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10 Year U.S. Treasury Note: The June 10 Year US Treasury Note will generate a short term sell signal on May 4. The June contract remains on an intermediate term buy signal.

Gold: June 2017 New York gold will generate an intermediate term sell signal on May 4 after generating a short term sell signal on May 2.

June gold lost $8.50 on volume of 267,607 contracts. Total open interest declined just 2,638 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on May 4, the June contract is trading sharply lower, down $18.20 or -1.46% on heavy volume and has made a new low for the move of $1225.70, which is the lowest print since 1221.30 made on March 16.

The COT report released last Friday revealed that managed money was caught massively long at the top of the market and the ratio derived from the report as of April 25 showed that managed money was long by a ratio of 4.41:1, up from the previous week of 4.17:1 and the ratio two weeks ago of 3.84:1. In summary, there are large numbers of speculative longs in the gold market who will be forced to liquidate as prices continue their move lower. We have no recommendation.

Copper:

On May 3, July New York copper lost 9.20 cents on very heavy volume of 127,273 contracts. However, very surprisingly, total open interest declined only 895 contracts, a number that is approximately 70% below average. The COT report released last Friday revealed that managed money was long as of April 25, (the COT tabulation date) by a ratio of 1.93:1, up from the previous week of 1.89:1, but down from the ratio 2 weeks ago of 2.39:1.

In summary, there were large numbers of speculators who did not liquidate in yesterday’s horrific decline. On May 1, when we wrote the report for April 28, we noted that copper was getting close to generating a short term buy signal and said the July contract had to make a daily low above our key pivot point for May 1 of $2.6335. In subsequent days July copper was unable to accomplish this.

Interestingly, on May 1 when copper made its high of $2.6945 and closed up 5.30 cents, total open interest increased by a massive 2,557, which relative to volume of 57,843 contracts was approximately 75% above average. Yet when copper experienced yesterday’s massive decline of twice the May 1 gain, total open interest declined substantially below average.

Market participants were quick to buy and push up prices on May 1 but very reluctant to sell on May 3 as prices crashed. Lower prices ahead.

From the April 28 report on NY copper:

Copper: July New York copper is getting close to generating a short term buy signal and this will occur if the daily low is above OIA’s key pivot point for May 1 of $2.6335. The low on May 1 is 2.5940.

WTI crude oil:

June WTI crude oil advanced 16 cents on volume of 1,118,818 contracts. Total open interest increased by 17,984 contracts, which relative to volume is approximately 35% below average. The June contract lost 2,270 of open interest. As this report is being compiled on May 4, the June contract is trading sharply lower, down $1.93, or -4.02%, heating oil is trading 3.67% lower while gasoline -3.41%.

On April 24, OIA announced that June WTI crude oil generated a short term sell signal and had been on an intermediate term sell signal. The massive long position held by speculators is unwinding as prices move to multi-month lows. Today, the June contract has made a low of $45.63, which is the lowest print on the daily continuation chart since November 30, 2016 when the January 2017 contract made a low of 45.22. We have no recommendation.

Yen: The June yen will generate an intermediate term sell signal on May 4 provided the daily high remains below OIA’s key pivot point for May 4 of .8920. On April 26, OIA announced that the June Japanese yen generated a short term sell signal.

The June yen lost 49 pips on volume of 122,143 contracts. Total open interest declined by just 446 contracts, a number that is approximately 85% below average. This indicates that market participants were not panicking during yesterday’s decline even though the June contract fell to .8881, the lowest print since .8846 made on March 17.

As this report is being compiled on May 4, the June contract is trading 6 pips above yesterday’s close and has made a daily high of .8909, which is below OIA’s key pivot point for the generation of an intermediate term sell signal. The COT report, which was tabulated on April 25 and released last Friday revealed that managed money was heavily long the yen, by a ratio of 2.01:1, which was up sharply from the previous week of 1.47:1 and almost double the ratio two weeks before of 1.21:1. Tomorrow the new COT report will be released and we will have a better fix on the extent to which professional money managers have liquidated long positions. We have no recommendation.

Soybean oil: On May 3, July soybean oil generated a short term buy signal, and remains on an intermediate term sell signal.

July soybean oil lost 6 points on volume of 72,082 contracts. Total open interest declined by massive 3,625 contracts, which relative to volume is approximately 100% above average meaning liquidation was extremely heavy on yesterday’s modest decline. As this report is being compiled on May 4, the July contract is trading unchanged on the day, but has made a new high for the move of 32.91, which takes out yesterday’s print of 32.75 and the May 2 print of 32.80 and is the highest since 32.92 made on March 29. As we have said in previous notes on the soybean complex, soybean oil will provide support for higher soybean prices. Our preferred trade is the long side of soybeans.

Soybeans:

July soybeans advanced 6.50 cents on light volume of 132,150 contracts. Total open interest declined by a substantial 4,455 contracts, which relative to volume is approximately 25% above average. Yesterday’s advance coupled by low volume and decline of open interest is negative. If we continue to see this kind of action, we will abandon our bullish tilt. The May 2017 contract, which goes off the board shortly lost 1,970 of open interest, which means there were additional open interest losses in the forward months.

As this report is being compiled on May 4, the July contract is trading 2.50 cents lower or -0.26% while July corn is trading sharply lower, -2.27% and much of this is due to the very sharp decline in crude oil, which is affecting the ethanol market. Chicago and Kansas City wheat are finally correcting some of the past day’s excesses.

For the soybean trade to gain substantial traction, soybean meal needs to generate a short term buy signal and this is not going to occur on May 4. Also, it would definitely help if corn was able to generate a short term buy signal and based upon the way it is trading will not likely occur until next week. Yesterday, we recommended the initiation of bullish positions . We think it is a fairly low risk trade. Please call or email with any question.