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Soybeans:

November soybeans gained 25.00 cents on extremely low volume of 166,017 contracts. Remarkably, volume was the lowest since March 18 when 128,879 contracts were traded and the November contract closed at 9.09 3/4. On July 29, total open interest declined by 2,012 contracts, which relative to volume is approximately 45% below average, but the dismal volume on Friday’s strong advance combined with the total open interest decline confirms that many players were sitting on the sidelines and that both longs and shorts were exiting positions on the rally.

The COT report revealed that managed money liquidated 12,223 of their long positions and also liquidated 8,643 of their short positions. Commercial interests liquidated 16,109 of their long positions and also liquidated 44,544 of their short positions. Remarkably, managed money remains heavily long soybeans despite the sharp decline seen during the past couple of weeks and according to this week’s report they are long by a ratio of 6.77:1, which is actually up from the previous week of 5.09:1, but down from the ratio two weeks ago 7.52:1.

As this report is being compiled on August 1 the November contract is trading sharply lower, down 42.50 cents or -4.24% and the November contract has made a new low for the move of 9.60 1/4, which is the lowest print since 9.59 3/4 made on April 18. With managed money remaining heavily long in the soybean market and huge numbers of speculators showing sizable losses, there is a substantial amount of potential selling pressure on the market as prices continue their downward trek.

As we have said in many prior reports, speculators will use any rally to trim losses, which will keep a lid on advances.On July 6, OIA announced that November soybeans generated a short term sell signal and intermediate term sell signal on July 20. Soybeans have not come close to reversing the sell signals. For speculative accounts, we recommend a stand aside posture because the market can have a sustained rally if there is a spell of hot weather during the next 30 days.

From the July 26 research note on soybeans:

“As we have said in prior reports, rallies will be met by speculative longs selling and looking to trim losses. This phenomena will continue until they have been blown out of the market in substantial numbers. Additionally, hot dry weather needs to be persistent before market participants become concerned and a weather premium begins to build. Stand aside.”

Corn:

September corn advanced 3.25 cents on volume of 275,552 contracts. Total open interest increased by 9,086 contracts, which relative to volume is approximately 20% above average meaning aggressive buyers were entering the market and pushing prices higher (3.35). The September contract accounted for a loss of 1,914 of open interest.

The COT report released on Friday revealed managed money liquidated 14,770 of their long positions and added 23,043 to their short positions. Commercial interests added 14,647 to their long positions and liquidated 31,791 of their short positions. As of the latest report, managed money short corn by a ratio of 1.46:1, up from the previous week of 1.18:1 and the ratio two weeks ago of 1.04:1. Three weeks ago, managed money was long corn by ratio of 1.72:1.

As this report is being compiled on August 1 the September contract is trading sharply lower, down 7.00 cents or -2.09% and has made a new contract low of  3.26 1/2 which is fractionally below the July 22 print of 3.26 3/4. Stand aside.

Live cattle: October (not December) 2016 live cattle will generate a short term buy signal on August 1. Additionally, it is close to generating an intermediate term buy signal and this will occur if the daily low is above OIA’s key pivot point for August 1 of $114.940. Currently, the October contract is trading limit up and gapped higher on the opening, and has made a low that is above OIA’s key pivot point to generate a short term buy signal. In tomorrow’s report, we will provide the details on today’s action and recommend on how to trade the live cattle market. We think it is highly likely that the bottom is in for now.

From the July 27 research note on live cattle:

“Due to seasonal factors, we think live cattle could have a decent sized rally, but first it has to generate a short term buy signal. For this to occur, the low of the day must be above OIA’s key pivot point for July 28 of 112.190 and the low on July 28 has been 112.125. Wait for a buy signal before considering bullish positions.”

WTI crude oil:

September WTI crude oil advanced 46 cents on volume of 789,315 contracts. Total open interest increased by 13,187 contracts, which relative to volume is approximately 35% below average, but Friday’s open interest increase indicates that new buyers were stepping up and moving prices higher (41.12).

The COT report revealed that managed money added 2,037 to their long positions and also added 37,516 to their short positions. Commercial interests added 9,785 to their long positions and also added 6,761 to their short positions. According to the latest report, managed money is long WTI crude oil by a ratio of 1.53:1, down from the previous week of 1.89:1 and the ratio two weeks ago 2.20:1. The current ratio is the lowest in at least three months.

As this report is being compiled on August 1, the September contract is trading sharply lower, down $1.53 and has made a new low for the move of 39.86, which takes out the April 7 print of 39.96. On June 16 OIA announced that September WTI crude oil generated a short term sell signal and an intermediate term sell signal on July 8. Continue to hold the short call position recommended in the June 21 report.

Natural gas: On July 29 September and October natural gas generated a short term buy signals and remain on intermediate term buy signals.

September natural gas advanced 3 ticks on volume of 290,438 contracts. Total open interest increased by massive of 11,337 contracts, which relative to volume is approximately 35% above average meaning a battle ensued between buyers and sellers and neither side was able to move the market beyond an approximate unchanged number. The September contract accounted for a loss of 4,687.

The COT report revealed that managed money added 2,828 to their long positions and also added 4,998 to their short positions. Commercial interests liquidated 27,559 of their long positions and also liquidated 11,963 of their short positions. As of the latest report, managed money remains short natural gas by a ratio of 1.21:1, which is fractionally above the previous week of 1.20:1, but up slightly from the ratio two weeks ago of 1.14:1. Commercial interests are long natural gas by ratio of 1.04:1.

It remarkable that managed money continues to hold a substantial net short position despite the fact that natural gas has rallied by over a dollar from the lows. This means that there are substantial numbers of short-sellers who are showing losses.

As this report is being compiled on August 1 September natural gas is pulling back, which is typical after the generation of a buy signal and is trading 7.9 cents below Friday’s close. We really like natural gas from the long side, but know the market should be topping in the period immediately ahead. We expect major fireworks on the upside this winter. For now, stand aside.

Dollar index: The September and December dollar index will generate short term sell signals on August 1. Both contracts remain on intermediate term buy signals.

The September dollar index fell by a large 1.23 points on volume of 37,154 contracts. Total open interest declined by 2,995 contracts, which relative to volume is approximately 220% above average. The COT report revealed that managed money added 4,686 to their long positions and also added 997 to their short positions. As of the latest report, leveraged funds are short the dollar index by ratio of 1.98:1, which is down in the previous week of 2.65:1 and is a substantial reduction from the ratio two weeks ago a 4.67:1. We have no recommendation.

Yen: September and December yen will generate short term buy signals on August 1. Both contracts remain on intermediate term buy signals.

The September yen advanced by a very strong 317 pips on volume of 284,774 contracts. Remarkably, total open interest increased only 1,350 contracts, which relative to volume is approximately 75% below average. As this report is being compiled on August 1 the September contract is trading 31 pips lower on the day.

The COT report revealed that managed money liquidated 5,374 of their long positions and also liquidated 1,341 of their short positions. As of the latest report, leveraged funds are long the yen by a ratio 2.65:1, down from the previous week of 2.72:1 and the ratio two weeks ago of 3.22:1. We have no recommendation. The yen is too volatile to trade.

Euro: The September and December euro will generate short term buy signals on August 1. Both contracts remain on intermediate term sell signals.

The September euro advanced 1.06 cents on volume of 193,224 contracts. Total open interest declined by 2,174 contracts, which relative to volume is approximately 50% below average and indicates that short-sellers were powering the market higher. According to the latest COT report, leveraged funds liquidated 2,366 of their long positions and added 4,489 to their short positions. According to the latest report, leveraged funds are massively short the euro by a ratio of 3.46:1, up from the previous week of 3.20:1 and the ratio two weeks ago a 3.07:1. We have no recommendation.

Swiss franc: The September and December Swiss franc will generate short and intermediate term buy signals on August 1.

The COT report revealed that managed money added 3,605 to their long positions and also added 7,381 to their short positions. As of the latest report, leverage funds are short the  Swiss franc by a ratio of 1.82:1, up from the previous week of 1.74:1 and the ratio two weeks ago of 1.59:1. We have no recommendation.