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Coffee: On March 7, May New York coffee generated a short-term buy signal, but remains on an intermediate term sell signal. We have no recommendation.

Soybean meal: On March 7, May soybean meal generated a short-term buy signal, but remains on an intermediate term sell signal. We have no recommendation.

Soybeans: On March 7, May soybeans generated a short-term buy signal, but remains on an intermediate term sell signal. We have no recommendation.

Kansas City wheat: On March 7, May Kansas City wheat generated a short-term buy signal, but remains on an intermediate term sell signal. We have no recommendation.

WTI crude oil:

April WTI crude oil gained $1.98 on heavy volume of 1,392,057 contracts. Volume was the strongest since February 17 when WTI advanced $2.01 on volume of 1,487,268 contracts and total open interest declined by 57,512. On March 7, total open interest increased only 6,991 contracts, which is substantially below average. However, the April contract lost 49,086 of open interest, which means there were sufficient open interest increases in the forward months to offset all the decline in the April contract and increase total open interest slightly. We view yesterday’s action as bullish.

On March 3, April WTI crude oil generated a short-term buy signal and continued its advance on March 4 and March 7. Today, however, we are seeing the usual correction after the generation of the buy signal. Currently, the April contract is trading $1.12 lower and has made a daily low of 36.54, which is the lowest print since 36.09 made on March 7.

Overnight, the April contract made a high of 38.39, which is slightly above yesterday’s print of 38.11. There may be another day or two of corrective activity and the April contract should find support at $35.99-35.49. Conceivably, if the EIA report is extremely bearish and the market reacts badly, a pullback to 34.88 is not out of the question. For those adventurous enough to test the water on the bullish side, we recommend waiting until after tomorrow’s EIA report before considering light bullish option positions. For those of you who subscribe to OIA-Direct, please call with any question.

Brent crude oil: On March 7, May Brent crude oil generated an intermediate term buy signal after generating a short-term buy signal on February 26.

May Brent crude oil advanced $2.12 on volume of 913,199 contracts. Total open interest increased by 5,622 contracts, which is substantially below average. However, the May contract lost 29,243 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 slightly. We view yesterday’s activity as somewhat bullish, but not as bullish as the action in WTI.

As this report is being compiled on March 8, the May contract is trading 1.09 lower and has made a daily low of 39.63, which is above yesterday’s print of 38.96. Our view with regard to light bullish positions in WTI applies to Brent as well. Wait until after the EIA report.

Heating oil: On March 7, April and May heating oil generated intermediate term buy signals, after generating short term buy signals on February 8.

April heating oil advanced 6.12 cents on volume of 155,369 contracts. Total open interest declined by 1,292 contracts, which relative to volume is approximately 55% less than average. The April contract lost 5,455 of open interest, which means there were NOT enough open interest increases in the forward months to offset the decline in April.

We know based upon the most recent COT report that managed money is short heating oil by over a 2 to 1 ratio. As this report is being compiled on March 8, the April contract is trading 1.68 cents lower on the day after making a new high for the move of 1.2425, which is the highest print since 1.2544 made on December 10, 2015. We have no recommendation.

Gasoline: On March 7, April and May gasoline generated short-term buy signals, but remain on intermediate term sell signals.

April gasoline advanced 6.06 cents on volume of 165,904 contracts. Total open interest declined by 692 contracts, which relative to volume is approximately 70% below average, and yesterday’s total open interest decline is negative. The April contract lost 7,701 of open interest, which means that there were NOT sufficient open interest increases in the forward months to offset the decline in April. As this report is being compiled on March 8, the April contract is trading 1.05 cents lower on the day after making a new high for the move of 1.4160, which is the highest print since 1.4221 made on January 8. We have no recommendation.

British pound:

The March British pound advanced 49 pips on volume of 124,532 contracts. Volume increased from March 4 when the March contract gained 42 pips on volume of 113,293 contracts and total open interest declined by 3,515. On March 7, total open interest increased by 2,351 contracts, which relative to volume is approximately 25% below average, but the total open interest increase on yesterday’s advance is positive.

With the exception of March 4, total open interest has increased each time the pound advanced beginning on March 2. This increases our reluctance to recommend bearish positions at this juncture. In other words, new buying is moving prices higher, not short covering, which would be a bearish set up. We still think the pound will test the February 29 low of 1.3835, but it may not occur immediately. Also, the ECB will make its announcement on March 10, and it is difficult to ascertain the impact this will have on the pound. We continue to recommend a stand aside posture.

Canadian dollar:

The March Canadian dollar advanced 27 pips on volume of 73,269 contracts. Total open interest exploded higher, up by 5,643 contracts, which relative to volume is approximately 210% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of 75.40, which is the highest print since November 2015.

Beginning on March 3 through March 7, the March Canadian dollar has advanced each day and total open interest has increased as well. The consistency of the open interest increase continues to confirm that short sellers are not capitulating, which leads us to believe that higher prices are ahead. However, on March 8, the March contract is trading 62 pips lower, as crude oil is lower on the day as well. Although we are bearish on the Canadian dollar, we think a stand aside posture makes the most sense at this juncture.

Australian dollar:

The March Australian dollar advanced 46 pips on volume of 94,972 contracts. Volume shrank substantially from March 4 when the March contract gained 70 pips on volume of 122,037 contracts and total open interest increased by a disappointing 422. On March 7, total open interest increased by 2,896 contracts, which relative to volume is approximately 10% above average meaning aggressive new buyers were entering the market in above average numbers and driving prices to a new high of 74.82. As this report is being compiled on March 8, the March contract is trading 11 pips lower and has not taken out yesterday’s high. The March Australian dollar remains on short and intermediate term buy signals. We have no recommendation.

10 Year Treasury Note:

The June 10 year treasury note lost 5.5 points on light volume of 896,779 contracts. Total open interest declined by a substantial 30,945 contracts, which relative to volume is approximately 25% above average meaning liquidation was substantial on the minor decline as the June contract made a new low for the move of 128-265, which is the lowest print since 128-310, made on January 29.

On March 3, OIA announced that the June contract generated a short-term sell signal and remains on an intermediate term buy signal. Today, March 8 is the first day of the counter trend rally to occur after the generation of a sell signal, and this could carry through tomorrow, but with the ECB announcement on Thursday, we are reluctant to recommend bearish positions.

S&P 500 E-mini:

The March S&P 500 E-mini advanced 4.00 points on volume of 1,714,503 contracts. Total open interest increased by 37,642 contracts, which relative to volume is approximately 20% below average, but yesterday’s open interest increased on the price advance continues the pattern that has been in place since February 22 when on every positive close, total open interest increases. On March 4, the March contract gained 4.50 points and total open interest increased by 20,102.

The continuing increase of total open interest on price advances confirms that new buyers are pushing prices higher and that short sellers refuse to capitulate. In our Sunday special report titled: “WTI On Buy Signal-AAPL On Buy Signal-Emini Open Interest Increases Positive for Rally,” we discussed that open interest increases were fueling the advance and that short sellers were holding firm. The market is in a period of corrective activity and we expect a move to the 1950.00 level before the market resumes its uptrend.