Another strong day as we approach options expiration and the funds and specs were able to extend the gains from Wednesday and reach fresh 9-week highs in the July. There was actually a gap looking at the open outcry open @ 53.25 above the previous days high of 52.60.
This should give good support for July @ 53.25 and the market will be pushing for the contract high set in March of 55.60. With options expiration tomorrow, we should see the market hold this 54 or higher level as this strike represents the highest option open interest. Volume was huge again today with almost 70,000 futures (2nd highest compared to 74,000 in April'07).
Orders were split 50/50 between ICE and the floor as well as over 35,000 combined options. Export sales and shipments were within expectations but sales were 50% lower than the 4-week average which reflects the higher prices in NY. Combined sales were 142,000 b/c with China the biggest buyer of 47.000 b/c.
Shipments set another season high at 450,000 b/c or 30% above the 4-week average with 218,0000 b/c going to China. The market was finding support technically along with local, fund and spec buying which hit stops and forced trade into buying call spreads to roll short options further out of the money.
Technically we reached an RSI today of 67% which is reaching oversold territory for the first time since the uptrend started almost 4 weeks ago. The close today suggests that we could test the upside again, butafter another 200 pts of rallying over the last two days that now topped out today at 800 pts from the lows @ 51.60 on May 16th, it seems that we may be due for a correction soon.
Specs remain strong buyers and the trade are increasingly unable to sell rallies as out of the money options start to become a major issue. Demand at these levels in July will be hard to find and we may be in store for a pull back after options expire tomorrow.
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.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
