March corn closed 1/4 cents higher on very heavy volume of 482,235 contracts. Open interest declined 4834 contracts. This was the first decline in open interest since January 25. It appears that there was a churning of contracts, and that old longs were being replaced by new longs and old shorts were being replaced by new shorts. I remain friendly to the market longer-term, however part of the massive build up in open interest will need to be liquidated. Stand aside.
March soybeans closed 1/2 cents higher on volume of 196,131 contracts. Open interest increased by 2687 contracts. I have been impressed by soybean’s performance for the last week and a half. Pullbacks look like buying opportunities. As in all commodities, if the dollar strengthens, soybeans would be negatively impacted. Sell stops should be based upon risk tolerance and sound money management principles.
March crude oil closed $.30 higher on heavy volume of 922,366 contracts. Open interest declined 10,617 contracts. This was the first time that open interest declined since January 20. Stand aside.
March gasoline closed 4.77 cents higher on volume of 143, 528 contracts. Open interest increased by a very healthy 5765 contracts. My opinion has been to wait for a further setback in gasoline. Unfortunately, the market has not provided the opportunity to enter into long positions at lower levels. From December 16 when gasoline made its low at $2.49, it has rallied nearly $.50 during the slowest driving period. This has ominous implications for the economy as we move into the prime driving season. A corrective break down to 2.70-2.80 would be a comfortable zone to get long. For now, stand aside.
March sugar closed 8 points higher on volume of 139,428 contracts. Open interest declined 5765 contracts. This was the first decline in open interest since January 24. This market has a number of obstacles to overcome before it becomes a bull market. Namely, its daily low has to be above the key pivot point of 24.82. Additionally, sugar must move decisively above its 200 day moving average of 25.27 and its low has to be above 25.27. Also, the market must exhibit the widening of backwardation. I will keep you apprised of any new developments in the above mentioned areas.
April gold closed lower by $17.10 on volume of 162,017 contracts. Open interest declined 3914 contracts. Although it is positive to see open interest decline with price, I continue to suggest that speculators stand aside for now. As mentioned in earlier posts, the movement of the dollar index is going to have an impact on the precious metals in particular and on commodities in general. Since the euro is weighted nearly 60% of the dollar index, it has a disproportionate impact on the index. If the euro weakens significantly again, the dollar index will rise and this will be negative for the precious metals.
March silver closed $.49 lower on volume of 69,448 contracts. Open interest decline 676 contracts. Stand aside.
The March euro closed 50 points higher on light volume of 276,840 contracts. Open interest declined 5434 contracts. As the euro is moving higher open interest is declining, which is indicative of longs and shorts closing out their positions. Since speculators are heavily short, if the market continues to move higher, I expect more declines in open interest. At some point, the euro will be a very good play on the short side. Stand aside.
S&P 500 E mini:
March S&P 500 E mini closed 2.25 points higher on light volume of 1,546,668 contracts. Open interest increased by 8112 contracts. The market continues to march higher, but it is massively overbought relative to its 50 day moving average of 1267.53. In other words, the market can correct down to its 50 day moving average and still be in a bullish trend. As I have said all along, long put protection should be in place in the event of a major correction, or a black swan event.