After making a low of 97.25, prices remained firm for the remainder of the period but were unable to make significant gains. The market generally held the 100.00 level but was noted for failing rallies. The buyers were swap dealers and large traders. Funds were net buyers but we see that both buyers and sellers were active in the managed money sector. Commercials and small traders sold longs. The open interest hardly changed, especially in the Supplemental, as options activity dried up. The biggest change was in Dec which was down possibly because of EFP activity. What the COT does not show is the continuous selling in forward months, likely origin. The daily OI changes show that there is two way activity by several sectors. It is difficult to ascertain who the players are during the trading day except for when the market drops or rallies. At such times we can turn to commercials.
For the rest of the week, the market continued the same pattern, except for yesterday. Looking at the chart, yesterday looks like an aberration in comparison to the days prior, even with the steady Real. We seem to experience sporadic and unpredictable entry into markets by different sectors. Charts remain the best guide. The buying as the market dropped yesterday was significant and will likely continue on Monday. Can the market continue lower? Of course, but the COT, volume, and market behavior are saying that prices will not wander far in either direction. Nov option expiration takes place this coming Friday but the options OI is not very big. Nevertheless, support and resistance will be present at strikes. Fund short positions are high in both markets and this sector is not as aggressive as we have seen in the past. In fact what we observe is more two way business coming from funds rather than system type trading.
Robusta remained quiet. Spreads and EFPs were active as the NovJan moved higher and then retreated. KC spreads remained inactive. Managed Money added new shorts making their gross short position relatively high. Hopefully the SCTA dinner on the 10th and 11th will fuel some activity.
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