Bloomberg Access:{OIAR<GO>}

Corn:

July corn advanced 4.50 cents on volume of 443,244 contracts. Total open interest declined by 2,770 contracts, which relative to volume is approximately 70% below average. However, a total open interest decline on Friday’s advance is bearish. This follows the bearish action on June 15 when July gained 2.50 cents and total open interest declined by 19.068. The July contract accounted for a loss of 23,722 of open interest on Friday, which means there were not enough open interest increases in the forward months to offset the decline in July.

The COT report released on Friday revealed that managed money added 18,730 contracts to their long positions and liquidated a massive 104,333 contracts. Commercial interests liquidated 39,059 of their long positions and added 64,917 to their short positions. As of the June 13 tabulation date, managed money was short corn by ratio of 1.02:1, down sharply from the previous week of 1.52:1 and nearly half the ratio two weeks ago of 1.93:1.

As this report is being compiled June 19, the July contract is trading 7.00 cents lower, or -1.82% and has made a daily low of 3.75 1/4, which is the lowest print since 3.70 on June 15. In the June 15 note on corn, we told clients that corn would resume its uptrend if it made a daily low above our pivot point of 3.78 1/4 and as yet has been unable to do this.

It appears that corn is headed toward a short term sell signal and this will occur if the daily high is below OIA’s key pivot point for June 19 of 3.76 5/8. We recommend a stand aside posture in corn and if it generates a short term sell signal, we advise against shorting this market due to the potential for a weather scare during the growing season.

From the June 15 note on corn:

“In yesterday’s research note on corn, we suggested the exit for bullish positions could either be the low made on June 12 or penetration of the 20 day moving average 3.74 7/8. As this report is being compiled June 15, both of these conditions been fulfilled and therefore we recommend moving to the sidelines for now. The rally will resume again if the July contract makes a daily low of above our pivot of 3.78 1/4. The last time July was able to accomplish this was on June 9 when it made a low of 3.80 3/4.”

From the June 13 note on corn:

“We are troubled by substantial drop off in volume on yesterday’s advance and the lack of a total open interest increase. Also of concern the dollar index is trading sharply lower on June 14, but this is not giving corn a bid. Undoubtedly, somewhat weaker ethanol prices are weighing on corn and currently the July contract is down 1.15%, but is trading above its 20 day moving average of 1.533.”

Euro: The September euro will generate a short term sell signal provided the daily high is below OIA’s key pivot point for June 19 of 1.1242.

The September euro advanced 40 pips on strong volume of 256,788 contracts. Surprisingly, total open interest skyrocketed higher, up 11,531 contracts, which relative to volume is approximately 75% above average. Making this more impressive was that the June contract, which expires shortly lost 22,024 of open interest, which means there was more than enough open interest increases in the forward months to offset the decline in June and increase total open interest substantially.

The COT report released on Friday revealed that leverage funds liquidated 3,003 of their long positions and also liquidated 2,894 their short positions. As of the June 13 tabulation date, leverage funds were long the euro by a ratio of 1.19:1, which is exactly the ratio of the previous week, but a reversal from  two weeks ago when leverage funds were short by a ratio of 1.08:1.

As we pointed out in previous notes on the euro, we like the currency in the intermediate and longer-term, but at this juncture is likely to move into a correction mode, which will likely cause the speculative community to reestablish fresh short positions. Stand aside for now.

Yen: On June 16, the September Japanese yen generated a short term sell signal and is getting close to generating an intermediate term sell signal. This will occur if the daily high is below OIA’s key pivot point for June 19 of .9018.

The September yen gained 20 pips on volume of 193,108 contracts.Total open interest increased by 5,354 contracts, which relative to volume is average. The June contract accounted for a loss of 12,117 of open interest, which means there was more than enough open interest increases in the forward months to offset the decline in June and increase total open interest to an average number.

The COT report revealed that leverage funds liquidated 6,147 of their long positions and also liquidated 12,342 of their short positions. As of the June 13 tabulation date, leverage funds were short the yen by a ratio of 1.75:1, down from the previous week of 1.85:1 and slightly above the ratio two weeks ago of 1.73:1. It appears the trajectory of the yen is lower, especially because the trend of global stock markets is higher at least for now. As this report is being compiled on June 19, the September contract is trading 51 pips lower or -0.57% on low volume. We have no recommendation.

September NASDAQ 100: On June 16, the September NASDAQ 100 contract generated a short term sell signal and this occurred after the NASDAQ 100 cash index generated a short term sell signal on June 12. Both indices remain on intermediate term buy signals.

The September contract will reverse the sell signal if it makes a daily low above OIA’s key pivot point for June 19 of 5802.55. The current high for the September contract is 5774.00 and low of 5683.25. On June 9, the September contract made an all-time high of 5907.50. We have no recommendation.