Bloomberg Access:

Live cattle:

October live cattle advanced 1.125 cents on volume of 75,945 contracts. Volume increased from September 13 when the October contract lost 1.025 cents on volume of 66,694 contracts and total open interest declined just 20 contracts. On September 14, total open interest increased by 648 contracts, which relative to volume is approximately 55% below average, but a total open interest increase on yesterday’s advance is positive. The October contract lost 6,822 of open interest, which means there were more than enough open interest increases in the forward months to offset the decline in October and increase total open interest.

Yesterday’s price and open interest action is the most positive we have seen recently. On two occasions (September 12 and September 9) when prices advanced, total open interest declined. For example, on September 12 the October contract gained 1.30 cents on volume of 99,088 contracts and total open interest declined by 2,132. On September 9, October gained 3.00 cents on volume of 91,424 and total open interest declined by 3,773.

As this report is being compiled on September 15, the October contract is trading higher again, up 1.25 cents on light volume and has made a daily high of 107.500, it is the highest print since 108.450 made on August 31.The October contract is getting close to generating a short term buy signal, although we think it will struggle to do so at this point. For a short term buy signal to occur, the low of the day must be above OIA’s key pivot point for September 15 of 107.620. It should be noted that the October contract made its contract low of 99.375, a multi-year low on September 6 and we expect an attempt to test this low before a bottom is finally in. Continue to stand aside.

WTI crude oil:

October WTI crude oil lost $1.32 on strong volume of 1,400,582 contracts. Volume exceeded that of September 13 when the October contract lost 1.39 on volume of 1,296,220 contracts and total open interest declined by 8,737. Additionally, volume exceeded that of September 9 when the October contract lost 1.74 and volume of 1,236,748 and total open interest declined by 44,153.

On September 14, total open interest increased by 26,070 contracts, which relative to volume is approximately 25% below average, but a total open interest increase on yesterday’s decline is bearish and indicates that new short-sellers were entering the market at the low-end of the recent trading range. The October contract lost 29,108 of open interest, which means there were more than enough open interest increases in the forward months to offset the decline in October and increase total open interest.

As this report is being compiled on September 15 the October contract is trading 63 cents higher after making a daily low of 43.26, which slightly takes out yesterday’s print of 43.42. October WTI crude oil remains on short and intermediate term sell signals, and we recommend a stand aside posture.

Gold:

December gold advanced $2.40 on light volume of 154,864 contracts. Total open interest declined by 1,179 contracts, which relative to volume is approximately 60% below average, but yesterday’s open interest decline is the fifth one in a row. As we have pointed out in previous reports, managed money is massively long gold and we are seeing disillusioned longs liquidate positions as the market continues its trend lower.

As this report is being compiled on September 15, the December contract is trading $6.70 below yesterday’s close and has made a new low for the move of 1312.10, which takes out yesterday’s print of 1316.60 and is the lowest price since 1307.40 made on September 2. Remarkably, December gold remains on short and intermediate term buy signals and for a short term sell signal to occur the daily high must be below OIA’s key pivot point for September 15 of $1325.70. The rally will resume if the December contract makes a daily low above OIA’s pivot point for September 15 of 1341.20. Stand aside.