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WTI crude oil: On July 3 August and September 2017 WTI crude oil generated short term buy signals, but remain on intermediate term sell signals.

August WTI crude oil gained $1.03 on volume of 798,468 contracts. Total open interest declined by 1,658 contracts, which relative to volume is approximately 90% below average. The August contract accounted for a loss of 6,941 of open interest. Short-sellers were powering the market higher. Monday’s open interest decline is the first on a price advance since before June 22.

As this report is being compiled on July 5, the August contract is trading sharply lower, down 1.64, or-3.46% and has made a daily low of of 45.20, which is the lowest print since 44.88 made on June 30. As indicated in our previous note, clients should be standing outside.

Heating oil: On July 3, August and September 2017 New York heating oil generated short term buy signals, but remain on intermediate term sell signals.

Gasoline: On July 3, August and September 2017 New York gasoline generated short term buy signals, but remain on intermediate term sell signals.

Natural gas:

August natural gas lost 8.4 cents on light pre-holiday volume of 299,633 contracts. Total open interest increased by 8,264 contracts, which relative to volume is average. As this report is being compiled July 5, the August contract is trading sharply lower, down 10.7 cents on heavy volume. The August contract will not generate a short term sell signal today, but will likely tomorrow.

The signal will be generated if the high of the day is below OIA’s key pivot point for July 5 of $2.972. In our previous note, we recommended that clients liquidate the bullish positions we had recommended after natural gas generated a short term buy signal on June 28.

From the June 30 note on natural gas:

“It appears that natural gas is headed toward a reversal of the short term buy signal generated on June 28. We recommended bullish positions after the buy signal and these should be liquidated. As we pointed out in previous notes, July tends to be the bottom for the natural gas market before it begins its ascent through late summer and early fall.”

Soybeans: On July 3, August and November 2017 soybeans generated short term buy signals and will likely generate intermediate term buy signals on July 5.

On July 3, August soybeans advanced 26.00 cents on volume of 365,567 contracts. Total  open interest declined just 243 contracts. There was massive liquidation in the front month contracts with July losing 1,014 and August 2017 through November 2017 contracts losing a total of 10,190 of open interest. The open interest increases occurred in the back months, 2018 forward, but soybeans were powered higher by short sellers covering positions. Managed money is short beans by a ratio of 2.80:1

As this report is being compiled on July 5, the August contract is rocketing higher, up 9.75 cents and has  made a new high for the move of 9.86 1/2, the highest print since 9.88 3/4 made on May 10. We advise against shorting the market and also caution against purchasing soybeans at current levels.  

Chicago wheat:

On July 3, September Chicago wheat advanced 29.00 cents on volume 445 658 contracts. Total open increased by 4,395 contracts, which relative to volume is approximately 25% below average. However, during the past two days (June 30 and July 3) the September contract has gained 59 cents while total open interest has increased by 10,653 contracts. This clearly indicates that new buyers are the force pushing prices higher.

As this report is being compiled on July 5, the September contract is trading lower, down 6.00 cents after making contract high of 5.7 4 1/2, which is the highest print since 5.86 3/4 made on the weekly continuation chart during the week of July 13, 2015.

Remarkably, the COT report revealed that managed money remains net short Chicago wheat and the current ratio stands at 1.10:1, which is exactly the same as the previous week, but down sharply from the ratio two weeks ago of 1.92:1. Do not short or purchase wheat at current levels.

Corn: On July 5, September 2017 corn will generate short and intermediate term by signals. We have no recommendation.

10 Year Treasury note: On September 10 year note generated an intermediate term sell signal after generating a short term sell signal on June 28. Since generating the short term sell, the market has not provided an opportunity to get short on a rally. Do not enter bearish positions at current levels.