Corn:

March corn closed 8/2 cents higher on volume of 285, 363 contracts. Open interest increased a healthy 7949 contracts. From January 19, through January 23, open interest has increased by 10,999 contracts and corn has advanced 26 1/2 cents. Corn is above its 50 day moving average of $6.18. The 200 day moving average is 6.67. For the rally to continue, corn must close over the following three pivot points: 620 1/2, 628 1/2, and the most important point is 636 5/8. If corn closes above 636 5/8, the next barrier is for the daily low to be least 636 5/8. As I’ve said before, I’m friendly to this market a couple of months down the road, but I believe long positions at this juncture are premature.

Soybeans:

March soybeans closed higher by 30 1/2 cents on volume of 160,833 contracts. Open interest declined by 3971 contracts, which is bearish open interest action. There should be resistance at the January 3 high of 1244 3/4. Since January 17, when the rally began through January 23, soybeans have advanced 59 1/4 cents and open interest has declined by 1010 contracts. This is bearish.

Crude Oil:

March crude oil closed $1.25 higher on very light volume of 396,709 contracts. Open interest increased by 3522 contracts. The interesting aspect of crude oil trading on January 23, was that volume was the lightest since December 30, when 301,639 contracts were traded. Additionally, the range for January 23 was $2.84, which is higher than the previous 21 days average true range of $2.50. Clearly, there is a lack of enthusiasm for crude oil at these price levels. Another interesting phenomenon is that since January 17, the dollar index has declined 1.83% and crude oil has declined 1.33%. A decline in the dollar index is usually bullish for crude, and the fact that it hasn’t been able to boost crude prices should be of concern to the bulls. Stand aside.

Copper:

March copper closed higher by 5.35 cents on volume of 48,279 contracts. Open interest increased by 2387 contracts. The market is still in a bullish formation, and I believe it’s going higher, but anyone looking to get long should wait for a setback. The market is overbought at this point relative to its 50 day moving average of $3.48. If the equity market heads lower as I expected to, it is likely that copper will follow. Prudent money management is the order of the day, and stops should be applied based upon your risk tolerance.

Gold:

February gold closed $14.30 higher on volume of 154,670 contracts. Open interest declined by 1845 contracts. During the last two days, gold’s price has increased by $23.80 and open interest has declined by 4,678 contracts. The market was able to close $.40 above one of my key pivot points of $1677.90. The market needs to close above 1693.50 and the open interest action has to be positive to give the advance validity. This market continues to act in a very irregular manner and my opinion is to continue to stand aside. Additionally, if the equity market falls, I believe that gold will fall with it.

Silver:

March silver closed $.59 higher on volume of 44,108 contracts. Open interest declined by 1376 contracts. Silver made a new high for the move at 32.77, yet volume increased only fractionally. If the advance in silver is for real, we have to see increases in open interest and increasing volume. Also, the market’s low on a daily basis must be above the pivot point of 32.15.

Sugar #11

March sugar closed seven points higher on volume of 88,728 contracts. Open interest was up a gargantuan 9851 contracts. In last week’s commitment of traders report, commercials increased their short position by 17,062 contracts, managed money increased their long positions by 5,391 contracts and small traders increased their short positions by 4,321. I suspect that the commitment of traders report to be released this Friday and tabulated as of Tuesday, will show the same configuration. The market continues to act well, but setbacks should be expected based upon seasonal weakness.

Euro:

The March Euro closed 95 points higher on volume of 270,935 contracts. Open interest declined by 5107 contracts. The euro made a new high for the move at 1.3056. Stand aside.

S&P 500 E Mini:

The March S&P 500 E mini closed unchanged on volume of 1,609,469 contracts. Open interest declined by 4298 contracts. Although the market made a new high for the move at 1318.25, and closed unchanged, open interest declined. Another interesting aspect of the market’s action on January 23, was that there were more declines that advances in the S&P 500. This was the case on Friday as well, and these numbers show that market internals are weakening even as the market moves higher. Another sign of weakening internals are the weak number of new 52-week highs. As discussed in earlier posts, from December 20 when the rally began, new 52-week highs peaked on December 27 at 270. As things stand on January 23, the S&P 500 is higher by 50.75 points or 4.03% from December 27, yet new 52-week highs are lower at 219. 

10 Year Treasury Notes:

March 10 year treasury notes closed down 9 points on volume of 991,482 contracts. Open interest increased by 21,209 contracts. This is the second day that prices have declined and open interest has gone up. This is a sign that longs should be cautious. One of my pivot points at 129-29 was penetrated, however the market closed above it. The next the next two pivot points are 129-19 and 129-08. If the market closes under 129-19, this could be the first signal that it is time to exit the March treasury note trade. A close under 129-08 would be another confirmation.