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Lean hogs: On April 1, June lean hogs will generate a short-term sell signal. The June contract remains on an intermediate term buy signal.

June lean hogs lost 70 points on volume of 30,484 contracts. Total open interest declined by a massive 2,362 contracts, which relative to volume is approximately 210% above average meaning liquidation was extremely heavy on yesterday’s decline. The April contract accounted for loss of 2,167 of open interest.

As this report is being compiled on April 1, the June contract is trading 1.75 cents lower on the day and has made a daily low of 78.800, which is the lowest print since 78.825 made on February 22. According to the latest COT report tabulated on March 22, managed money is long lean hogs by ratio of 4.18:1, which is very close to the high ratio of 4.32:1 recorded for 2016 the previous week.

In summary, there are large numbers of speculators who will be forced to liquidate as prices move lower. Wait for the counter trend rally before initiating new bearish positions.

Corn: May corn will generate short and intermediate term sell signals on April 1. This reverses the short-term buy signal of March 14 and the intermediate term buy signal of March 22.

May corn lost 15.50 cents on exchange record volume in corn of 930,250 contracts on a very bearish Planting Intentions Report released by the USDA. Total open interest increased by a massive 56,491 contracts, which relative to volume is approximately 140% above average meaning huge numbers of new short-sellers were entering the market and driving prices to a new contract low of 3.47 1/2. The May contract gained 15,345 of open interest.

As this report is being compiled on April 1, the May contract is trading 1.00 cent lower and has made another contract low of 3.47 1/4, but this is above the 52 week low of 3.46 3/4 made the week of June 15, 2015. We have no recommendation.

Soybeans:

May soybeans advanced 1.75 cents on heavy volume of 361,828 contracts. Total open interest increased by 13,687 contracts, which relative to volume is approximately 25% above average meaning a battle ensued between buyers and sellers and buyers were able to edge the market slightly higher. The May contract gained 2,299 of open interest.

As this report is being compiled on April 1 the May contract is trading 2.25 cents higher and has made a daily high of 9.18, which is the highest print since 9.19 3/4 made on October 14, 2015. May soybeans remain on short and intermediate term buy signals. We have no recommendation.

WTI crude oil:

May WTI crude oil advanced 2 cents on volume of 887,756 contracts. Total open interest increased by a sizable amount for the third day in a row, this time by 22,799, which relative to volume is average. On March 29, the May contract lost $1.11 and total open interest increased by 21,215 and on March 30 the contract gained 4 cents and total open interest increased by 13,495.

In summary, from March 29 through March 31 total open interest has increased by 57,509 contracts while the May contract lost $1.05. Clearly shorts are in control and as this report is being compiled on April 1, the May contract is trading $1.48 lower and has made a new low for the move of 36.72, which is the lowest print since 36.86 made on March 15. The May contract is headed toward a short-term sell signal, and this will occur when the daily high is below OIA’s key pivot point for April 1 of 37.52. No recommendation

From the March 29 research note on crude oil:

“The market is getting close to generating a short-term sell signal and this would occur if the daily high is below OIA’s key pivot point for March 30 of 37.32.For the rally to resume, the low of the day must be above OIA’s pivot point for March 30 of $38.92.”

Natural gas:

May natural gas lost 3.7 cents on volume of 421,288 contracts. Total open interest increased by 9,416 contracts, which relative to volume is approximately 10% below average, but a total open interest increase on yesterday’s decline is negative. Additionally, the May contract lost 1,109 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in May and increase total open interest.

As this report is being compiled on April 1, the May natural gas contract is trading unchanged on the day and has made a daily low of 1.925, which is slightly below yesterday’s print of 1.930. In yesterday’s report, we suggested a trade that involved either shorting out of the money puts in the nearby contract or buying calls in more distant months.

Everyone knows the fundamentals for natural gas are bearish, but it is entering its period of seasonal strength and it should be noted that commercial interests in the COT report, which was tabulated on March 22 showed that commercials were net long by 5,750 contracts. This is not a group of people whose actions should be taken lightly. The COT report also revealed that managed money is short by ratio of 1.61:1, however, this is down from 1.77:1 the previous week and 1.92:1 the ratio of two weeks ago.

Euro:

The June euro advanced 52 pips on volume of 231,738 contracts. Total open interest increased by 6,644 contracts, which relative to volume is average. March 31 was the fourth day in a row in which the euro advanced along with open interest. This is very strong bullish action, and it will be interesting to see whether the net short position of leverage funds has been reduced in this week’s COT report. On March 29, the date for tabulation of this week’s report, the euro advanced 94 pips and total open interest increased by 5,809 contracts.

As this report is being compiled on April 1 the June contract is trading 8 pips above yesterday’s close and has made another new high of 1.1462, which is the highest print since 1.1505 made on October 15, 2015. As we have said before, the euro should be traded from the long side only. We have no recommendation.

British pound:

The June British pound lost 16 pips on volume of 96,251 contracts. Volume was the highest since March 29 when the June contract gained 1.26 cents on volume of 94,329 and total open interest declined by 1,028 contracts. On March 31, total open interest declined by a massive 4,687 contracts, which relative to volume is approximately 75% above average meaning liquidation was extremely heavy on the modest decline.

As this report is being compiled on April 1, the June contract is trading sharply lower, down 1.49 cents and is the weakest currency of the major currencies we follow. Remarkably, the June contract has not generated a short-term sell signal, and astoundingly, the British pound volatility index is actually trading 12% below yesterday’s close. In short, the pound is sharply lower, but volatility is declining. This tells us that the current move down is market noise and the trend is still higher in the pound. We continue to recommend a stand aside posture.

Silver: May silver will generate a short-term sell signal if the daily high is below OIA’s key pivot point for April 1 of $15.284. It appears likely the short term sell signal could come as early as Monday. The May contract remains on an intermediate term buy signal.

Gold:

June gold advanced $7.00 on light volume of 127,729 contracts. Total open interest increased by 3,179 contracts, which relative to volume is average. The April contract lost 1,054 of open interest. Yesterday’s performance was positive, but yesterday’s high of 1242.30 was below that of the March 30 high of 1246.80 and the March 29 print of 1245.20.

In summary, gold has been making a series of irregular lower highs and lower lows. As this report is being compiled on April 1, the June contract is trading $13.70 lower and is made a daily low of 1210.30, which is the lowest print since 1207.70 made on March 28. On March 24, OIA announced that June gold generated a short-term sell signal and currently it remains on an intermediate term buy signal. We continue to recommend a stand aside posture.