Corn:
March corn closed $.06 lower on volume of 399,967 contracts. Open interest increased by a very healthy 14,504 contracts. No change in my outlook. I continue to believe that corn is headed lower.
Soybeans:
March soybeans closed $.03 higher on heavy volume of 244,437 contracts. Open interest increased by 6,385 contracts. It is apparent that soybeans are leading the grain complex and beans continue to make new daily highs. I have recommended long positions on pullbacks, and if long, sell stop protection should be moved up to protect profits and capital. The original stop was at 12.14, but with the market moving significantly higher, sell stops should be moved up in accordance with risk tolerance and sound money management principles.
Sugar #11:
March sugar continues to disappoint the bulls, and closed 39 points lower on volume of 113,139 contracts. Open interest declined by 4,021 contracts. As I’ve said before, I’m bullish on sugar longer-term, but now is not the time to be long. Continue to stand aside.
Crude oil:
March crude oil closed higher by $.29 on healthy volume of 876,138 contracts. Open interest decreased by 11,491 contracts. The market reached a new high for the move at 101.84 and closed at 100.74. This was the highest price and the highest close since January 19. The open interest action was disappointing, but it is understandable that both longs and shorts would be closing out their positions as the market moves to the upper end of its trading range. With geopolitical tensions rising between the US and Iran, the crude market should stay reasonably buoyant. However, if the stock market swoons, or the dollar rises sharply (because the euro is declining), crude may succumb and move to the downside, if only temporarily. The dollar was stronger on February 14, and yet this had little impact on the price of crude.
Gasoline:
March gasoline declined $.03 on volume of 166,191 contracts. Open interest declined by 3,168 contracts, which is what would be expected in a healthy bull market. The 50 day moving average for March gasoline is 2.76, and this is the area that longs should look for as an entry point. For now, stand aside. Zero hedge published some excellent data about the gasoline market, and pointed out that the price at the pump in January is the highest ever on record. As I’ve said before, the implications of sharply higher gas prices is very negative for consumer spending and will have the effect of slowing down the economy.
Gold:
April gold closed $7.10 lower on volume of 167,700 contracts. Open interest increased by 4,380 contracts. The rally in the dollar caused by a sharply lower euro negatively impacted gold and silver. It is important to keep in mind two things about the precious metals. If the stock market rallies and/or the dollar declines, gold and silver tend to rally. If the stock market declines and/or the dollar rallies, gold and silver tend to decline. I’m looking for gold and silver to trade independently on their own supply demand fundamentals. My opinion of the precious metals is in part based upon my negative view of the Euro, which creates dollar strength, and therefore is negative for gold and silver. Stand aside.
Silver:
March silver closed lower by $.37 on volume of 55 840 contracts. Open interest declined by 1, 320 contracts. Everything I said about gold is applicable to silver. Stand aside.
Euro:
The March euro closed 1.11 cents lower on volume of 282,697 contracts. Open interest increased by 4,481 contracts, which is consistent with the Euro being in a bear market. February 14 was the first day that the daily high (1.3218) was below my key pivot point of 1.3258. As I stated in my February 13 analysis, the fact that the Euro was only able to close fractionally higher after making its high for the day of 1.3285, is bearish. The market rallied because of the affirmative vote of the Greek Parliament to support Euroland’s bailout package, but the rally could not be sustained. The fact that the market could not move above the old high of 1.3325 made on February 9, conveyed the internal weakness of the Euro. On February 13, I suggested that on a rally, either/and, long puts, short calls, or outright short positions be implemented. The action of February 14 reinforced my bearish views, and as I stated on February 13, the high of 1.3325 should be used as a benchmark to exit the aforementioned positions.
S&P 500 E mini:
The March S&P 500 E mini closed 1.25 points lower on volume of 1,740,775. Open interest increased by 32,000 contracts. The market continues to be overbought and my opinion is to make sure that long put protection is in place because the market can turn on a dime.
