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10 Year U.S. Treasury Note: The September 10 year U.S. Treasury note will generate a short term buy signal on July 19 provided the daily low remains above OIA’s key pivot point for July 19 of 125-235

The September 10 year note advanced 11.5 points on volume of 1,393,914 contracts. Total open interest declined by 34,762 contracts, which relative to volume is average.

The COT report released Friday revealed that leverage funds added 19,714 to their long positions and liquidated 39,127 of their short positions. As of the July 10 tabulation date, leverage funds were long the 10 year note by a ratio of 1.11:1, up from the previous week of 1.01:1 and a reversal from the ratio two weeks ago when leverage funds were short by 1.06:1. We have no recommendation.

Natural gas: On July 19, August and September 2017 New York natural gas generated short term buy signals, but remain on intermediate term sell signals.

August natural gas advanced 6.6 cents on volume of 356,079 contracts. Total open interest declined by 5,527 contracts, which relative to volume is approximately 40% below average. The August contract accounted for a loss of 17,285 of open interest. As this report is being compiled on July 19, the August contract is trading fractionally lower on the day, but has made a new high for the move of 3.103.

The COT report released last Friday revealed that managed money liquidated 6,184 their long positions and also liquidated 589 of their short positions. Commercial interests liquidated 6,130 of their long positions and also liquidated 6,520 of their short positions. As of the latest report, which was tabulated on July 10, managed money is long natural gas by a ratio of 1.49:1, down slightly from the previous week of 1.51:1, but up from the ratio 1.43:1 made two weeks ago.

We like the long side of natural gas, but it may repeat the pattern of last year when the low was made during the month of August. Unseasonably warm temps will send prices higher. However, if this does not materialize, natural gas prices will likely fall, but even so, clients should not become overly bearish. We see higher prices into fall and winter.

Gold:

August gold is getting close to generating a short term buy signal. This will occur  if the daily low is above OIA’s key pivot point for July 19 of 1240.40. The October 2017 contract will generate a short term buy signal the daily low is above the OIA’s key pivot point for July 19 of the 1243.70.

We have been unimpressed with the action in gold, especially because of the precipitous fall of the dollar and gold’s inability to rebound strongly on this kind of action. Additionally, the 10 year treasury note has been rallying (meaning lower yields) and rallies remain tepid.

The COT report released on Friday revealed that managed money liquidated 6,161 of their long positions and added 4,306 to their short positions. Commercial interests added 5,839 to their long positions and liquidated 4,813 of their short positions.

As of the July 10 tabulation date, managed money is long gold by a ratio of 1.23:1, down from the previous week of 1.35:1 and a substantial reduction from the ratio two weeks ago of 2.01:1. We have no recommendation.