Bloomberg Access:{OIAR<GO>}

Cocoa: On May 12, July New York cocoa generated a short-term sell signal, but remains on an intermediate term buy signal. We have no recommendation.

Corn:

July corn advanced 11.50 cents on volume of 343,716 contracts. Surprisingly, volume was tame considering the magnitude of the advance. For example, on May 11, the July contract lost 3.50 cents, and volume traded was 307,910 while open interest declined by 9,428. On May 10, July corn advanced 12.00 cents on volume of 463,439 and total open interest increased by 6,495. In summary, many would be participants were sitting on the sidelines in yesterday’s trading.

On May 12, total open interest increased by 10,254 contracts, which relative to volume is approximately 5% above average. The May contract lost 414 of open interest, July -4,861, which means there were sufficient open interest increases in the forward months to offset the decline in the two delivery months and increase total open interest slightly above average.

As this report is being compiled on May 13, the July contract is trading 1.50 cents higher and has taken out yesterday’s print with a new high for the move of 3.91 1/4, which is the highest print since 3.95 made on May 3. July corn remains on short and intermediate term buy signals. We have no recommendation.

WTI crude oil:

June WTI crude oil advanced 47 cents on volume of 1,305,445 contracts. Total open interest increases respectably, up by 28,538 contracts, which relative to volume is approximately 20% below average. The June contract lost 16,707 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. Yesterday was the most positive price and open interest action seen recently. For example, on May 10 and 11 June crude advanced by a total of $2.79 while total open interest declined by 19,894 contracts in the two day time frame.

As this report is being compiled on May 13 the June contract is trading 49 cents below yesterday’s close and has made a daily high of 46.49, which is below yesterday’s contract high of $47.02. June WTI remains on short and intermediate term buy signals. We have no recommendation.

Gold:

June gold lost $4.30 on substantial volume of 264,690 contracts. Total open interest declined by 7,519 contracts, which relative to volume is average. The June contract, which enters first noticed day in a couple of weeks lost 13,529 of open interest. As this report is being compiled on May 13 the June contract is trading $1.50 higher on the day and has made a daily low of 1264.00, which is above yesterday’s print of 1262.90 and the low for the move of 1258.30 made on May 10. We continue to recommend a stand aside posture.

From the May 11 research note on gold:

“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.”

Dollar index:

The June dollar index advanced 33.8 points on volume of 19,157 contracts. Total open interest exploded higher, up 961 contracts, which relative to volume is approximately 100% above average meaning aggressive new buyers were entering the market in substantial numbers and driving prices higher (94.160).

As this report is being compiled on May 13 the June contract is trading 54.1 points above yesterday’s close and has made a daily high of 94.845, which is the highest print since 94.820 made on April 27. As we alluded to yesterday in the research note on gold, we think the dollar index will generate a short-term buy signal, and this will occur if the daily low is above OIA’s key pivot point for May 13 of 94.324. We have no recommendation.

Euro:

The June euro lost 52 pips on volume of 130,348 contracts. Total open interest declined by 3,480 contracts, which relative to volume is average. As this report is being compiled on May 13, the June contract is trading 81 pips lower and has made a daily low of       1.1292, which is the lowest print since 1.1286 made on April 27. The June contract is getting close to generating a short-term sell signal and this will occur if the daily high is below OIA’s key pivot point for May 13 of 1.1344. We have no recommendation.

British pound: The June British pound will generate a short-term sell signal if the daily high is below OIA’s key pivot point for May 13 of 1.4395.

The June British pound closed unchanged on May 12 on volume of 96,397 contracts. Total open interest increased by 1,889 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on May 13 the June contract is trading 83 pips lower and has made a daily low of 1.4340, which is the lowest print since 1.4314 made on April 22.

The British pound volatility index has been climbing during the past several days, which has made options more expensive. However, we recommend waiting until a short-term sell signal is generated, and then for the counter trend rally to occur, before initiating bearish positions. Keep in mind that the vote to exit the European Union is still six weeks away.

Australian dollar:

The June Australian dollar lost 48 pips on volume of 98,362 contracts. Total open interest declined by 1,743 contracts, which relative to volume is approximately 30% below average. As this report is being compiled on May 13, the June contract is trading 51 pips lower and has made a daily low of 72.46, which is the lowest print since 72.79 made on March 3.

On May 4 the June and September Australian dollar generated short-term sell signals and intermediate term sell signals on May 9. Since generating the sell signals, the Aussie has not had much of a rally to enable clients to initiate bearish positions. We recommend against chasing the bearish trade. The Aussie could have a very strong counter trend move at any time.