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Soybeans:

August soybeans advanced 4.75 cents while the November contract lost 1.25 on total volume of 144,722 contracts. Total open interest declined by 12,561, which relative to volume is approximately 240% above average, meaning that liquidation was heavy on July 25. Accounting for the massive decline was the heavy liquidation in the August contract(-13,424 contracts) as it approaches 1st notice day. Additionally, the November contract lost 27 of open interest. As this report is being compiled on July 28, August soybeans are trading 16.25 cents higher and has taken out Friday’s high of 12.14 1/2 and the July 24 high of 12.32 3/4. Soybeans are having a well deserved rally in the face of relentless selling of the past couple of weeks. August soybeans made a recent low at 11.66 on July 21 and therefore the rally has carried soybeans approximately 62 cents from the lows. The November contract made its low on July 23 at 10.55 and has rallied approximately 44 cents from the lows.We think the rally in November soybeans could continue to the 11.28, which is one of OIA’s key pivot points and this would be the highest print since 11.29 1/2 made on July 8.Continue to stand aside.

Corn:

September corn gained 1.50 cents on volume of 216,232 contracts. Total open interest increased by 6,272 contracts, which relative to volume is approximately 20% above average meaning that longs and shorts were fairly aggressive about entering new positions, but longs were able to move corn fractionally higher. The September contract lost 2,414 of open interest. For the past 3 trading sessions beginning on July 23, open interest has increased substantially, and prices are responding on the upside. For example, the 3 day open interest increase from July 23 through July 25 totals 35,979 contracts, and during this time, September corn has advanced 2.50 cents. As this report is being compiled on July 28, September corn is trading 3.25 cents higher and has made a daily high of 3.67 3/4. Continue to stand aside.

Chicago wheat:

September Chicago wheat advanced 9.25 cents on volume of 75,596 contracts. Total open interest increased by just 84 contracts. The September contract lost 1,811 of open interest and there were open interest increases in the December 2014 through September 2015 contracts. In short, there were sufficient open interest increases in the forward months to bring total open interest to a negligible number. We consider this to be positive for wheat, especially since there has been relentless selling in this market for many weeks. September Chicago wheat made its low at 5.20 1/4 on July 23 and through today’s high of 5.43 1/4 has rallied approximately 23 cents. As this report is being compiled on July 28, September Chicago wheat is trading 3.25 cents lower. Continue to stand aside in Chicago wheat.

Live cattle:

August live cattle advanced 2.55 cents on total volume of 46,673 contracts. Surprisingly, volume was the lowest since June 30 when 43,425 contracts were traded and August cattle closed at 1.50075.On July 25, total open interest increased by 2046 contracts, which relative to volume is approximately 75% above average meaning that new longs were aggressively entering the market and moving prices to new all-time highs (1.59000). The August contract lost 1,777 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on July 28, August cattle is trading 40 points lower and the October contract -1.175 cents. The very low volume on July 25 indicates an unwillingness of many market participants to be involved in cattle at current stratospheric prices. Stand aside.

WTI crude oil:

September WTI crude oil advanced 2 cents on volume of 573,955 contracts. Volume increased from July 24 when September WTI crude oil lost $1.05 on volume of 417,636 contracts and total open interest declined by 8,536 contracts. On July 25, total open interest declined by 1613 contracts, which is minuscule and dramatically below average. The September contract accounted for loss of 9,431 of open interest. On July 25, September WTI crude made a low of 101.00 and as this report is being compiled on July 28 has made a low of 100.90, just 10 cents under Friday’s low.

Beginning on July 24 through July 28, the highs in the September contract have been lower and the lows have been lower. In the report of July 21, OIA recommended shorting (writing) calls at strike price and month of your choice.This trade continues to be profitable and we recommend holding it. Also, we recommended the trade be exited on upon the penetration of 103.45, the high made on July 22. September WTI crude oil remains on a short term sell signal, but an intermediate term buy signal.

Brent crude oil:

September Brent crude oil advanced $1.32 on volume of 625,945 contracts. Total open interest increased by only 1,388 contracts, which is minuscule and dramatically below average. The September contract lost 6,826 of open interest. As this report is being compiled on July 28, September Brent is trading 73 cents lower on the day. The dismal open interest increase in Friday’s trading confirms the weakness of Brent and WTI. Both are headed lower.

Natural gas:

September natural gas lost 6.3 cents on volume of 170,688 contracts. Total open interest increased by 807 contracts, which relative to volume is approximately 75% below average. But this is the first open interest increase on a price decline that we have seen since July 10 when natural gas declined by 5.00 cents and total open interest increased by 5,802 contracts.On July 10, September natural gas closed at $4.113, and through July 24, natural gas experienced open interest declines when natural gas prices declined indicating that both longs and shorts were liquidating as prices moved lower.

On July 25, the August contract lost 3,627 of open interest, September -611, October -1686, which makes the total open interest increase more impressive (bearish).As this report is being compiled on July 28, September natural gas is trading 2.5 cents lower and has made a new for the move at 3.725, which is considerably above the contract low of 3.355.Like coffee, we think natural gas has the ability to become one of the outstanding trades of 2014, but the market has to form a base from which a rally can take place. Continue to stand aside.

Copper:

September copper lost 2.60 cents on volume of 47,043 contracts. Total open interest declined by 2,569 contracts, which relative to volume is approximately 120% above average meaning that liquidation was very heavy on the decline. As this report is being compiled on July 28, September copper is trading 50 points higher and has made a daily low of 3.2260, which is below Friday’s low of 3.2380, but above the July 24 low of 3.2020. We see no compelling reason to be involved in copper, and the year to date performance (-3.46%) indicates that copper is not on an up trend, but is in fact range bound.On a performance basis year to date, copper is in last place of the metals we follow.Additionally, the 50 day moving average of 3.1570 remains below the 200 day moving average of 3.1815. September copper remains on a short and intermediate term buy signal. Stand aside.

Gold:

August gold advanced $12.50 on good volume of 178,471 contracts.Total open interest declined by 1370 contracts, which relative to volume is approximately 60% below average, but an open interest decline on the price advance confirms the bearish set-up for gold. On July 24, August gold generated a short-term sell signal, but remains on an intermediate term buy signal. As this report is being compiled on July 28, August gold is trading 1.30 lower and has made a daily high of 1309.40 and a low of 1301.10, which is above the July 25 low print of 1291.00. We expect gold to resume its downtrend, especially with managed money holding a large net long position.

Silver: September silver will most likely generate a short-term sell signal on July 28,but remains on an intermediate term buy signal.

September silver gained 22.1 cents on volume of 44,302 contracts. Total open interest declined by 1,328 contracts, which relative to volume is approximately 20% above average meaning that large numbers of longs and shorts were liquidating as prices moved higher.As this report is being compiled on July 28, September silver is trading 10.3 cents lower.Stand aside.

Euro:

The September euro lost 32 pips on volume of 143,874 contracts. Total open interest increased by a massive 10,124 contracts, which relative to volume is approximately 185% above average meaning that aggressive new short sellers were entering the market and driving prices to a new low for the move lower (1.3422). The euro remains on a short and intermediate term sell signal. We have no recommendation.

British pound: On July 25, the September British pound generated a short-term sell signal, but remains on an intermediate term buy signal.

The September British pound lost 8 pips on volume of 72,634 contracts. Total open interest declined by 2017 contracts, which relative to volume is average. As this report is being compiled on July 28, the pound is experiencing its first rally day after the generation of the buy signal. We expect a rally to continue, especially since the September pound declined every day from July 16 through July 25.From July 16 through July 25, total open interest has declined by 14,679 contracts while the September pound has declined 1.69 cents. This is very positive open interest action relative to the price decline. Although we expect the pound to continue to decline after it has its counter trend rally, we think the pound will find support between 2 of OIA’s key pivot points: 1.6824-1.6873. Stand aside.

Canadian dollar:  On July 28, the September Canadian dollar will generate a short-term sell signal, but remains on an intermediate term buy signal. 

The September Canadian dollar lost 58 pips on volume of 64,965 contracts. Volume was the highest since July 16 when 69,809 contracts were traded and the September Canadian dollar closed at 92.93.On July 25, total open interest increased by 383 contracts, which relative to volume is approximately 70% below average, but an open interest increase on a price decline of this magnitude is clearly bearish.As we pointed out in the weekend report (see the partial extract below), open interest has been increasing on the price decline and this continued on July 25. In short, from July 7 through July 25, total open interest has increased by 8,792 contracts while the September Canadian dollar declined by 1.62 cents.We think the Canadian dollar is a terrific candidate for bearish positions once we see a day or two of counter trend rallies.

From the July 27 Weekend Wrap: 

“From July 7 through July 24, total open interest has increased by 8,409 contracts while the September Canadian dollar has declined by 1.04 cents.”

“This is bearish open interest action relative to the price decline and is bad news for anyone long the Canadian dollar. However, it is particularly problematic for speculators who rushed into the Canadian dollar at the highest level since January 2014.We expect the September Canadian dollar to generate a short-term sell signal on July 28. The heavy net long position of manage money will fund and add fuel to the downside move.”

Coffee:

September coffee advanced 85 points on volume of 16,346 contracts. Total open interest declined by 122 contracts, which relative to volume is approximately 60% below average. The September contract lost 294 of open interest. As this report is being compiled on July 28, September coffee has closed at 1.8110, which is the highest close since 1.8205 made on June 25. From July 16 through July 28, September coffee has closed higher every day with the exception of July 22. In the report of July 24, we recommended the initiation of bullish positions with the caveat that the market is overbought and should pull back, especially after generating a short-term buy signal on July 24. The 50 day moving average for the September contract is 1.7460, therefore, the market is overbought, but not by much according to the 50 day moving average. Setbacks should be bought.