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BLUE LINE = BRLUSD
The narrow ranges, low volatility and low volume that we see on the chart is reflected in the COT report. The market ranged 6.10c and ended down 2.30c. The COT does not show many significant changes. There are some observations of interest however.
Commercials bought volatility, probably not by design, and in the form of buying both puts and calls. Managed money sold both puts and calls but mostly calls. In futures, this group net bought but by looking at the changes in the Number of Traders we notice a possible reversal to selling. Swap dealers sold mostly new and kept a lid on prices. In RC, the market was also quiet and the sectors were almost flat. The arbitrage stayed between 81.96 and 85.36. On Friday it closed at 90.55.
Spreads were mostly on the soft side during the COT period and firmed slightly during the time after, except for NU which remained -2.00/-1.95. Specs are net long as we enter roll time, warehouse stocks are still climbing but some spreads are close to flat while the front spreads are staying mostly weak. Origin appears to be selling forwards, especially on Friday, making some spreads steady.
The market continues to be steady. Monday’s market will tell us whether Friday’s strength was a typical frost season pre-weekend rally or weather it was just another leg of a bull market. Cold weather will continue later this week and so the drama continues. Corrections are inevitable but drops and dips have proven to be opportunities. The weakness that we saw during the COT period only proves the old adage: “Never sell a quiet market.”
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