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Sugar: On March 2, May New York sugar generated an intermediate term buy signal after generating a short-term buy signal on February 24.

May New York sugar advanced 28 points on volume of 116,297 contracts. Total open interest increased by 2,789 contracts, which relative to volume is approximately 10% below average. The May contract lost 508 of open interest. As this report is being compiled on March 3, the May contract is trading 15 points higher and has made a new high for the move of 14.85, which is the highest print since 14.78 made on January 20. We have no recommendation.

Copper: On March 2, May New York copper generated an intermediate term buy signal after generating a short-term buy signal on February 4.

May copper advanced 3.55 cents on volume of 83,294 contracts. Total open interest increased by a sizable 4,032 contracts, which relative to volume is approximately 75% above average meaning aggressive new buyers were entering the market in large numbers and sending the May contract to a new high for the move of $2.2000. As this report is being compiled on March 3, the May contract has made another new high of 2.2065, which is the highest print since 2.2612 made the week of November 16, 2015. We have no recommendation.

WTI crude oil: April and May WTI crude oil will generate a short-term buy signal on March 3, but both contracts remain on intermediate term sell signals.

April WTI crude oil advanced 26 cents on healthy volume of 1,072,478 contracts. Total open interest increased by 14,662 contracts, which relative to volume is approximately 40% below average, but the total open interest increase in yesterday’s trading on the price advance is the third in a row.

In summary, prices have been advancing and open interest has been increasing, which indicates that new buyers are moving prices higher. The April contract lost 5,380 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in April and increase total open interest.

As this report is being compiled on March 3, the April contract is trading 4 cents lower after making a new high for the move of $35.32, which takes out yesterday’s print of 35.17. As we mentioned in yesterday’s report, the major drag on crude oil is the abysmal performance of gasoline, which currently is trading 2.06 cents lower while WTI is nearly unchanged. As a result, gasoline will not generate a short-term buy signal today and the inability of it to do so may portend a reversal of today’s buy signal in WTI. We have no recommendation.

Gold: On January 7, 2016 OIA announced that April gold generated a short-term buy signal and an intermediate term buy signal on January 26.

April gold advanced $11.00 on volume of 204,154 contracts. Total open interest increased by 6,439 contracts, which relative to volume is approximately 10% above average. As this report is being compiled on March 3, the April contract is trading $15.60 higher and has made a new high for the move of 1261.30, which is slightly below 1263.90, the high made on February 11 when the major indices were making new lows.

Today, J.P. Morgan made a recommendation to buy gold and underweight equities. This is giving gold bid even though the indices are trading modestly lower. April gold has just experienced a 50 day moving average cross above the 200 day moving average, which puts the gold market on a solid bullish footing. However, we remain concerned that silver is lagging badly. Usually and almost without exception, gold and silver move pretty much in tandem.

Gold should be well supported at the 1210.90 level and below this, 1195.20. We believe that a major new thrust higher in gold will occur when the equity market rolls over. Additionally, the European Central Bank will be making its quantitative announcement on March 10 and this could give gold another bid. At this point, we have no specific recommendation.

Euro:

The March euro lost 2 pips on light volume of 168,646 contracts. Total open interest increased by 2,077 contracts, which relative to volume is approximately 45% below average. As this report is being compiled on March 3, the March contract is having its usual counter trend rally after the generation of sell signals and trading 77 pips higher. On February 29, the March and June euro generated short-term sell signals and intermediate term sell signals on March 1. The counter trend rally could carry for another day or two. The announcement by the ECB is going to be driving trading in the euro, and we think a stand aside posture is most prudent at this time.

British pound:

The March pound advanced 1.22 cents on strong volume of 105,316 contracts. Surprisingly, total open interest increased by a massive 6,704 contracts, which relative to volume is approximately 140% above average meaning aggressive new buyers were entering the market and driving prices to a new high for the move of 1.4093. As this report is being compiled on March 3, the March contract is trading 63 pips higher and has made a new high for the move of 1.4190, which is the highest print since 1.4192 made February 22.

Yesterday’s sharp move did not shake short-sellers out of the market, and the pound may continue its rally, especially if short-sellers begin to panic. From February 29 when the March pound bottomed at 1.3835 through today’s high, the March contract has advanced 3.55 cents The March pound remains on short and intermediate term sell signals. We have no recommendation.

Australian dollar:

The March Australian dollar advanced 1.23 cents on volume of 116,568 contracts. Total open interest increased by a massive 9,776 contracts, which relative to volume is approximately 230% above average meaning aggressive new buyers were entering the market in massive numbers and driving prices to a new high for the move of 72.98.

As this report is being compiled on March 3, the March contract is making another new high at 73.72, which is the highest print since 73.84 made on December 4, 2015. On February 4, the March and June Australian dollar generated short-term buy signals and intermediate term buy signals on February 23. We have no recommendation.

S&P 500 E-mini:

The March S&P 500 E-mini advanced 5.50 points on volume of 1,851,319 contracts. Total open interest increased by 17,730, which relative to volume is approximately 55% below average. This follows the very modest open interest increase of 3,545 on March 1 when the March contract gained 48.50 points on volume of 2,055,557.

As this report is being compiled on March 3, the March contract is trading 4.00 points higher and has taken out yesterday’s high with another new print of 1988.75. On February 18, the March and June S&P 500 E-mini generated short-term buy signals and for an intermediate term buy signal to occur, the low of the day must be above OIA’s key pivot point for March 3 of 1997.00.

The real test of the market is whether the E-mini has the strength to make a low above the pivot point. For prices to continue to advance, there must be a sufficient number of new buyers entering the market or short-sellers looking to cover. We think the major indices have entered into a bear market, and  that the risk lies on the downside. In summary, we would rather miss upside opportunity, then risk potential losses caused by a resumption of the down trend. We have no specific recommendation to make.