Bloomberg Access: {OIAR<GO>}

Lean Hogs: On June 30, October lean hogs generated a short term sell signal, and remains on an intermediate term buy signal. 

Corn: On June 30, September corn generated an intermediate term sell signal after generating a short-term sell signal on June 22.

September corn lost 12.25 cents on heavy volume of 620,862 contracts. Total open interest increased by 1,824 contracts, which relative to volume is approximately 90% below average. The July contract lost 11,854 of open interest, March 2017 -954, which means there were more than enough open interest increases in the forward months offset the decline in the two delivery months and increase total open interest fractionally. As this report is being compiled on July 1, the September contract is trading down 6.25 cents and has made a new low for the move of 3.59, which is the lowest print since 3.60 made on April 5. No recommendation.

From the June 21 research note on corn:

“As this report is being compiled on June 22, the July contract is trading 2.00 cents above yesterday’s close and has made a new low for the move of 3.94, which is the lowest print since 3.95 1/2 made on May 23. On June 30, the USDA will release its planning intentions report and this is always a big market mover. Any positions entered into between now and June 29 should be liquidated prior to the report. Now that corn is on a short-term sell signal, the market should have a counter trend rally lasting 1-3 days. We recommend a stand aside posture at this juncture.”

From the June 17 research note on corn:

“Though Friday’s open interest increase was impressive, the lack luster volume compared to previous days indicates that many would be participants were sitting on the sidelines. Additionally, the July contract is encountering formidable resistance at the 439 level and with managed money heavily long and the seasonal  tendency for corn to top, at least temporarily in the late June early July time frame, it appears that the path of least resistance is lower for now.”

“The first sign that corn is likely to generate a short-term sell signal would be if the daily high is below OIA’s pivot point for June 20 of 4.26 3/8. July corn will generate a short-term sell signal if the daily high is below OIA’s key pivot point for June 20 of 4.12 1/2.We continue to advise a stand aside posture with respect to new positions and those who are long from lower levels should have appropriate sell parameters in place.”

Soybeans:

August soybeans advanced 33.75 cents on heavy volume of 403,513 contracts. Total open interest increased by 14,685 contracts, which relative the volume is approximately 25% above average meaning aggressive new buyers were entering the market in substantial numbers and driving prices higher (11.81 1/2), which is the highest print since 11.97 3/4 made on June 13.

As this report is being compiled on July 1, the August contract is trading 7.25 cents lower after making a daily high of 11.78 1/2, which means there has been no follow through on yesterday’s strong action. For the rally to continue, the August contract must make a daily low of 11.69 1/2. A short-term sell signal will be generated if the daily high is below OIA’s key pivot point of 11.35. August soybeans remain on short and intermediate term buy signals. We have no recommendation.

Gasoline: August and September gasoline will generate intermediate term sell signals on July 1 after generating a short-term sell signal on June 21. We have no recommendation.

WTI crude oil:

August WTI crude oil lost $1.55 on volume of 900,284 contracts. Volume declined from June 29 when the August contract gained 2.03 on volume of 967,120 contracts and total open interest increased by 27,773. On June 30, total open interest declined by 9,119 contracts, which relative the volume is approximately 50% below average. The August contract accounted for a loss of 27,512.

As this report is being compiled on July 1, the August contract is trading unchanged after making a daily high of 48.77, which is substantially below yesterday’s printer 49.62 and a daily low of 47.90, which is below yesterday’s print of 48.17. Remarkably, in the product category, gasoline has been the weak sister, and weak gasoline prices will continue to weigh on WTI. Heating oil has been the star performer and remains on short and intermediate term buy signals. In the report of June 20, which was published on June 21, OIA recommended short call positions and this trade continues to work well. Continue to hold.

Copper: On June 30, September copper generated an intermediate term buy signal after generating a short-term buy signal on June 27. We have no recommendation.

Silver:

September silver advanced 21.6 cents on volume of 60,198 contracts. Total open interest increased by 3,007 contracts, which relative the volume is approximately 100% above average meaning aggressive new buyers or entering the market in substantial numbers and driving prices to a new high for the move of $18.90.As this report is being compiled on July 1, silver has exploded higher and the September contract is trading 99.7 cent above yesterday’s close or +5.35% on strong volume. The silver volatility index has increased by 9.39% on July 1 compared to the gold volatility index, which is down 1.03%.We have no explanation for the explosive move in silver on July 1 except to say that a huge move in the silver market on the upside will inevitably result in an opposite reaction on the downside. Do not enter new positions at current levels.

Gold:

August gold lost $6.30 on volume of 211,964 contracts. Total open interest declined just 62 contracts. The August contract accounted for a loss of 4,509 of open interest. As this report is then compiled on July 1, the August contract is trading $18.20 above yesterday’s close and has made a daily high of 1344.30, which is the highest print since 1362.60 (contract high) made on June 24. As we mentioned in the research note on silver, the gold volatility index is trading 1.03% lower even though gold is approaching its old high. We continue to recommend a stand aside posture for new positions.

British Pound:

The September British pound lost 1.84 cents on volume of 183,068 contracts. Volume was the strongest since June 27 when the September contract lost 4.7 cents on volume of 229,581 contracts and total open interest increased by 5,483. On June 30, total open interest increased again, this time by 6,380 contracts, which relative the volume is approximately 25% above average.

As this report is being compiled on July 1, the September contract is trading 19 pips above yesterday’s close and has made a daily low of 1.3255, which is above yesterday’s print of 1.3215. It is inevitable that the September contract will test the contract low 1.3133 made on June 27 and likely take it out. We have no recommendation except to say the pound is too volatile to trade. There will be inevitable strong short covering rallies, which make initiating bearish positions risky.

S&P 500 E-mini: The September S&P 500 E-mini will generate an intermediate term buy signal on July 1. This reverses the June 27 intermediate-term sell signal. The September contract remains on a short-term sell signal.

September S&P 500 E-mini advanced 23.50 points on volume of 2,305,065 contracts. Volume increased from June 29 when the September contract gained 38.25 points on volume of 2,068,415 contracts and total open interest increased by 76,284. On June 30, total open interest declined by 14,477 contracts, which relative to volume is approximately 70% below average, but a total open interest decline on yesterday strong advance is negative. Yesterday, the September contract made a high of 2091.25 and this has been taken out on July 1 with another new high of 2100.75, the highest price since 2119.50 made on June 24.

We continue to recommend the stand aside posture and want to monitor the September contract for another couple of days to see whether it can generate a short-term buy signal. We are concerned about the European banking situation and the possibility of a major crisis that comes from out of the blue. Italy has been given permission by the European commission to provide substantial liquidity to Italian banks due to their precarious financial situation. The question: can this be contained or is a contagion on the horizon.