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May closed 15 1/4 cents lower on heavy volume of 496,306 contracts. Open interest declined by 548 contracts. It would have been healthy for the market if open interest has declined by a significant amount. The May-July bull spread widened on the decline, which is bullish, with May selling at a 9 cent premium to July. May corn closed at $6.34 3/4, and this was the lowest close since March 29 when the market closed at $6.04, the day prior to the USDA supply demand report. The market has not generated a sell signal, and for this to occur, the daily high would have to be below $6.33 7/8. For the next couple of weeks, corn will be entering a period of some seasonal weakness. I will be watching the market carefully to determine a safe entry point on the long side.
May soybeans lost 5 cents on heavy volume of 352,518 contracts. Open interest increased by 4,666 contracts. Remarkably, open interest has increased for 14 consecutive days. The market is massively overbought, and it would be healthy for soybeans to have a pullback. Do not enter long or short positions at this juncture.
May New York sugar closed 56 points lower on very heavy volume of 202,876 contracts. Open interest declined by a whopping 19,983 contracts. Despite sugar’s poor performance, a sell signal has not been generated. This would occur when the daily high is below the pivot point of 23.75. For those that were long, the sell stop of 24.11 would have been triggered and therefore everyone should be out of the market. I will continue to watch the market to determine when and if, a new position should be taken.
May crude oil closed $1.44 lower on fairly light volume of 639,126 contracts. Open interest increased on the decline by 4,784 contracts. The market closed at $101.02, which was the lowest close since February 10 when the market closed at $99.63. The market is on a short-term sell signal, and an intermediate term sell signal has not been generated. Do not short crude oil. Stand aside.
May gasoline lost 4.71 cents on volume of 180,752 contracts. Open interest declined by 2,476 contracts. The market closed at $3.287 per gallon, which was the lowest close since March 15 when May gasoline closed at 3.284. The market has not generated a short-term sell signal, nor an intermediate term sell signal. Stand aside.
May copper lost 7 cents on very heavy volume of 127,276 contracts. Open interest declined by 1,464. During the past four days copper has fallen 27.90 cents. The market went on a short-term sell signal on April 9, and has not yet generated in intermediate term sell signal. For this to occur, the daily high must be below $3.599. The market is over due for a technical rally. Stand aside.
June gold closed $16.80 higher on volume of 204,526 contracts. Open interest increased by a minuscule 1,603 contracts. For the first time in many months, gold decoupled from the rest of the market by closing higher. It was one of the few commodities that closed positively. Since March 15, gold has been on a short-term sell signal, but speculators should use this as an opportunity to acquire gold at lower prices. Do not short the market.
May silver closed 15 cents higher on heavier than normal volume of 67,721 contracts. Open interest declined by 1,309 contracts. The silver market continues to act poorly, and went on an intermediate term sell signal on April 5, 2012. Stand aside.
The June Euro closed 45 points lower on relatively heavy volume of 291,811 contracts. Open interest increased on the decline by 8,573 contracts. Open interest action continues to be negative, and the market looks weak. Wait for a rally before implementing bearish positions.
The June Australian dollar lost 72 points on volume of 136,473 contracts. Open interest increased on the decline by 1,716 contracts and it has been acting negatively with respect to price action for couple weeks. The market is on a short-term sell signal, but an intermediate term sell signal has not yet been generated. Stand aside for now.
S&P 500 E mini:
The S&P 500 E mini closed 18.00 points lower on heavy volume of 2,523,224 contracts. Open interest increased by 10,365 contracts. Volume was the highest since March 14 when 2,606,860 contracts were traded. The June S&P 500 E mini closed at 1357.00, which is approximately 7.00 points below its 50 day moving average of 1364.87. At this juncture, the market’s action can be considered a garden-variety correction. Financial events coming out of Europe and the upcoming earnings season will have a significant impact on the direction of the market.