Corn:
May Chicago corn closed $.16 per bushel lower on volume of 316,268 contracts. Open interest declined by 11,539 contracts. Considering the magnitude of the decline, and the range for the day, volume was fairly light. The range on March 20 was 20 1/4 cents, which is 50% higher than the 21 day average true range of 13 1/2 cents. For the past two sessions prices declined 25 1/2 cents and open interest declined 18,031 contracts. Taking the light volume of the past two days into account and the two day decline of open interest on price declines, this action can be considered positive. In the March 18 weekend wrap, I mentioned that it is important to watch the May July corn spread. On March 19, the spread closed at 2 3/4 cents, premium to the May contract. On March 20, the spread narrowed to 1 1/2 cents premium to the May contract. The fact that May corn continues to sell at a premium to July when prices are declining is another positive. Corn continues to be on a buy signal. Stand aside because I think further liquidation is in the offing.
Soybeans:
May Chicago soybeans closed 21 1/2 cents per bushel lower on volume of 212,443 contracts. Open interest declined by 3,324 contracts. Like corn, volume was fairly light considering the magnitude of the decline and the range for the day. The range on March 20 was 26 1/4 cents and the 21 day average true range is 17 7/8 cents average. When comparing the range for corn and soybeans on March 20, it is clear that corn is the more volatile of the two. The market continues to act well, but it is likely that further declines are in the offing. Stand aside.
Sugar #11:
May New York sugar lost five points on good volume of 148,313 contracts. Open interest increased by 2,750 contracts. The market made a new high at 26.20 cents per pound, which is the highest price since October 28, 2011 when the high in sugar was 26.35 cents per pound. However, sugar could not hold its gains and closed at 25.61 cents per pound. Sugar is on a buy signal, but it must be able to hold its gains to continue moving higher. If long, protective sell stops should be placed based upon risk tolerance and sound money management principles.
Crude oil:
May crude oil closed $2.02 lower on volume of 672,108 contracts. Open interest declined by
5,591 contracts. The market’s high for the day was $108.37 per barrel, which was just shy of the March 19 high of $108.70 per barrel. The market continues to move sideways to lower going back to late February. Additionally the Crude Oil Volatility Index, ticker symbol OVX is down at major lows. For example, the current price for the index is 26.51. The last time the index was this low was on January 19, 2011. On that day, February crude oil closed at $90.86 per barrel. In other words, the current price for crude is $16.00 higher than its January 19, 2011 close, but the volatility index remains down at the January 19, 2011 level. Everyone is aware of geopolitical risks with respect to oil, especially as it pertains to Iran. However the crude oil volatility index is telling us that market participants are not terribly concerned about a black swan event in crude. Stand aside.
Gasoline:
May New York gasoline closed 1.05 cents per gallon lower on extremely heavy volume of 190,766 contracts. Open interest declined by 1,687 contracts. The volume is the highest that I remember seeing any time this year. The range for the day was 4.96 cents, which is less than the 21 day average true range of 5.89 cents. Although there was no discernible reason for the heavy volume, perhaps market action during the next few days will give us the answer. The market continues to look tired, and I suggest all speculators stand aside and wait for lower prices.
Gold:
April New York gold closed $20.30 lower on relatively light volume of 182,758 contracts. Open interest declined by 3,187 contracts. The market is unable make any headway and looks tired. The market is on a sell signal, but speculators should be looking to position themselves to acquire gold at lower prices. If the market breaks to $1630 per ounce, a retest of the $1530 area is likely. The Gold Volatility Index ticker symbol GVZ is currently at 18.37. On March 13, the index made a low at 16.78. This was the lowest level for the index since July 22, 2011. On that day August gold closed at $1601.50 per ounce. Similar to the oil volatility index, the Gold Volatility Index is indicating there is a lot of complacency.
Silver:
May silver closed $1.21 lower on fairly light volume of 56,582 contracts. Open interest increased by a heavy 3,154 contracts. The close of $31.83 per ounce was the lowest close since January 20, 2012 when silver closed at $31.72 per ounce. The major open interest build on declining prices clearly indicates the shorts are in control. Stand aside.
Euro:
The June Euro closed 9 points lower on light volume of 208,564 contracts. Open interest declined by 90,261 contracts. The reason for the large open interest decline was that the March contract went off the board. Exit all bearish positions if the June Euro breaks above 1.3299.
S&P 500 E mini:
The June S&P 500 E mini closed 4.00 points lower on volume of 1,583,872 contracts. Open interest increased on the decline by 12,170 contracts. Long put protection should be in place.
Interest Rates:
The June 10 year treasury note closed 1 point lower on volume of 1,173,167 contracts. Open interest declined by 22,059 contracts and the market reached a new low for the move at
127-23. The market is on a sell signal and speculators should wait for a rally to the 128-28 to 129-15 area before implementing bearish positions.
Please e-mail me with any question or comment garry@openinterestanalyst.com
