Bloomberg Access:{OIAR<GO>}

Natural gas:

March natural gas lost 7.1 cents on volume of 429,730 contracts. Total open interest increased by 6,049 contracts, which relative to volume is approximately 40% below average, but a total open interest increase accompanying yesterday’s decline indicates that new short-sellers were willing to enter positions at the low end of the trading range of the past couple of months. Additionally, the March contract accounted for a loss of 11,477 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in March and increase total open interest.

Yesterday, the March contract made a low of $2.831 and this is the lowest print since 2.690 made on November 18. As this report is being compiled on February 17, the March contract is trading unchanged on the day and has not taken out yesterday’s low. On January 4, OIA announced that March natural gas generated short and intermediate term sell signals, and we have recommended a stand aside posture ever since.

Dollar index:

The March dollar index lost 73.4 points on volume of 42,798 contracts. Total open interest increased by 663 contracts, which relative to volume is approximately 40% below average. Yesterday’s action indicated that new short-sellers were willing to enter the market on the price decline,

As this report is being compiled on February 17, the dollar index has reversed course and is trading 43 points above yesterday’s close. On February 15, OIA announced that the March and June dollar index generated short term buy signals, but both contracts remain on intermediate term sell signals.

The main driver for the rally in the dollar index is going to be the euro and as we pointed out in previous reports, we think it is headed to parity with the dollar. We have no recommendation for futures, but in yesterday’s report we recommended adding to the dollar index ETF UUP and placing a sell stop slightly below the low for the move of $25.65.

British pound:

The March British pound will generate a short term sell signal if the daily high is below OIA’s key pivot point for February 17 of 1.2453. On January 23, the March pound generated a short term buy signal, but was unable to generate an intermediate term buy signal.

Euro:

The March euro advanced 85 pips on volume of 208,753 contracts. Total open interest increased by 5,698 contracts, which relative to volume is average. As this report is being compiled on February 17, the euro has reversed course and is trading 61 pips lower and made a daily low of 1.0620, which is above yesterday’s print of 1.0601.

On February 13, OIA announced that the March euro generated a short term sell signal and remains on an intermediate term sell signal. In yesterday’s report, we mentioned that the euro might have one more day of rally activity, but this was not to be. As a consequence, we are reticent to recommend bearish positions at current levels.

10 Year Treasury Note:

The March 10 year treasury note gained 15.5 points on volume of 1,453,007 contracts. Total open interest declined by 6,135 contracts, which relative to volume is approximately 80% below average, but yesterday’s total open interest decline on the strong advance indicates that short-sellers were powering the market higher, not new buying.

The March treasury note remains on a short term buy signal, but an intermediate term sell signal. At this juncture,the March contract is sandwiched between two pivot points, one which would indicate the rally will continue and the other a short term sell signal. For the rally to continue, the low of the day must be above OIA’s pivot point for February 17 of 124-230. A short term sell signal will be generated if the daily high is below OIA’s key pivot point for February 17 of 124-055.

As this report is being compiled on February 17, the March contract is trading 8.5 points above yesterday’s close and has made a daily high of 124-290 and, which is the highest print since 124-295 made on February 10.