Corn:
May Chicago corn closed 3 1/4 cents higher on volume of 231,992 contracts. Open interest increased by 7,666 contracts. The open interest increase was healthy but the volume was lackluster. I went back into my records and couldn’t find a lower volume day for all of 2012. Sharp decreases in volume at market highs often portend a pullback. The market made a new high for the move at $6.73 3/4 per bushel, which was only slightly higher than the previous days high of 6.73. Corn is on a buy signal, but as I’m writing this, the market has pulled back $.05 on the day and has made a low of 6.63. For detailed information on the corn market please see the March 18 weekend wrap.
Soybeans:
May Chicago soybeans closed $.05 higher per bushel on volume of 186,421 contracts. Open interest increased by 1,804 contracts. The market made a new high for the move at $13.77 1/2 per bushel. The market is over due for a setback, and as I’m writing this soybeans are down 5 3/4 cents having made a low for the day at 13.62 1/2. For detailed information on soybeans, please see the weekend wrap of March 18.
Sugar #11:
May New York sugar lost nine points on volume of 129,996 contracts. Open interest increased by 691 contracts. The market reached a new high for the move at 25.68 cents per pound. This slightly exceeded the February 28 high of 25.67 cents and fell short of the high made on February 27 of 25.81 cents. The market is going to have to break through these highs in a convincing manner for the rally to continue. It is likely, that we could get a pullback before the market attempts to move decisively higher. Sugar is on a buy signal, and if long, stops should be based upon risk tolerance and sound money management principles.
Crude oil:
April New York crude oil gained $1.95 on very light volume of 556,689 contracts. Open interest increased by 15,039 contracts. Stand aside.
Gasoline:
April gasoline closed 6.84 cents higher on volume of 140,014 contracts. Open interest declined by 1,882 contracts. For the past two days, price and open interest action have been bearish. On Thursday, gasoline declined by 5.85 cents, but open interest increased by 5,040 contracts, which is bearish. On March 16, open interest declined on a substantial move to the upside, which is bearish The market made its high on March 1 at $3.3868 per gallon and there have been numerous attempts to break above that price, but the market falters each time. Stand aside and wait for lower prices.
Gold:
April gold closed $3.70 lower on volume of 195,925 contracts. Open interest declined by 3,460 contracts. Gold is currently on a sell signal, which means that speculators should be positioning themselves in order to acquire gold at lower prices. Do not short this market.
Silver:
May silver closed $.12 lower on light volume of 46,202 contracts. Open interest increased by 586 contracts. Despite its weakness, silver has not moved to a sell signal. The market made a low of $31.62 per ounce on March 14, which is is $.02 above the low of 31.60 made on January 25. The key pivot point for silver on the upside is 32.88. If the market’s daily low is above the pivot point, a buy signal will be generated. Because volume is rather light in the futures contract, it might be wiser to trade one of the silver ETF’s.
Euro:
The June Euro closed 77 points higher on volume of 316,551 contracts. Open interest increased by a massive 16,166 contracts. This is the second day in a row when the the Euro has advanced and open interest has been up substantially. This is anomalous behavior, and it should be taken seriously. I cannot remember when the Euro advanced two days in a row and open interest was up substantially both days. As I am writing this on March 19, the euro is 70 points higher, and is trading at 1.3250. As mentioned in previous posts, the exit point for all bearish positions is 1.3299.
S&P 500 E mini:
The June S&P 500 E mini closed 2.50 points higher on volume of 1,432,537 contracts. Open interest declined by 18,155 contracts. Put protection should be in place.
Interest Rates:
June treasury notes closed 7 1/2 points lower on volume of 1,304,051 contracts. Open interest declined by 14,436 contracts. the Commitment of traders Report showed that leveraged funds are heavily long treasury notes. As of the Friday report, leveraged funds held 422,914 contracts long and 221,774 contracts short. This means there is a tremendous amount of potential selling pressure if the market continues to move lower. As I am writing this on March 19, June notes are down 15 points and have made a new low for the move. On March 15, notes generated a sell signal, and I suggested that speculators wait for a rally before implementing short positions. There has been no rally and this underscores the weakness of the treasury note market. If the stock market takes a sharp tumble, I would expect notes to rally sharply.
Please e-mail me with any questions or comments.
garry@openinterestanalyst.com
