Bloomberg Access:{OIAR<GO>}

Corn: On June 23, September 2017 corn generated an intermediate term sell signal after generating a short term sell signal on June 21.

September corn lost 5.25 cents on heavy volume of 601,963 contracts. Total open interest declined by 36,764 contracts, which relative to volume is approximately 140% above average and this indicates liquidation was extremely heavy on the decline. Accounting for this was a 74,961 contract loss in July as it approaches first notice day.

The COT report released on Friday revealed that managed money liquidated 17,103 of their long positions and added 29,209 to their short positions. Commercial interests added 26,491 to their long positions and liquidated 14,931 of their short positions. As of the latest report, which was tabulated on June 20, managed money is short corn by ratio of 1.20:1, up from the previous week of 1.02:1 and down from the ratio two weeks ago of 1.52:1. Stand aside.

Gold:

August gold advanced $7.00 on volume of 173,405 contracts. Total open interest declined by 2,426 contracts, which relative to volume is approximately 40% below average. This was one of the rare days that total open interest declined on the price advance. The COT report released on Friday revealed that managed money liquidated a massive 49,920 contracts from their long positions and also liquidated 1,800 contracts from their short positions. Commercial interests liquidated 555 of their long positions and also liquidated 18,838 of their short positions. As of the June 20 tabulation date, managed money was long gold by a ratio of 2.51:1, down sharply from the previous week of 3.19:1 and the ratio two weeks ago of 3.62:1.

As this report is being compiled on June 26, the August contract is trading $10.40 lower on the day and has made a daily low of 1236.50, which is the lowest print since 1233.60 made on May 16. On June 15, OIA announced that August gold generated a short term sell signal and an intermediate term sell signal on June 20. Although we think gold will be a solid play on the long side down the road, it is imperative that the dollar index reverse the buy signal generated on June 20 before a rally can be sustained in earnest. On the equity side, we like Royal Gold (RGLD), which is a royalty company, not a miner.

Euro:

The September euro advanced 50 pips on volume of 129,171 contracts. Though volume was light, the total open interest increase was heavy, up 5,826 contracts, which relative to volume is approximately 75% above average. This indicates that new buyers were rushing into the euro and pushing it to a high of 1.1260.

As this report is being compiled on June 26, the September contract has made a fractional new high of 1.1271 above Friday’s print. The COT report revealed that leverage funds liquidated 2,241 of their long positions and added a massive 22,735 to their short positions. As of the June 20 tabulation date, leverage funds were short the euro by a ratio of 1.25:1, up from the previous week of 1.19:1 and the ratio two weeks ago of 1.19:1.

While we like the euro in the intermediate term, we cannot discount the possibility of a move higher from here despite the over bought condition. However, we prefer to remain on the sidelines wait for a possible correction to the 50 day moving average of 1.1123. This is a level at which we would feel comfortable recommending light bullish positions and add to these after a new short term buy signal is generated.

Nasdaq 100:

On June 12, the NASDAQ 100 cash index generated a short term sell signal and NASDAQ 100 futures (September) generated a short term sell signal on June 16. Remarkably, though the NASDAQ 100 has had a rally from the low, it has not been able to reverse these sell signals. As this report is being compiled on June 26, the September NASDAQ 100 contract is trading 15.00 points lower after rallying to a high of 5862.00 in the early going, it has now reversed sharply.

We think the action in the Nasdaq 100 could be a harbinger for the rest of the market, another concern is that Apple is currently on short and intermediate term sell signals. Because Apple is a benchmark stock for the NASDAQ 100, the fact that it is on short and intermediate term sell signals reinforce the likelihood of additional weakness ahead. No recommendation.

From the June 12 note on the Nasdaq 100:

“Nasdaq 100 (cash index): On June 12, the NASDAQ 100 cash index generated a short term sell signal and remains on an intermediate term buy signal.”

“This is the first time a short term sell signal has occurred in the NASDAQ 100 during calendar year 2017. During mid-May, the S&P 400, New York Composite, Russell 2000 and Dow Jones Industrial Average generated short term sell signals, but, the NASDAQ 100 and S&P 500 remained on buy signals.”

“For confirmation, we want to see the June/September NASDAQ 100 futures generate a short term sell signal. This will occur in the June contract if the daily high is below OIA’s key pivot point for June 13 of 5725.67. The reason futures has not generated a sell signal is because they trade almost 24 hours a day, which enables the index to expand its range in the overnight session.”

“If a sell signal in NASDAQ 100 futures is confirmed, in our view it would be extremely negative for the market as a whole. The NASDAQ 100 cash index should find support at the 50 day moving average of 5620.49, which is approximately 126 points below the current price of 5746.70.”