Corn:
May corn closed 3 1/4 cents higher on volume of 364,332 contracts. Open interest increased by a minuscule 204 contracts. Corn went on a buy signal on April 3 The market made a new high for the move at $6.65 3/4, which fractionally took out the high of $6.63 1/2 made on March 20. The meager increase in open interest may signal that the market is ready for a small pullback. The bull spread continued to work with May corn selling at a 5 1/4 premium to July. As a testament to the strength of corn, when the Federal Open Market Committee released the minutes of its previous meeting at 11 o’clock, which was bearish for precious metals, and commodities in general, corn closed higher. The low for the day was $6.52, which was above my two key pivot points of $6.47 1/2 and $6.50 7/8 and it was this action that gave the buy signal. As I am writing this on April 4, corn is down 5 cents and the precious metals are sharply lower as is the petroleum complex, but the market is showing relatively strong underlying support. Setbacks are buying opportunities. There is a 2 1/2 cent gap in the May contract that was made between the high of $6.44 on March 30 and Monday’s low of $6.46 1/2. I suggest speculators wait until that gap is filled before entering long positions. There is a high likelihood that it will be filled sooner rather than later.
Soybeans:
May soybeans closed 4 1/4 cents lower on volume of 244,385 contracts. Open interest increased by 11,608 contracts. The market made a fractional new high at $14.34 1/4 and then reversed to close lower. As a positive, volume contracted on the pullback from the high volume made on the rally days of April 2 and March 30. Volume was the lowest since March 29 when soybeans declined 12 cents and the market traded 243,773 contracts. The market acted well considering the decline of commodities and precious metals. Despite this, the market remains massively overbought and speculators should be cautious at these levels. As I write this on April 4, soybeans are 1 1/2 cents lower, equities and commodities are sharply lower. If the equities indices further deteriorate, I would expect this to negatively impact soybeans. Also, the number of speculative longs are at record highs, which means the market has plenty of fuel for a downside move.
Sugar #11:
May sugar closed 33 points lower on volume of 112,127 contracts. Open interest declined by 5,735 contracts. The sugar market remains on a buy signal, but I suggest that speculators stand aside for now.
Crude oil:
May crude oil closed $1.22 lower on light volume of 542,362 contracts. Open interest increased on the down move by 6,405 contracts. The market has been on the short term sell signal since March 29. As I write this on April 4, crude oil is down $2.39. Stand aside.
Gasoline:
May gasoline closed 1.32 cents higher on volume of 201,824 contracts. Open interest declined by 2,872 contracts. The market made a new high for the move at $3.4278 per gallon, which took out the old high of 3.4118 made on March 23. The market action for the past two days has been negative. On April 2, the market rose 7.41 cents, but open interest increased only 301 contracts. In the post of April 2, I wrote that the minuscule increase in open interest was negative considering the size of the advance. On April 3, the market made a new high and closed positively, but open interest declined. As I am writing this on April 4, gasoline is down over 5 cents. Stand aside.
Gold:
June gold closed $7.70 lower on volume of 169,331 contracts. Open interest declined by 1,572 contracts. The gold market hit the skids when the Federal Open Market Committee released the minutes of the previous month’s meeting. The trading range on April 3 was $40.80, which was nearly 50% above its 21 day average true range of $28.00. In the April 2 post, I wrote about the dismal performance of gold and the poor performance continues on April 4 as gold is down over $50.00 per ounce. Gold has been on a sell signal since March 15. As I have said numerous times, the sell signal should be used to acquire gold at lower prices. I believe gold is in a long-term bull market and speculators should take advantage of pull backs.
Silver:
May silver closed 16 cents higher on heavier than normal volume of 53,864 contracts. Open interest increased by 3,399 contracts. The market was trading just fine until the minutes of the Federal Open Market Committee were released and then silver sunk like a stone. As I write this on April 4, silver is down over $2.00. Stand aside
Euro:
The June Euro closed 1.18 cents lower on higher than normal volume of 301,424 contracts. Open interest increased on the decline by 2,601 contracts. Volume was the highest since March 16 when 316,551 contracts were traded. For the past several days, I’ve said that the Euro was trading in a steady fashion. That went out the window when the Federal Open Market Committee released the minutes of the previous month’s meeting. The Euro fell off the cliff, and as I write this on April 4, it is down another 86 points. I will inform you when and if the Euro generates a sell signal.
Australian dollar:
The June Australian dollar moved lower with the other currencies by declining 1.35 cents on volume of 147,133 contracts. Open interest increased on the decline by 1,981 contracts. The Australian dollar went on a short term sell signal on March 28 and I have been waiting for the market to rally before suggesting that bearish positions be taken. A longer term sell signal has not yet been generated. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini closed 3.75 points lower on volume of 1,674,290 contracts. Open interest declined by 1,984 contracts. As I write this the S&P 500 E mini is down 19.50 points. Long put protection should have already been in place.
Interest Rates:
June treasury notes closed 25 points lower on heavy volume of 1,347,900 contracts. Open interest declined by 13,494 contracts. Volume was the highest since March 15 when 1,548,276 contracts were traded. After the release of minutes by the Federal Open Market Committee, treasury notes had a major move to the downside. As readers know, I’ve been bearish on treasury notes for quite a while, and it appears that a major top has been formed at the 130 area. For those that are holding bearish positions, stay with them, but keep in mind the Federal Reserve is controlling this game. Speculators should make sure that they have an exit strategy in in place if the equities market declines precipitously, and/or the Federal Reserve tries to stem the tide. The low to mid 130 area would be an ideal place to exit if for some reason the market rallies. As I write this on April 4, June notes have rallied only 17 points and have made a high at 129-17. With the equities market down sharply, as well as precious metals and other commodities, I would’ve expected a rally of greater magnitude.
