Bloomberg Access:{OIAR<GO>}

Japanese yen: On September 23, the December Japanese yen generated a short term buy signal and remains on an intermediate term buy signal. We have no recommendation. The COT report released on Friday revealed that leverage funds liquidated 3,868 of their long positions and also liquidated 158 contracts of their short positions. According to the latest report, leverage funds are long the yen by a ratio of 2.85:1, down from the previous week of 2.98:1 and the ratio two weeks ago 2.89:1.

Live cattle:

December live cattle lost 10 points on strong volume of 71,470 contracts. Volume increased from September 22 when the December contract lost 1.40 cents on volume of 52,740 contracts and total open interest increased by 486, a bearish setup. On September 23, total open interest increased again, this time by 1,656 contracts, which relative to volume is approximately 10% below average, but it total open interest increase confirms that new short-sellers are entering the market and driving prices lower (104.100.The October contract lost 2,947 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.

On Friday the market was almost limit down and then rallied to close nearly unchanged. However, the market again has reversed on September 26 and the December contract is trading 1.175 cents lower and has made a daily low of 104.950. The COT report revealed that managed money added 1,750 to their long positions and liquidated 2,141 of their short positions. Commercial interests liquidated 1,877 of their long positions and added 818 to their short positions. As of the latest report, managed money is long live cattle by a ratio of 1.44:1, up from the previous week of 1.36:1, but down slightly from the ratio two weeks ago of 1.46:1. The December contract remains on short and intermediate term sell signals and we recommend a stand aside posture.

WTI crude oil:

November WTI crude oil lost $1.84 on volume of 1,190,321 contracts. Total open interest increased by 9,963 contracts, which relative to volume is approximately 65% below average. The November contract lost 9,197 of open interest and there were sufficient open interest increases in the forward months to offset the decline in November and increase total open interest.

The COT report revealed that managed money liquidated 2,936 of their long positions and added 38,905 to their short positions. Commercial interests liquidated 1,688 of their long positions and also liquidated 10,517 of their short positions. As of the latest report, managed money is long WTI crude oil by ratio of 1.79:1, down sharply from the previous week of July 30 9:1 and the ratio two weeks ago of 2.00:1.

As this report is being compiled on September 26, the November contract is trading sharply higher, up $1.55 or +3.46% on another rumor of the Saudi Arabians restricting oil output. This is a rumor, and we see no reason to be involved in the market. The November contract remains on short and intermediate term sell signals and for a short term buy signal to occur, the low of the day must be above OIA’s key pivot point for September 26 of $46.10.

Natural gas:

November natural gas lost 4.8 cents on light volume of 323,007 contracts. Total open interest declined by a sizable 10,835 contracts, which relative to volume is approximately 20% above average meaning liquidation was substantial on Friday’s modest decline. The October contract accounted for a loss of 22,162 of open interest.

The COT report revealed that managed money is getting more bullish on natural gas and added 16,871 contracts to their long positions and liquidated 8,845 of their short positions. Commercial interests added 6,887 to their long positions and also added 14,339 to their short positions. As of the latest report, managed money is long natural gas by a ratio of 1.69:1, up from the previous week of 1.51:1 and a complete reversal from two weeks ago when managed money which short by a ratio of 1.008:1.

As this report is being compiled on September 26, the November contract is trading 5.8 cents higher on the day, but has not taken out Friday’s print of 3.090. We like natural gas and it should be traded from the long side. We think the real fireworks will occur as winter approaches and if temperatures are unseasonably cold, natural gas could make a substantial move higher.

Gold:

December gold lost 3.00 on volume on light volume of 129,032 contracts. Total open interest increased by a massive 7,023 contracts, which relative to volume is approximately 120% above average. The COT report revealed that managed money liquidated 25,512 of their long positions and added 4,318 to their short positions. Commercial interests added 340 contracts to their long positions and liquidated 10,471 of their short positions. As of the latest report, managed money is a long gold by a ratio of 7.46:1, down sharply from the previous week of 9.48:1 and substantially below the ratio two weeks ago at 13.17:1.

From the September 22 research note on gold:

“We have recommended that clients begin to position themselves on the bullish side of gold and though the market has been trading sideways for the past couple of weeks, we think it is poised to move higher in the period just ahead. As this report is being compiled on September 23 the December contract is trading $2.10 lower on low volume and has made a daily low of 1337.40, which is above yesterday’s print of 1335.10. For further confirmation of the uptrend, we want to see the December contract make a daily low above the pivot point of 1340.20.”