March corn closed .03 higher on volume of 311,966 contracts. Open interest increased by 9159 contracts. Today, corn’s low was 6.38, which is above my pivot point of 6.37. Therefore, until further notice, this market should be traded from the long side. Stops should be based upon risk tolerance and sound money management principles.
March soybeans closed 16 1/4 cents higher on volume of 185,309 contracts. Open interest increased by 3264 contracts. My bias towards this market is to the downside, but if the other grains continue to move higher, I suspect soybeans will as well. Despite this, I do not believe this market should be traded from the long side.
March sugar closed five points lower on volume of 120, 906 contracts. This is considerable volume considering that the range in sugar was only 34 points. Remarkably, the open interest in sugar increased by a whopping 12,216 contracts. All long positions should have been closed out by now, and I will apprise you when there is an opportunity to enter this market from the long side.
March crude oil closed $.87 lower on volume of 618,838 contracts. Open interest increased by 18,125 contracts. This is the fourth day in a row where open interest increased and price declined. This is bearish. Stand aside.
March gasoline closed higher by 13 points on volume of 173,572 contracts. Open interest declined by 926 contracts. Stand aside and wait for lower prices.
March copper rallied 5.20 cents on volume of 56,524 contracts. Open interest increased by a very light 672 contracts. The market is beginning to look a bit tired. The open interest build during the previous three days decline, combined with the meager increase in open interest on February 1 is a cautionary sign. The market closed at approximately 3.84 and its 50 day moving average is at 3.53. By any standard, the market is massively overbought and can easily correct half the distance between 3.84 and 3.53. Also, it is important to keep in mind that many markets are significantly overbought and a correction can have a major impact on the most bullish of markets. Stops should be placed based upon risk tolerance and sound money management principles. Half the position should have already been sold at much higher levels based upon my previous stated views.
April gold closed $9.10 on volume of 131,859 contracts. Open interest increased by 4961 contracts. This was the first time in the last five sessions that open interest increased along with price. Volume decreased nearly 30,000 contracts from the previous day’ s 162,437 contracts. As a matter of fact, volume has declined every day this week as the market as the market moved higher by a total of $17.30. Gold’s 50 day moving average is 1663.59. Therefore, the market is nearly $100 overbought relative to its 50 day moving average. Stand aside.
March silver closed $.54 higher on volume of 50,783 contracts. Open interest increased by a minuscule 174 contracts. March silver’s 50 day moving average is at 30.89 and therefore is overbought. Additionally, the open interest action continues to be unimpressive. Stand aside.
The March euro closed 72 points higher on volume of 348,674 contracts. Open interest declined by 1409 contracts. The euro continues to manifest all the traits of a bear market. It’s high on February 1 was 1.3221. This was within 6 points of the high that it made on January 27. Although the euro hasn’t been able to mount a rally significantly above the 1.32 area, I still think there is a possibility that the euro could continue to move higher. If this does not occur, a sound strategy could be to wait for the euro to break its old low of 1.2627 and then implement a short position and/or a long put position. Stand aside.
S&P 500 E mini:
March S&P 500 E mini closed 11.50 points higher on volume of 1,905,719 contracts. Open interest increased by 8149 contracts. The market’s 50 day moving average is 1250.45 and therefore is overbought. Put protection should be in place.
10 Year Treasury Notes:
March 10 year treasury notes closed eight 1/2 points lower on volume of 1,023,520 contracts. Open interest increased by 14,140 contracts. As I’ve said before, partial profits should have already been taken. Any remaining positions should have a protective sell stop based upon risk tolerance and sound money management principles.
I wanted to call your attention to two excellent articles published on February 1. The first is titled: “Baltic Dry Index Falls to 25 Year Low” on Bloomberg, which discusses the current collapse in global freight rates. The remarkable thing is that the Baltic dry Index is now lower than it was during the collapse of the markets during 2008 and early 2009. The second, is titled:” Refinery Closures Lead To Rising Gas Prices And Job Losses” by Robert Rapier. This discusses the refinery closures taking place and their impact upon gas prices. Both are worthwhile reads.