contract lost 16,958 of open interest, and there were sufficient open interest increases in the forward months to offset the decline in June and increase total open interest substantially above average.

This is bullish for the pound going forward.As this report is being compiled on June 10, the September contract is trading 1.47 cents higher has made a daily high of 1.5543, which is the highest print since 1.5665 made on May 22.For the September contract to generate a short-term buy signal, which would reverse the short-term sell signal of June 1, the low of the day must be above OIA’s key pivot point for June 10 of 1.5503.

Canadian dollar:

The June Canadian dollar advanced 48 pips on volume of 92,019 contracts. Total open interest declined by 4,662 contracts, which relative to volume is approximately 100% above average meaning that liquidation was extremely heavy on the advance. The June contract lost 10,677 of open interest. As this report is being compiled on June 10, the September contract is trading 34 pips above yesterday’s close and has made a daily high of 81.83, which is the highest print since 81.98 made on May 22.For the September contract to generate a short term buy signal, which would reverse the short term sell signal of May 26, the low of the day must be above OIA’s key pivot point or June 10 of 81.40.

S&P 500 E mini:

The June S&P 500 E mini advanced 1.75 points on volume of 1,597,446 contracts. Total open interest increased by 35,931 contracts, which relative to volume is approximately 10% below average. However, the June contract lost 32,603 of open interest, which makes the total open interest increase more impressive (bullish). On June 8, the June and September S&P 500 E mini generated short term sell signals, and as this report is being compiled on June 10 the E mini is rallying sharply, up 24.25 points.

We have cautioned clients to expect a rally, which usually occurs after the generation of sell signals. For the short term sell signal in the June E mini to reverse, the low of the day must be above OIA’s key pivot point for June 10 2114.83. Tomorrow, is the release of the retail sales numbers at 8:30 EDT and this should be a major market mover. We strongly recommend using options for trading in the E mini to mitigate risk.

From the June 8 report:

“Usually, after the generation of the sell signals markets have counter trend rallies that can last from 1-3 days and this is the opportunity to initiate bearish positions. Please review the June 7 weekend report for our strategies.”

From the June 7 Weekend Wrap:

“For those of you who follow the S&P 500 cash index, which is on a short term sell signal, a move to the 2111.40 level is likely and we do not see the rally extending beyond 2119.10. After the advance, which should not last much more than two or three days, we recommend the initiation of put positions in the September contract Emini contract.”

Coffee:

July coffee gained 80 ticks on heavy volume of 53,274 contracts. Volume exceeded that of June 8 when the July contract gained 1.45 cents on volume of 48,406 contracts and total open interest declined by 175. On June 9, total open interest declined by 108 contracts, which is dramatically below average. The July contract lost 5189 of open interest. As this report is being compiled on June 10, July coffee has closed at 1.3645, down 90 ticks after making a new high for the move of 1.3885, which is above yesterday’s print of 1.3770.  Although we thought it was likely coffee would generate a short-term buy signal today, the daily low of     1.3 555 is slightly below OIA’s key pivot point for June 10 of 1.3564. July coffee remains on a short and intermediate term sell signal.