May Chicago corn closed 3 1/4 cents lower per bushel on volume of 297,581 contracts. Open interest declined by 987 contracts. The market is on a buy signal, but I have expressed reservations about how much more corn has on the upside. Currently, as of 9:17 am Pacific Daylight Time on March 15, corn is trading $.09 higher having made a new high for the move at 673. This took out the high of 672 1/2 made on January 3. The next upside objective would be the November 9, 2011 high of 683 1/4.
Soybeans:
May soybeans closed 1 1/2 cents higher on volume of 183,838 contracts. Open interest increased by a whopping 12,281 contracts. Open interest has risen every day since March 8, and the cumulative open interest increase is 48,541 contracts. During that time, soybeans increased 23 1/2 cents, or 1.77%. Approximately a week ago, I suggested those speculators who were long from significantly lower levels (lower $12.00 area) take profits around the $13.50 per bushel level. My concern was that the market was extremely overbought. With the current price on March 15 at 13.67 per bushel, the market is overbought by over $1.00 relative to its 50 day moving average. I would suggest that speculators stand aside, especially since the dollar appears to be heading higher and interest rates are rising.
Sugar #11:
May sugar closed 31 points higher on light volume of 86,539 contracts. Open interest increased by 3,298 contracts. As I have been saying for a number of days, sugar never generated a sell signal despite its poor performance beginning in late February. In yesterday’s post I stated that if the low in sugar was above the key pivot point of 24.06, sugar would be on a buy signal. As of today March 15, the low in sugar is 24.41. If this low holds today, then speculators should look for a pullback before entering long positions. The market made its low of 23.26 on Monday, March 12 and has rocketed approximately 2 cents since that time. Do not chase the market higher. Wait for a pullback before entering long positions.
Crude oil:
April crude oil closed $1.28 lower on volume of 671,171 contracts. Open interest declined by 9,123 contracts. Despite the rising dollar and rising interest rates, crude has been able to hold at the current level ($105.00) with very shallow setbacks. The market looks like it wants to go higher. Stand aside.
Gasoline:
April gasoline lost $.76 per gallon on volume of 143,069 contracts. Open interest declined by 2,541 contracts. The market reached a high of 3.3809, which was just shy of the 3.3868 high made on March 1. Stand aside.
Gold:
April gold closed $51.30 lower on very heavy volume of 333,152 contracts. Open interest declined by 4,726 contracts. The market made a new low for the move at 1634.70 per ounce and volume was the highest since February 29 when the market declined $77.10 and 366,754 contracts changed hands. The market closed at the lowest point since January 13 when gold closed 1633.60. Also, a gap occurred between the high that was made on March 14 of 1682.80 and the close of March 13 at 1694.20. The key pivot point for gold has been 1681.40. Because gold penetrated the pivot point by reaching a high of 1682.80 on March 14, a sell signal was not generated. Today March 15, the high in gold is 1667.40. If the high for gold on March 15 does not penetrate the pivot point, a sell signal will be generated. However, I am bullish on gold and would not think of shorting this market. From my point of view, a sell signal means there is an opportunity to acquire gold at more favorable prices. I suggest that all readers look at a six-month gold chart. It is readily apparent that there is a double top in gold separated by a period of of 75 trading days. The first top of 1808.00 was made on November 8 and the secondary top of 1792.70 was made on February 28. This is going to be an area of formidable resistance.
Silver:
May silver closed $1.40 lower on heavier volume of 84,737 contracts. Open interest declined 2,134 contracts. The closing price on March 14 was $32.18, which was the lowest close since January 24, 2012. Silver’s performance relative to gold is actually quite positive. For example, for a sell signal to be generated in May silver, the daily high cannot exceed the pivot point of $31.92 per ounce. Considering that the 21 day average true range for silver is $1.23, it is apparent that silver would have to move significantly lower for the daily high to be less than $31.92 per ounce. I need to see more action in silver, but there may be an opportunity to get long during the next week.
Euro:
The June Euro closed 51 points lower on heavy volume of 415,115 contracts. Open interest increased by 10,236 contracts. During March 13 and 14, the Euro has declined by 1.27 cents and open interest has increased by 32,501 contracts, which is bearish. Also, total volume on those two days exceeded 400,000 contracts, which indicates large participation by speculators and commercial interests alike. On rallies, short calls, and/or long puts, and/or outright short positions should be implemented. Use the high of 1.3299 as an exit point for those positions.
S&P 500 E mini:
The June S&P 500 E mini closed 2.00 points lower on volume of 2,606,860 contracts. Open interest increased by 33,007 contracts. The market looks like it wants to go higher, but long put protection continues to be a reasonable and cautious move. I have many concerns about the continuation of the rally in the S&P 500 and other major indices. For further information on my thoughts about the S&P 500, please see the weekend wrap of March 11. A new wrinkle concerning the major indices is the disconnect between rising interest rates and rising equity prices. Speculators in precious metals have recently seen what rising interest rates and a rising dollar can do to their positions. The question becomes if interest rates continue to rise, how much longer will the equity markets continue levitating higher.
Interest Rates:
The 10 year treasury note closed 1-11.5 lower on heavy volume of 1,820,221 contracts. Open interest declined a minuscule 5,997 contracts. The low of 128-20 was the lowest price for notes since October 2011. The high on March 14 was 130-01, which was above my key pivot point of 129-13. So far today on March 15, the high for June notes has been 129-02. If a sell signal is generated on March 15 by not penetrating the pivot point, I would suggest that speculators wait for a further rally before implementing bearish positions.
