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

April gold advanced $16.40 on heavy volume of 258,623 contracts. Total open interest exploded higher by 25,944 contracts, which relative to volume is approximately 300% above average meaning aggressive new buyers were entering the market in huge numbers and driving prices to a new high for the move of 1 1269.30, which took out the previous high print of 1263.90 made February 11.

As this report is being compiled on March 4, the April contract is trading $11.20 higher after making another new high of 1280.70, which is the highest print since the week of February 2, 2015 when the April  2015 contract made a high of 1284.70. Obviously, the market is massively overbought and open interest stats show that new buyers are rushing into the market for fear of missing out on the move. We advise against entering new bullish positions at current levels and from the seasonal point of view both gold and silver prices tend to trade in a sideways pattern during March, April and May.

WTI crude oil: On March 3, April and May WTI crude oil generated short-term buy signals, but remain on intermediate term sell signals.

April WTI crude oil lost 9 cents on volume of 1,050,406 contracts. Total open interest declined just 526. The April contract accounted for a loss of 8,677 of open interest. As this report is being compiled on March 4, the April contract is rocketing higher, up $1.14 or + 3.27% and has made a new high for the move of 35.94, which is the highest print since 35.93 made on January 29.

Now that April WTI is finally on a short-term buy signal, the market should experience a pullback from 1-3 days, and this would be the time to initiate light bullish positions if you are so inclined. We have mixed feelings about the market because the fundamentals are terrible and yet sentiment remains extremely bearish.

Often, markets climb a wall of worry and we are seeing such action in a number of currencies and equity indices. In past reports, we said that gasoline needed to show some strength in order to support crude oil prices and it appears that it is finally joining the party..

Brent crude oil: On February 26, OIA announced that May Brent crude oil generated a short-term buy signal, but remains on an intermediate term sell signal.

May Brent crude oil advanced 14 cents on light volume of 726,128 contracts. However, total open interest exploded higher, by 35,468 contracts, which relative to volume is approximately 75% above average meaning a battle ensued between buyers and sellers and buyers were able to move the market slightly higher. The May contract gained 1,707 of open interest.

As this report is being compiled on March 4, the May contract is trading $1.47 higher or +4.02% and has made a daily high of 38.72, which is the highest print since 40.49 made on January 4. Since generating a short-term buy signal on February 26, the Brent contract has not had a pullback of any kind. This is a bit surprising considering the bearish sentiment in the market, however a pullback is overdue and will come from higher levels. We have no recommendation.

Dollar index:

The March dollar index lost 62.4 points on volume of 24,133 contracts. Total open interest declined by 923 contracts, which relative to volume is approximately 25% above average meaning liquidation was heavier than normal. On February 29, the March and June dollar index generated short-term buy signals and thus far has corrected on March 2 (-14 points) March 3 and March 4, 27.1 points lower.

Unless the buy signal is about to reverse, this should be the extent of the correction.The March dollar index will generate a short-term sell signal if the daily high is below OIA’s key pivot point for March 4 of 96.729. We don’t think this is in the cards and the main reason for the decline in the dollar index is the rally in the euro, which represents almost 58% of the movement of the dollar index. The euro is experiencing its counter trend rally after generating short and intermediate term sell signals during the past couple of days. We have no recommendation.

Euro:

The March euro advanced 91 pips on volume of 192,428 contracts. Total open interest increased by 1,122 contracts, which relative to volume is approximately 65% below average, but an open interest increase on yesterday’s price advance is positive. As this report is being compiled on March 4, the euro is experiencing the second day of a countertrend rally, after the generation of the short-term sell signal on February 29 and the intermediate term sell signal on March 1. With the meeting of the ECB next week, we recommend a stand aside posture in the euro.

Canadian dollar: On February 1, OIA announced that the March and June Canadian dollar generated short-term buy signals and intermediate term buy signals on February 26.

The March Canadian dollar advanced 16 pips on volume of 53,964 contracts. Total open interest increased by 1,525 contracts, which relative to volume is average. As this report is being compiled on March 4, the March Canadian dollar is trading 48 pips higher and has made a new high for the move of 75.08, which is the highest price since 75.08 made on December 4, 2015.

From January 20 when the March Canadian dollar made its low of 68.09 through today’s high, the March contract has gained an astounding 7.00 cents or approximately $$7000 per contract. Today, after the close, the COT report will be released and we will provide details in the upcoming Weekend Wrap, and still expect to see a substantial net short position in the Canadian dollar.

Our target for the March contract has been 75.85, and if the number of short-sellers remains at elevated levels, we expect this to be achieved next week. As we have said before, we think the Canadian dollar will be a terrific bearish opportunity, but want to see more short-sellers blown out of the market.

Australian dollar: On February 4, OIA announced that the March and June Australian dollar generated a short-term buy signal and intermediate term buy signals on February 23.

The March Australian dollar advanced 58 pips on volume of 86,343 contracts. Total open interest increased by a substantial  3,795 contracts, which relative to volume is approximately 60% above average, meaning that aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of 73.72. This was the third day in a row in which total open interest increased along with prices. 

As this report is being compiled on March 4, the March contract is trading higher again, this time by 83 pips and has made another new high for the move of 74.41, which is the highest print since 74.64 for the week of July 13, 2015. According to the latest COT report released last Friday, managed money was still net short the Australian dollar.

10 Year Treasury Note: The June 10 year treasury note generated a short-term sell signal on March 3 and remains on an intermediate term buy signal.

The June 10 year note advanced 5.5 points on volume of 1,161,803 contracts. Total open interest declined by 20,526 contracts, which relative to volume is approximately 25% below average. As this report is being compiled on March 4, the June contract is trading 15 points lower on the day and has made a new low for the move of 128-295, which is the lowest print since 128-300 made on February 2.

On January 6, the March 10 year note generated a short-term buy signal and an intermediate term buy signal on January 14, 2016. Now that the 10 year note is on a short-term sell signal, the market should have a counter trend rally lasting 1-3 days and this will be the opportunity to initiate bearish positions.

S&P 500 E-mini: On February 18, OIA announced that the March S&P 500 E-mini generated a short-term buy signal, but remains on an intermediate term sell signal. An intermediate term buy signal will occur if the daily low is above OIA’s key pivot point for March 4 of 1997.00

The March S&P 500 E-mini advanced 7.00 points on volume of 1,593,375 contracts. Volume was slightly below that of February 23 when 1,609,995 contracts were traded and total open interest increased by 1,273 contracts while the March E-mini lost 28.05 points. On March 3, total open interest increased by 26,095 contracts, which relative to volume is approximately 35% below average. Total open interest has increased on every advance since February 22 and during this time there have been six days when the E-mini has advanced. This is bullish and indicates that short sellers are not convinced the rally is for real.

As this report is being compiled on March 4, the March contract is trading 10.25 points higher and is made a new high for the move of 2007.50, which is the highest print since 2013.25 made on January 6. We have no recommendation