Cocoa: On June 7, July and September New York cocoa generated short and intermediate term buy signals. We have no recommendation.
July corn lost 0.50 cents on heavy volume of 577,310 contracts. Volume was the strongest since April 22 when 627,132 contracts were traded and the July contract closed at 3.75 1/2. On June 7, total open interest increased by 3,821 contracts, which relative to volume is approximately 60% below average, however the July contract lost 42,438 of open interest, which means there were more than enough open interest increases in the forward months to offset the decline in July and increase total open interest.
As this report is being compiled on June 8, the July contract is trading higher, up 5.25 cents and has made a new high for the move of 4. 39 1/4, which is the highest print since the week of July 13, 2015 (4.54 1/4). Price and open interest action has been consistently bullish for the past several sessions and the series of open interest increases during price advances confirm that short sellers are not yet capitulating.
On April 14, OIA announced that July corn generated short and intermediate term buy signals. Corn has a tendency to top in the late June early July time frame. For anyone long the market, we recommend sell stop protection and caution against entering new long positions at current levels and advise against trying to pick a top in this market. The first sign of trouble would be if July corn makes a daily high below OIA’s pivot point of 4.10 1/2.
July soybeans lost 3.00 cents on volume of 355,400 contracts. Total open interest declined by 3,949 contracts, which relative to volume is approximately 50% below average. The July contract accounted for loss of 26,532 of open interest. As this report is being compiled on June 8, the July contract is rocketing higher, up 44.00 cents and has made a new high for the move of 11.87, which is the highest print since July 2014. It should be noted that new highs are being made in increments of approximately 20 cents. For example, the previous high was 11.69 made on June 3, which was 23 cents above the previous high of 11.46 made on June 2. Today’s high is 18 cents above the June 3 high.
There is no resistance for the July contract until $12.49 1/4, which was the low made on July 9, 2014 and is the high of the gap between 11.48 1/4 and 12.49 1/4 made in July 2014. In previous reports we have emphasized that, soybeans tend to top out in either June or July and with prices currently at nosebleed levels, it is becoming increasingly hazardous to participate in the market.
The first sign that the market may be reversing and getting close to a short-term sell signal would be if the daily high is below OIA’s pivot point for June 8 of 11.01 1/4. A confirmed short term sell signal would occur if the daily high is below OIA’s key pivot point for June 8 of 10.75 3/8. If long from lower levels make sure sell parameters are in place. Do not attempt to pick a top in this market and do not enter new bullish positions.
WTI crude oil:
July WTI crude oil advanced 67 cents on heavy volume of 995,483 contracts. Volume was the strongest since June 1 when the July contract lost 9 cents on volume of 940,936 contracts and total open interest declined by 2,102. On June 7, total open interest declined just 627 contracts. The July contract lost 55,061 of open interest, which means there were almost enough open interest increases in the forward months to offset the decline in July, but not enough to increase total open interest.
Yesterday, July crude made a high of 50.53 and this has been taken out with another new high of 51.34, which is the highest print since 51.58 made the week of July 20, 2015. We have continually warned clients to stand aside in crude and refrain from picking a top even though there are many analysts and financial pundits who claim lower prices are ahead.
At some point, prices will reverse, and OIA’s sell signals will guide you as to when bearish positions can be initiated. One of our major concerns about crude has been the dismal performance of gasoline during the peak driving season. The star performer in the product category has been heating oil. As this report is being compiled, there is now only a 3.00 cent spread between July heating oil and July gasoline.
The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.2 million barrels from the previous week. At 532.5 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories increased by 1.0 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 1.8 million barrels last week and are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 1.9 million barrels last week and are near the upper limit of the average range. Total commercial petroleum inventories increased by 3.2 million barrels last week.
August gold lost 40 cents on very light volume of 129,779 contracts. Total open interest increased by 3,682 contracts, which relative to volume is average. The June contract accounted for a loss of 1,080 of open interest. Yesterday the August contract made a daily high of 1249.00 and this has been taken out on June 8 with a new high for the move of 1267.20, which takes out the previous high print of 1262.30 made on May 19.
OIA has calculated a number of pivot points that gold must surpass for the uptrend to continue. First, it must make at least one daily low above our pivot point for June 8 of 1252.00, then a daily low above 1256.00 and finally a daily low above OIA’s key pivot point of 1266.50.
Each time the August contract makes a daily low above one of the pivot points, it increases the likelihood that the move will continue. Clients should wait for tomorrow’s session to see how well gold holds up when market conditions may be somewhat different. On June 8, the dollar index is trading substantially lower and this is giving a bid to all commodities across-the-board. August gold remains on short and intermediate term sell signals.
July silver lost 5.3 cents on volume of 73,648 contracts. Total open interest declined by 989 contracts, which relative to volume is approximately 45% below average. The July contract accounted for a loss of 8,611 of open interest. As this report is being compiled on June 8, the July contract is rocketing higher, up 62.1 cents or +3.79% versus gold which is up 1.28%.
For July silver to continue its advance it has to make at least one daily low above OIA’s pivot points. First, it must make a daily low above $16.659, then 16.795 and finally the confirmed buy signal will occur when silver makes a daily low above OIA’s key pivot point for June 8 of 16.994. The low on June 8 has been 16.390. Unlike gold, silver never generated an intermediate term sell signal. This is testimony to the strength of silver compared to gold and which has been the out performer year to date.
British pound: The June and September pound remain on short and intermediate buy signals.
The June British pound advanced 93 pips on heavy volume of 195,173 contracts. Total open interest exploded higher, up 12,466 contracts, which relative to volume is approximately 160% above average meaning aggressive new buyers were entering the British pound futures market and driving prices to a high of 1.4669.
As this report is being compiled on June 8, the June pound is trading 44 pips lower and has made a daily high of 1.4602. We strongly advise clients to avoid the pound-long or short. The market is too dangerous and volatility is at multi-year highs, which makes options extremely expensive.
Euro: On June 7, the June and September euro generated intermediate term buy signals after generating short term buy signals on June 6.
Swiss franc: On June 7, the June and September Swiss franc generated intermediate term buy signals after generating short term buy signals on June 6. We have no recommendation.
Canadian dollar: On June 7, the June and September Canadian dollar generated short-term buy signals and remain on intermediate term buy signals.
The June Canadian dollar gained 29 pips on substantial volume of 92,540 contracts. Total open interest exploded higher, up 7,049 contracts, which relative to volume is approximately 210% above average meaning aggressive new buyers were entering the market in substantial numbers and driving prices higher (78.53).
As this report is being compiled on June 8, the June Canadian dollar is trading 32 pips above yesterday’s close and has made another new high for the move of 79.02. The Canadian dollar will continue to be strong as long as the petroleum complex remains on short and intermediate term buy signals. We have no recommendation.
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