Corn:
March corn closed 7 3/4 cents higher on heavy volume of 459,431 contracts. Open interest increased by a healthy 15,773 contracts. As I have said before, I am troubled by massive open interest increases that do not propel the market significantly higher. For example, on January 26, corn closed at 6.34 1/2 and total open interest was 1,221,912 contracts. On February 13, corn closed at 6.39 1/2 and total open interest 1,301,392, or an increase of 79,480 contracts from January 26. A 5 cent increase in price after an enormous build of open interest is bearish and reinforces that the shorts are in control. I’m still bullish longer-term, but for now it’s better to stand aside.
Soybeans:
March soybeans closed $.23 higher on heavy volume of 276,790 contracts. Open interest increased a whopping 13,697 contracts. The massive increase in volume and open interest, combined with soybeans breaking out into new high ground, is a very positive development. The market made a new high for the move at 12.54, and closed at the highest price since October 27, 2011. During the past week, I have been suggesting that speculators acquire soybeans on pullbacks using a stop at 12.14. My opinion is to continue staying long, but speculators should consider moving up stops based upon your point of entry, risk tolerance and sound money management principles.
Sugar #11:
March sugar closed 3 points higher on volume of 129,920 contracts. Open interest increased by 3,911 contracts. The massive build up in open interest, combined with lackluster price action clearly indicates that the shorts are in control. As I have pointed out before, this is a weak time of year for sugar on a seasonal basis. Stand aside.
Crude oil:
March crude oil closed $2.24 higher on light volume of 575,580 contracts. Open interest increased 8,708 contracts. The light volume can be explained by the fact that Globex was off-line for couple of hours. From February 2, when crude dipped to its lowest point since December 19, the market has rallied smartly and made a new high for the move on February 13 at 101.00. The market closed at its highest price since January 11. Additionally, from February 2 through February 13 open interest has increased 79,842 contracts. I like the way crude oil is acting, however, I’m concerned about a broad market equities decline and its impact on all commodities. Continue to stand aside.
Gasoline:
March gasoline closed higher by 3.76 cents on volume of 135,106 contracts and made a new high for the move at 3.0220. Open interest increased by 2,006 contracts. We are still waiting for gasoline to setback to the 2.70-2.80 area.
Gold:
April gold closed $.40 lower on very light volume of 113,169 contracts. Open interest declined by 1,775 contracts. I’m very positive on gold, but I think lower prices are in the offing. Stand aside.
Silver:
March silver closed nearly $.12 higher on volume of 50, 470 contracts. Open interest increased by 223 contracts. Stand aside.
Euro:
The March euro closed 33 points higher on very light volume of 209,777 contracts. Open interest declined by 1,354 contracts. The market sprinted to its high of 1.3285 Sunday evening based upon the vote by the Greek Parliament. It then proceeded to fall from its highs into Monday’s trading day. The market looks increasingly weak and the high of 1.3325 made on February 9 may be the high for the move. At this juncture, wait for a further rally and look to implement either/or, long puts, short calls, or a short position. The Euro’ s high of 1.3325 should be used as a benchmark to exit any of the aforementioned positions.
S&P 500 E mini:
The March S&P 500 E mini closed 8.50 points higher on extremely light volume of 1,236,229 contracts. Open interest declined on the rally by 41,947 contracts. The extremely light volume combined with a significant decrease in open interest while the market was rallying is a negative indicator. The market made a high of 1352.25, which was just short of the February 9 high of 1352.75, and is the high for the move, which began on October 4, 2011. The S&P 500 cash market volume was among the lowest readings of the past two months at 2.65 billion shares. Long put protection should be in place.
