May corn closed 2 1/2 cents higher on volume of 299,797 contracts. Open interest increased by a whopping 18,352 contracts. The advance occurred as the dollar moved higher. Taking volume into account, the open interest increase was substantial. This tells me there is a major battle between the longs and shorts. Despite the open interest increase, prices were only able to advance by a minor amount. May corn made a new high for the move at 666 3/4 per bushel, but was unable to close at the highs. The high made on March 13 took out the old high made on March 5 of 665 1/4. Although corn went to a buy signal on March 13, I remain dubious of a significant advance above 672 1/2 per bushel, which was the high made on January 3, 2012, and have even greater doubts that the November 9, 2011 high of 683 1/4 per bushel will be penetrated. One final point on corn. During the last two days, volume on the advances have been light, which indicates a decreasing amount of participation as the market moves higher.
May soybeans closed 14 1/2 cents per bushel higher on volume of 196,658 contracts. Open interest increased by a massive 14,788 contracts. We have the same battle in soybeans as we have in corn. Both longs and shorts have very strong opinions about the direction of soybeans. As I’m writing this on March 14, soybeans are $.10 higher on the day. The market has not corrected its advance, nor has it traded in a consolidation pattern, which would allow speculators to re-enter positions on the long side. Continue to stand aside.
May sugar advanced 36 points on very light volume of 73,812 contracts. Open interest increased by 1,225 contracts. The market has not generated a sell signal as of yet, and if the low of the day is above 24.06 cents per pound, the market will be on a new buy signal. Until that occurs stand aside.
April crude oil advanced $.37 per barrel on volume of 689,301 contracts. Open interest declined by 5,394 contracts. The market was able hold up despite a sharply higher dollar, which is constructive. Stand aside
April gasoline closed 3.16 cents higher on volume of 144,546 contracts. Open interest increased by a massive 9,923 contracts. The volume was relatively light in relation to the open interest increase. This indicates a major battle between longs and shorts. Continue to stand aside.
April gold closed $5.60 per ounce lower on heavy volume of 239,522 contracts. Open interest increased by 1,771 contracts. The market made a new low for the move at 1662.10. As I had mentioned in previous posts, speculators should have placed their stop loss positions on longs at the March 6 low of 1663.40. I am writing this on March 14, and gold is down $56.70, and so far the low the day has been 1635.80. I am friendly to the market, but it appears the rising dollar and sharply higher interest rates are having a major impact on gold. I have written before about my concern that a rally in the dollar would negatively impact the precious metals and commodities. As readers know, I have been bearish on the Euro for quite some time and the bearish Euro is putting upward pressure on the dollar. To date, it appears that the precious metals are being hit the hardest by the dollar rally and the recent rise of interest rates.
May silver closed $.16 higher on volume of 52,698 contracts. Open interest declined 92 contracts. Stand aside.
The June Euro closed 76 points lower on very heavy volume of 427,976 contracts. Open interest increased by a massive 22,265 contracts on the decline. The market is on a sell signal as of March 12, and as suggested earlier, short calls, and/or long puts, and/or outright short positions should be implemented on rallies. I have suggested that speculators use the high made on March 8 of 1.3299 as a point to exit positions.
S&P 500 E mini:
The June S&P 500 E mini closed 24.00 points higher on massive volume of 3,771,159 contracts. Open interest increased by 144,844 contracts. As I pointed out in the weekend wrap of March 11, if the S&P 500 cash index hit 1390, that it was very likely the market would move another leg higher. That next leg would take the S&P 500 cash index to approximately 1440, which was the high made in mid May of 2008. I have a number of problems with the broad market indices and I will get into greater detail about the issues in the March 18 weekend wrap.
The interest rate on the 10 year treasury note broke out to a new high of 2.10%. This was the highest rate since December 5, 2011 and the highest close since December 1, 2011 when the market closed at 2.11%. As of March 13, the 10 year note has not yet generated a sell signal, but based upon the action of today March 14, it appears it is likely that a sell signal is imminent. For a sell signal to be generated, the daily high cannot exceed 129-13 basis the June contract.