The sharp decline seen during the second half of last week wiped out the gains of the previous fortnight in quick time, though after such significant losses it was no surprise to find buying around as we resumed with trade and consumer entities printing the market straight up to 24.56. The intensity of the buying reduced soon afterwards, however the underlying trade/consumer interest remained in place and so values consolidated comfortably either side of 24.50 across the rest of the morning. Fridays COT reports had shown the net fund long growing by 17,718 lots to 208.117 lots as at last Tuesday close, to be expected given this represented a 26c market with those fresh positions anticipated to have been liquidated in the days since. Moving into the afternoon there was some new activity from specs emerging as they looked to build upon the solid base and push the market further, their efforts taking the Oct’23 contract to 24.72 before liquidation kicked in. A second effort to push the price higher followed soon afterwards, but despite the efforts improving the Oct’23/March’24 spread to 0.09 points premium the market was unable to make new highs. Jul/Oct’23 meanwhile was making a spirited recovery with far less rolling being seen as we move closer to expiry, and this allowed it to move back to a 0.06-point premium during the afternoon, with the gains being maintained. The same could not be said for the Oct’23 spreads which gave their gains back as the flat price crumbled during the later afternoon, buying suddenly hard to come by as Oct’23 reached 24.17, just a single point above Friday’s low. Fireworks were to follow during the final hour as the market plunged through this month’s 24.01 low mark, with funds/specs reacting to this with additional liquidation that in turn triggered stops, the combination serving to send Oct’23 down to 23.62. There was some pre-close buying seen but this served only to hold the market from further losses, and settlement for Oct’23 at 23.66 provides chart weakness that may lead to additional losses in the coming days.
Having lost significant ground last week, the market understandably found support as we started the new one, with consumer led buying helping the market to work hight across the morning. A slow but steady climb to the low $660’s followed, and provided a foothold from which the market was able to to try and accelerate ahead during the early afternoon, though the more robust spec efforts topped out in the $665 area on each occasion that they pushed. This action was at least helping the nearby spreads to recoup some of the recent losses, though Aug/Oct’23 remained at a small discount and so continues to cast a negative shadow upon the near-term prospects. All remained calm through the middle of the afternoon, though entering the last two hours the market started to weaken back toward morning lows with day trader liquidation sending prices back toward the support in place through the upper $650’s. No.11 was coming under strong pressure and its impact was to send the whites down through Fridays $655.00 low mark as we moved through the final hour, triggering some additional spec long liquidation that sent Aug’23 tumbling beneath $650.00. There was no respite to be found around the close with the day ending at $648.40, leaving the chart looking weaker still and vulnerable to ongoing technical correction.
