March corn closed 1 1/4 cents higher on volume of 345,586 contracts. Open interest declined 23,809 contracts. Stand aside.
March soybeans closed 2 1/4 cents higher on heavy volume of 275,232 contracts. Open interest declined 11,867 contracts. The market made a new high for the move at 12.84 3/4, but is over extended and a setback is long overdue. If long, move up stops to protect capital and profits. If not long, stand aside. Do not chase this market.
May sugar closed 36 points higher on good volume of 149,684 contracts. Open interest increased by 5,020 contracts. If long from lower levels, sell stops should have been placed at 23.81. If not long, wait for a setback.
April crude oil closed $1.94 higher on volume of 798,279 contracts. Open interest increased by a very healthy 24,920 contracts. The market made a new high at 109.95. Stand aside. Do not chase this market.
April gasoline closed 3.67 cents higher on very low volume of 117,312 contracts. Open interest declined by 3,910 contracts. Gasoline made a new high for the move at 3.3247. The market has been rocketing higher, but the decline in open interest and volume as the market moved to new highs is worrisome. It takes patience to wait for the right opportunity, and we need to see a major setback before it is safe to enter the market.
April gold closed $9.90 lower on volume of 165,300 contracts. Open interest declined 2,353 contracts, which is healthy in a bull market when price declines. Pullbacks are buying opportunities, but the direction of the stock market and the dollar index will play an important role in the short term direction of gold.
March silver closed approximately $.21 lower on heavy volume of 92,720 contracts. Open interest increased by 2,330 contracts. For the last four trading sessions, the lowest volume in silver has been 84,212 contracts, which occurred on February 21. The increase in participation by speculators is a very positive sign for silver. My concern about silver is tied to the possibility of a decline in industrial consumption due to the likelihood of recession. I prefer gold for its liquidity, and the increasing view that gold is a storehouse of value in an age where global money printing has become extreme.
The March euro closed 1.24 cents higher on light volume of 265,826 contracts. Consistent with the Euro’s bearish pattern, open interest declined 3,756 contracts on the rally. The market made a new high for the move at 1.3488 and the trading range for the day was 1.520 cents, which was higher than the 21 day average true range of 1.326. The range on Friday was the highest since February 16 when it reached 1.860 and the market closed higher by 78 points. The volume on February 16 was 359,743 contracts. Also the volume on Friday was much lighter than the volume from the previous day of 322,144 contracts when the Euro closed higher by 91 points. In other words, as the market climbed to its highest point since December and closed significantly higher, the volume dramatically tapered off as buyers and short sellers liquidated. As I said in the weekend wrap of February 26, for the Euro to move higher, its daily low has to be above 1.3408.
S&P 500 E mini:
The March S&P 500 E mini closed essentially unchanged on extremely light volume of 1,171,980 contracts. Open interest increased by 13,748 contracts. The February 26 weekend wrap discussed the very light volume for the S&P 500 E mini as well as the the cash market. As I have said before, the market is in a topping process. Long put protection should be in place.
10 Year Treasury Notes:
The March 10 year treasury note closed essentially unchanged on heavy volume of 1,514,350 contracts. Open interest increased by 33,711 contracts. The battle continues between buyers and sellers and the heavy volume indicates there is a great deal of participation in the market. It is interesting to note that on February 23 and 24, volume in notes exceeded the volume in the S&P 500 E mini. The fact there is more participation (more volume) in the 10 year note than in equity futures, may be another indication that the direction for notes is higher, and that equities are headed lower.