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Sugar: On April 5, May and July NY sugar will generate a short term sell signal, but remains on intermediate term buy signals.

Coffee: On April 5, May and July NY coffee will generate a short-term sell signal, but remains on intermediate term buy signals.

Cocoa: On April 5, May and July cocoa will generate intermediate term sell signals after generating short-term sell signals on March 24.

WTI Crude Oil: On April 4, May and June WTI crude oil generated short-term sell signals, but remain on intermediate term buy signals.

May WTI crude oil lost $1.09 on heavy volume of 980,336 contracts. Volume was the strongest since March 18 when 1,369,524 contracts were traded and total open interest declined by 48,358 when WTI lost 52 cents. On April 4, total open interest declined only 4,120 contracts, which relative to volume is approximately 75% below average. The May contract lost 9,007 of open interest.

As this report is being compiled on April 5, the May contract is trading nearly unchanged on the day and has made a daily high of 36.58, which is considerably below yesterday’s print of 37.21. As is usually the case after the generation of a sell signal, the market should have a counter trend rally lasting 1-3 days and this will be the opportunity to initiate bearish positions.

Brent crude oil: On April 4, June and July Brent crude oil generated short-term sell signals, but remain on intermediate term buy signals.

June Brent crude oil lost 98 cents on volume of 789,124 contracts. Total open interest increased by 3,117 contracts, which relative to volume is approximately 70% below average, but a total open interest increase on yesterday’s decline is clearly negative. The June contract accounted for loss of 7,636 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in June and increase total open interest slightly. Similar to WTI, the June contract should have a counter trend rally lasting 1-3 days and this will be the opportunity to initiate bearish positions.

Heating oil: On April 4, May and June heating oil generated short-term sell signals, but remain on intermediate term buy signals.

Gasoline: On April 5, May and June gasoline will generate short-term sell signals, but remain on intermediate term buy signals.

Silver: On April 4, May and July silver generated short-term sell signals, but remain on intermediate term buy signals.

May silver lost 10.2 cents on volume of 46,321 contracts. Total open interest increased by 826 contracts, which relative to volume is approximately 25% below average, but an open interest increase on yesterday’s decline is negative. As this report is being compiled on April 5, the May contract is trading 18.1 cents higher, which is a rather tepid response to the S&P 500 trading 17.75 points lower and gold trading only $10.90 higher on the day. As we said before, we are bullish on the precious metals, but think they are in a consolidation period and at this juncture, there is no reason to be involved in them on the long side.

Nikkei 225: On April 5, the June Nikkei 225 will generate a short-term sell signal, and remains on an intermediate term sell signal.

Yen:

The June yen advanced 36 pips on volume of 85,760 contracts. Total open interest increased by 1,703 contracts, which relative to volume is approximately 20% below average, but the total open interest increase in yesterday’s trading confirms a consistent pattern in the yen whereby as prices advance, total open interest increases. This is bullish.

As this report is being compiled on April 5, the June contract is trading sharply higher up 84 pips and has made a new contract high of .9113, which is the highest print since the week of October 27, 2014 when the December 2014 contract made a high of .9297. Looking at the weekly chart, there is no resistance until .9510, the weekly high made the week of October 13, 2014.

British pound:

The June pound gained 66 pips on volume of 81,703 contracts. Total open interest declined by a massive 4,248 contracts, which relative to volume is approximately 105% above average meaning liquidation was heavy on the advance. Total open interest has been acting in a consistent bearish fashion: it declines when prices advance and increases when prices decline.

As this report is being compiled on April 5, the June contract is trading 1.35 cents lower and has made a daily low of 1.4122, which takes out the previous recent low of 1.4174 made on April 1. We are waiting for the pound to generate a short-term sell signal before making bearish recommendations. For a sell signal to occur, the high of the day must be below OIA’s key pivot point for April 5 of 1.4201

Thus far the pound has resisted the sell signal, which has made us especially cautious knowing there are large numbers of short-sellers in the market who could provide a substantial amount of buying power if a temporary rally got underway. The British pound volatility index spiked to a high of 16.32 on April 5 and this may indicate that the downtrend has begun in earnest. 

10 Year Treasury Note:

The June 10 year note advanced 5.5 points on low volume of 739,965 contracts. However, total open interest exploded higher, up 24,266 contracts, which relative to volume is approximately 15% above average meaning that new buyers were rushing into the 10 year note and driving prices higher.

As this report is being compiled on April 5, the 10 year note is trading higher again, up 13 points and has made a new high for the move of 130-310, which is the highest print since 130-290 made on February 26, 2016. On March 30, OIA announced that the June 10 year note generated short and intermediate term buy signals and since then the market has not had a pullback which would have enabled clients to get on board the long side. The move higher has been relentless, and we advise against chasing the market.

S&P 500 E-mini:

The June S&P 500 E-mini lost 7.50 points on volume of 1,382,868 contracts. Total open interest declined by 12,858 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on April 5, the June contract is trading 17.25 points lower and has made a daily low of 2036.25, which is the lowest print since 2035.25 made on April 1.

The Dow Transportation Index topped at 8114.27 on March 21, which occurred 9 days before the S&P 500 cash index made its high of 2075.07 on April 1. On February 12, the transportation Index was the lead indicator indicating the rally in the broad market had begun when it generated a short term buy signal buy signal.

Throughout the rally, the transports have been outperforming the major indices. The fact that it topped on March 21 and was unable to move beyond this high when the major indices were making new highs may portend a resumption of the downtrend in the market as a whole. The transportation index is getting perilously close to generating a short-term sell signal and this will occur if the daily high is below OIA’s key pivot point for April 5 of 7746.34.

IBB:

Interestingly, the biotech index IBB, which has been decimated during the past several months just generated a short-term buy signal on April 4 . As this report is being compiled on April 5, it is trading lower by just a fraction even though the S&P 500 is down 0.81% (-16.75 points). Yesterday, when IBB generated a short-term buy signal, it closed positively even though the S&P 500 closed down 7.50 points.

It would appear that the selling has been squeezed out of the biotech sector after it made its all-time high of 400.79 during the week of July 20, 2015 and bottomed at 240.03 during the week of February 8, 2016. We think IBB will out perform the S&P 500, at least in the short term, even if the broad market rolls over.