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Cocoa: On May 12, July New York cocoa will generate a short-term sell signal, but remains on an intermediate term buy signal.

Cotton: On May 11, July cotton generated a short-term sell signal, but remains on an intermediate term buy signal.

WTI crude oil:

June WTI crude oil advanced $1.57 on huge volume (possibly record-setting) of 1,619,208 contracts. Total open interest declined by 6,900 contracts, which relative to volume is approximately 80% below average, but a total open interest decline on yesterday’s strong advance is distinctly negative. The June contract accounted for a loss of 48,072 contracts, which means there were not enough open interest increases in the forward months to offset the decline in June.

Yesterday’s negative activity follows that of May 10 when the June contract gained $1.22 on volume of 1,264,283 contracts and total open interest declined by 12,715. This confirms that new buying is not moving prices higher, rather short covering has been the dominant feature driving prices for the past two days.

As this report is being compiled on May 12, the June contract is trading 19 cents lower after making a new contract high of 47.02, which takes out the April 29 print of 46.78. June WTI remains on short and intermediate term buy signals. We have no recommendation.

Heating oil:

June heating oil advanced 5.92 cents on volume of 183,684 contracts. Total open interest increased by 2,162 contracts, which relative to volume is approximately 50% below average. However the June contract accounted for a loss of 4,155 which means there were sufficient open interest increases in the forward months to offset the decline in June and increase total open interest.

Still, the open interest increase was less than impressive considering the magnitude of the move. The COT report released last Friday showed that managed money finally assumed a net long position for the first time in at least several months. The ratio showed that managed money was long by 1.14:1 which was a complete reversal from the previous week when they were short by ratio of 1.02:1 and the ratio two weeks ago when managed money was short by 1.29:1. As this report is being compiled on May 12 the June contract is trading 1.54 cents lower. We have no recommendation. Heating oil remains on short and intermediate term buy signals.

Gasoline:

June gasoline advanced by a massive 9.58 cents on very heavy volume of 277,901 contracts. As impressive as the volume was, the total open interest increase left much to be desired having gained just 3,366, which relative to volume is approximately 45% below average. The June contract accounted for a loss of 7,360 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in June and increase total open interest.

Still, considering the magnitude of the move and the fact that gasoline is entering its prime period of consumption, the total open interest increase on the massive advance confirms the unimpressive performance of petroleum products. The COT report revealed that managed money was long (the report was tabulated on May 3) by ratio 1.94:1, which was down from the previous week of 2.14:1 and the ratio two weeks ago of 1.96:1. Gasoline remains on short and intermediate term buy signals. We have no recommendation.

Gold:

June gold advanced $10.70 on very heavy volume of 328,026 contracts. Volume was the strongest since May 6 when the June contract gained $21.70 on volume of 294,315 contracts and total open interest increased by a massive 21,848. On May 11, total open interest increased by 6,113, which relative to volume is approximately 25% below average, but it should be noted the June contract lost 21,911 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in June and increase total open interest.

As this report is being compiled on May 12, the June contract is trading $3.50 lower and has made a daily high of 1282.50, which is slightly above yesterday’s print of 1280.80. We continue to advise a stand aside posture because in our view, it appears increasingly likely the dollar index may generate a short-term buy signal in the not-too-distant future. Also, from a seasonal point of view, precious metals performance during the early summer months tends to be lackluster. As we have pointed out before, managed money is massively long gold and according to the latest COT report they are holding longs by a ratio of 8.31:1.

Yen:

The June yen advanced 70 pips on light volume of 85,252 contracts. Total open interest declined by 2,054 contracts, which relative to volume is average. The yen has displayed consistent negative open interest action relative to price advances and declines. We think it is likely the yen will generate a short-term sell signal, and this would occur if the daily high is below OIA’s key pivot point for May 12 of .9154. As this report is being compiled on May 12 the June contract is trading 38 pips lower and has made a new low for the move of .9146, which takes out yesterday’s print of .9152. We have no recommendation.

Canadian dollar:

The June Canadian dollar advanced 52 pips on light volume of 64,522 contracts. Total open interest declined by 387 contracts, which relative to volume is approximately 70% below average, however a total open interest decline on yesterday’s price advance is negative. This follows consistent negative open interest action on price advances and declines.

For example, on May 10 the June contract gained 23 pips on volume of 58,890 contracts and total open interest declined by 1,357. On May 9 when the June contract declined 16 pips on volume 67,556 total open interest increased by 492. The negative open interest action confirms the short term sell signal for the Canadian dollar, which occurred on May 6. OIA-Direct clients, please call for recommendations.

S&P 500 E-mini:

The June S&P 500 E-mini lost 19.50 points on light volume of 1,478,412 contracts. Total open interest declined by 26,470 contracts, which relative to volume is approximately 25% below average. As this report is being compiled on May 12, the June contract is trading 4.75 points lower and has made a daily low of 2048.50, which is the lowest print since 2048.00 made on May 10.

On May 6, the June E-mini generated a short-term sell signal, and thus far the market is beginning to show weakness on a fairly consistent basis. Rallies are met by selling and the performance of the NASDAQ 100 continues to weigh down U.S. indices. Although we are bearish, we are not ruling out the possibility of a final thrust higher to test the April 20 high of 2105.25. We have no recommendation at this juncture