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WTI crude oil:

May WTI advanced 54 cents on heavy volume of 1,583,292 contracts. Total open interest declined by 21,179 contracts, which relative to volume is approximately 40% below average. A total open interest decline in Friday’s trading is bearish open interest action relative to the price advance. The May contract lost 66.555 of open interest. We have been seeing this pattern of behavior for the past several sessions even as prices approach their highest levels since March 8 (53.43.

The COT report released on Friday revealed that managed money liquidated 1,322 of their long positions and also liquidated 19,069 of their short positions. Commercial interests liquidated 30,620 of their long positions and also liquidated 25,493 of their short positions. As of the April 4 tabulation date, managed money was long WTI crude by ratio of 2.97:1, which is up from the previous week of 2.56:1 and 2.83:1, the ratio two weeks ago. However, we want to point out that the increase in this week’s ratio was due exclusively to the liquidation of short positions, not the addition of new long positions.

As this report is being compiled on April 10, the May contract is trading higher, up 64 cents and has made a new high for the move of the 53.01. As clients know, we prefer the long side of gasoline and bullish positions in gasoline should continue to be held.

Dollar index: The June dollar index will generate a short term buy signal on April 10, and it remains on an intermediate term sell signal.

The June dollar index advanced on Friday by 54.7 points on volume of 37,780 contracts. Total open interest exploded higher, up 3,175 contracts, which relative to volume is approximately 230% above average, which means that large numbers of new buyers were moving into the dollar index and sending it higher (101.185).

The COT report revealed that leverage funds liquidated 2,189 of their long positions and also liquidated 2,085 of their short positions. As of the April 4 tabulation date, leverage funds were long by a massive 6.29:1, up sharply from the previous week of 4.64:1 and the ratio two weeks ago of 5.28:1. As this report is being compiled on April 10, the June contract is trading 20.2 points lower on the day. We have no recommendation.

Euro: The June euro will generate an intermediate term sell signal on April 10 after generating a short term sell signal on April 3

The June euro lost 58 pips on volume of 205,500 contracts. Total open interest increased by an astounding 12,400 contracts, which relative to volume is approximately 140% above average, which indicated that new short-sellers were piling into the euro and driving prices lower (1.0615).

The COT report revealed that leverage funds liquidated 5,596 of their long positions and added 1,838 to their short positions. As of the April 4 tabulation date, leverage funds were short the euro by a ratio of 2.34:1, up from the previous week of 2.08:1 and the ratio two weeks ago of 2.30:1.

As this report is being compiled on April 10, the euro is having a bit of the bounce, up 11 pips. Unfortunately, after generating a short term sell signal on April 3, the euro was unable to rally, which would have given clients an opportunity to initiate bearish positions. At this juncture, we have no recommendation.

Australian dollar: On April 7, the June Australian dollar generated an intermediate term sell signal after generating a short term sell signal on April 5.

The June Australian dollar lost 46 pips on volume of 105,958 contracts. Total open interest declined by 1,421 contracts, which relative to volume is approximately 40% below average.

The COT report revealed that leverage funds added 1,343 to their long positions and also added 3,832 to their short positions. As of the April 4 tabulation date, leverage funds were long the Australian dollar by ratio of 3.85:1, down from the previous week of 4.81:1, but up from the ratio two weeks ago of 3.25:1. No recommendation.

AUD/CAD: AUD/CAD will generate an intermediate term sell signal on April 10 after generating a short term sell signal on April 7.