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Live cattle: April live cattle will generate a short term buy signal on March 1 and continues to be on an intermediate term buy signal.

April live cattle advanced 2.425 cents on heavy volume of 70,127 contracts. Total open interest exploded higher, up 7,209 contracts, which relative to volume is approximately 305% above average, which indicates that huge numbers of new buyers were flooding into the market and driving prices to a new high for the move of 118.225. As this report is being compiled on March 1, the April contract is trading nearly unchanged, but has made another new high of 118.950, which is the highest print since 118.675 made on January 26. No recommendation

Natural gas:

April natural gas advanced 8.1 cents on volume of 451,587 contracts. Total open interest exploded higher, up 24,540 contracts, which relative to volume is approximately 120% above average meaning aggressive new buyers were entering the natural gas market and driving prices higher (2.788). The massive open interest increase in yesterday’s trading is an anomaly, and the April contract remains solidly on short and intermediate term sell signals. As this report is being compiled on March 1, the April contract is trading 1.5 cents above yesterday’s close and has made a daily high of 2.828. Continue to stand aside in natural gas.

British pound: The March and June British pound will generate short and intermediate term sell signals on March 1.

The March British pound lost 41 pips on volume of 120,485 contracts. Total open interest exploded higher, up 7,590, which relative to volume is approximately 160% above average, which indicates that new short-sellers were piling into the pound and sending it to a new low for the move of 1.2376. As this report is being compiled on March 1 the March contract is trading sharply lower, down 85 pips and has made a new low for the move of 1.2283, which is the lowest print since 1.2273 made on January 20. No recommendation.

Canadian dollar: The March and June Canadian dollar will generate short and intermediate term sell signals on March 1.

The March Canadian dollar lost 79 pips on heavy volume of 112,155 contracts. Total open interest increased by 4,119 contracts, which relative to volume is approximately 25% above average and this indicates that new short-sellers were entering the market and driving prices to a new low for the move of 75.11. As this report is being compiled on March 1, the March Canadian dollar is trading lower, down 27 pips and has made a new low for the move of 74.86, which is the lowest print since 74.73 made on January 20.

The COT report released last Friday showed that leverage funds added 5,387 to their long positions and also added 1,548 to their short positions. As of February 21, leverage funds were long the Canadian dollar by ratio of 2.11:1, up from the previous week of 2.01:1 and substantially above the ratio two weeks ago of 1.66:1. In summary, there are large numbers of speculative longs in the Canadian dollar who will be forced to liquidate as prices move lower. No recommendation.

10 Year U.S. Treasury Note: The June 10 year U.S. treasury note will generate a short term sell signal on March 1 and remains on an intermediate term buy signal. On February 24, the June treasury note generated an intermediate term buy signal after generating a short term buy signal on January 5. It appears that the reflation trade is on with interest rates on the 10 year rising along with the dollar index and equities. We will provide a detailed report tomorrow.