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Coffee:

July and September New York coffee will generate short and intermediate term buy signals on June 6. The COT report tabulated on Friday revealed that managed money was short coffee by ratio of 1.15:1, which was a complete reversal from the previous week when they were long by a ratio of 1.26:1. Two weeks ago, managed money was long by a ratio of 1.87:1.  Stand aside.

Lean hogs:

August lean hogs advanced 2.00 cents on heavy volume of 56,645 contracts. Volume increased substantially from June 2 when July and August hogs generated short and intermediate term buy signals on volume of 46,343 while total open interest increased by a massive 4,618.

On June 3, total open interest exploded higher for a fourth day in a row, this time by 4,228 contracts, which relative to volume is approximately 185% above average meaning aggressive new buyers continue to flood into the hog market and drive prices to a new highs for the move (85.950).

As this report is being compiled on June 6, the August contract is trading 2.725 cents higher and has made another new high for the move of 87.225. As we pointed out in the June 2 research note, there does not appear to be any resistance until the January 2015 high of 91.500. The prospect of substantial exports to China is most definitely the key driver of the market. Though, this has not materialized in exports to date, market participants are jumping on the bandwagon in anticipation of this. We have no recommendation.

Corn:

July corn advanced 3.00 cents on volume of 386,254 contracts. Volume fell substantially from June 2 when the July contract gained 1.50 cents on volume of 452,013 contracts and total open interest declined by 2,890. On June 3, total open interest increased by 8,844 contracts, which relative to volume is approximately 10% below average. However, the July contract lost 8,634 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in July and increase total open interest. Friday’s action was positive.

As this report is being compiled on June 6, the July contract is trading 7.00 cents above Friday’s close and has made a new high for the move of 4.27 1/2, which is the highest print on the weekly continuation chart since July 13, 2015 (4.28 1/2). The COT report revealed that managed money added 33,541 contracts to their long positions and liquidated 34,293 of their short positions. Commercial interests liquidated 43,524 their long positions and added 12,651 to their short positions.

As of the tabulation date of May 31, managed money increased their net long position and the current ratio stands at 2.26:1, up from the previous week of 1.51:1 and the ratio two weeks ago of 1.36:1. Three weeks ago, the ratio stood at 1.22:1. Even though the long ratio of managed money is at the highest level in several months, there remains substantial numbers of short-sellers who are going to be forced to cover as the market moves higher. We recommend against adding new longs, and clients should keep in mind that corn has a tendency to top in the late June early July period.

Chicago wheat:

July Chicago wheat advanced 11.75 cents on strong volume of 189,217 contracts. Total open interest increased just 72 contracts. However, the July contract lost 7,699 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in July and increase total open interest fractionally.

Actually, the performance on Friday was respectable considering that per the latest COT report, managed money remains short Chicago wheat by ratio of 3.29:1, which was up from the previous week of 3.25:1 and the ratio two weeks ago of 2.44:1. In summary, managed money is holding short positions at a stratospheric level and though fundamentals for wheat are undesirable, wheat may potentially have an explosive move to the upside. After short-sellers have been blown out, Chicago wheat may be a terrific candidate on the short side, but at this juncture we recommend standing aside. Do not short wheat. On May 27, OIA announced that July Chicago wheat generated short and intermediate term buy signals.

Gold:

August gold advanced $30.30 on volume of 255,983 contracts. Volume was the highest since May 31 when the August contract gained 80 cents on volume of 256,501 contracts and total open interest increased by 1,241. On June 3, total open interest increased by a massive 15,163 contracts, which relative to volume is approximately 140% above average meaning aggressive new buyers were entering the market in large numbers and driving prices higher (1247.40).

As this report is being compiled on June 6, the August contract is trading $3.40 higher on the day after making a high of 1251.30, which is above Friday’s print. We expect more consolidation in gold before it eventually generates a short term buy signal. Currently, OIA’s key pivot point for a buy signal stands at 1259.40 and the August contract must make a daily low above the pivot.

The COT report released on Friday showed that managed money liquidated 13,020 of their long positions, but also liquidated 5,170 of their short positions, which left manage money long gold by a ratio of 4.41:1, which was up slightly from the previous week of 4.21:1, but down sharply from the ratio two weeks ago of 7.14:1. The high ratio of 8.31:1 was made 4 weeks ago.

Preferably, we want to see more liquidation before a short-term buy signal is generated. On May 23, OIA announced that August gold generated a short-term sell signal and an intermediate term sell on May 25. Stand aside for now.

Silver:

July silver gained 34 cents on volume of 67,594 contracts. Total open interest declined by 697 contracts, which relative to volume is approximately 50% below average. Note that open interest action in silver was the opposite of gold. One is bullish and the other bearish.

As this report is being compiled on June 6, the July contract is trading 7.5 cents above Friday’s close and has made a daily high of $16.545, which takes out Friday’s print of 16.470. The COT report revealed that managed money remains long silver by a ratio of 4.22:1, which is up slightly from the previous week of 4.06:1, but down from the ratio two weeks ago of 5.22:1. Four weeks ago, managed money was long silver by a record high of 9.21:1. On May 19, OIA announced that July silver generated a short-term sell signal, but it continues to be on an intermediate term buy signal. We recommend a stand aside posture.

Copper:

July and September New York copper will generate short term buy signals on June 6. The COT report revealed that managed money is short copper by ratio of 1.99:1, which is down slightly from the previous week of 2.03:1, but up from the ratio two weeks ago of 1.63:1. We anticipate that managed money short-sellers will continue to power the market higher, but recommend a stand aside posture.

Dollar index: The June and September dollar index will generate short and intermediate term sell signals on June 6.

The June dollar index lost 1.538 points on heavy volume of 42,235 contracts. Total open interest increased by 2,404 contracts, which relative to volume is approximately 120% above average meaning aggressive new short-sellers were entering the market in large numbers and driving prices lower (93.860). Even the June contract, which is getting close to expiration gained 861 of open interest.

As this report is being compiled on June 6, the June dollar index is trading 12.3 points lower on the day. The COT report revealed that managed money remains short the dollar index by ratio 1.85:1, which is up from the previous week of 1.73:1 and the ratio two weeks ago of 1.55:1. We have no recommendation.

Euro: the June and September euro will generate short-term buy signals on June 6, but remain on intermediate term sell signals. The short-term buy signal reverses the May 18 short-term sell signal.

The June euro advanced by a very strong 1.95 cents on volume of 297,699 contracts. Remarkably, total open interest declined by 3,704 contracts, which relative to volume is approximately 45% below average, but a total open interest decline on Friday strong advance is negative short-term. The June contract accounted for a loss of 6,788 and reflected the fact that leveraged funds are short the euro by a ratio of 2.31:1, which is up from the previous week of 2.11:1 and up substantially from the ratio two weeks ago of 1.46:1.

As this report is being compiled on June 6 the June euro is trading 24 pips higher and has made a new high for the move of 1.1395, which takes out Friday’s print of 1.1377. Currency markets are fluctuating at the whim of the Federal Reserve, which makes them difficult to trade except in the very short-term. We see no reason to be involved in the euro.

Yen: The June and September yen will generate short-term buy signals on June 6. This reverses the May 19 short-term sell signals. Both contracts remain on intermediate term buy signals.

The June yen advanced by a very strong 189 pips on surprisingly light volume of 259,452 contracts. However, total open interest exploded higher up by a massive 16,925 contracts, which relative to volume is approximately 160% above average meaning aggressive new buyers were entering the yen futures market and driving prices to a new high for the move (.9390). The June contract which is getting close to expiration gained 4,428 of open interest.

The COT report revealed that leverage funds remain long the yen by a ratio of 1.63:1, which is up from the previous week of 1.53:1, but down from the ratio two weeks ago of 1.81:1. As this report is being compiled on June 6, the June contract is pulling back, down 49 pips, but has not taken out Friday’s high. We recommend a stand aside posture in the yen.

Australian dollar: The June and September Australian dollar will generate a short term buy signals on June 6. Both contracts remain on intermediate term sell signals.

The June Australian dollar advanced by a very strong 1.43 cents on heavy volume of 159,851 contracts. Total open interest increased by 4,236 contracts, which relative to volume is average. The June contract accounted for a loss of 238 of open interest.

As this report is being compiled on June 6 the June contract is trading 5 pips above Friday’s close and has taken out Friday’s high with another new high of 73.79. The COT report revealed that leverage funds remain long the Australian dollar by ratio of 1.68:1, however this is down from the previous week of 1.95:1 and a substantial reduction from the ratio two weeks ago of 2.92:1. The high ratio recorded several weeks ago was 5.44:1. We have no recommendation.

Canadian dollar:

Though the Canadian dollar had a strong advance on Friday and continues on June 6, the June Canadian dollar will not generate a short-term buy signal on June 6. However, it remains on an intermediate term buy signal and it appears likely a short-term buy signal will be generated in tomorrow’s trading. The COT report revealed that leverage funds are long the Canadian dollar by ratio of 2.49:1, up from the previous week of 2.37:1 and the ratio two weeks ago of 2.08:1. We have no recommendation.

British pound:

The June British pound will generate a short-term sell signal if the daily high is below OIA’s key pivot point for June 6 of 1.4443. The June and September contracts remains on intermediate term buy signals. The COT report revealed that leverage funds remain short the pound by ratio of 1.006:1, which is down from the previous week of 1.09:1 and the ratio two weeks ago of 1.15:1. We have no recommendation.

Swiss franc:

The June and September Swiss franc will generate short-term buy signals on June 6. Both contracts remain on intermediate term sell signals. The COT report revealed that leverage funds are short the Swiss franc by ratio of 1.65:1, up from the previous week of 1.18:1 and the ratio two weeks ago of 1.07:1. We have no recommendation.

10 Year Treasury Note: The September U.S. 10 year note will generate short and intermediate term buy signals on June 6.

The September 10 year treasury note advanced by a very strong 1-030 points on volume of 1,712,419 contracts. Total open interest increased by 36,051 contracts, which relative to volume is approximately 20% below average, but a total open interest increase on Friday strong advance is positive. As this report is being compiled on June 6 the September contract has made a high of 131-0 20, which matches Friday’s print. We have no recommendation.