Corn:
May Chicago corn closed 10 1/2 cents lower on a higher than usual volume of 372,740 contracts. Open interest increased by 2,735 contracts on the decline. The May-July bull spread continued to work with May selling at a 3/4 cent premium over July. The market made a new low for the move at $6.19 per bushel, which was the lowest price since January 23 when the market reached $6.17 3/4. The market also made a new closing low of $6.20 1/4, which was the lowest since January 20 when the market closed at $6.16 3/4. As I write this on March 29, corn is 8 1/2 cents lower and the high for the day has been $6.23 1/2. If the market doesn’t penetrate $6.33 5/8 on March 29, which seems unlikely, a sell signal will be generated. This is not a market that speculators want to enter on the short side, especially since the March 30 USDA prospective plantings in stocks report is to be released tomorrow. The danger for the corn market is that since the market topped out at $6.75 3/4 on March 19 the corn market has fallen 56 3/4 cents to the low of $6.19, but open interest has only declined a mere 30,847 contracts. This means there are huge numbers of longs that currently have significant losses. Depending upon the results of the March 30 report, a new wave of selling could engulf the market. Despite this, do not enter long or short positions prior to the report.
Soybeans:
May Chicago soybeans closed 2 1/4 cents lower on volume of 183,111 contracts. Open interest increased for the sixth day in a row by 3,399 contracts. The market is top-heavy with speculative longs. Stand aside.
Sugar #11:
May New York sugar closed 4 points lower on light volume of 91,096 contracts. Open interest decreased by 3,558 contracts. The market made a new low for the move at 24.11 cents per pound. The sugar market remains on a buy signal, and the open interest action on the decline is consistent with a bull market. Stand aside for now.
Crude oil:
May New York crude oil closed $1.92 lower on fairly light volume of 568,804 contracts. Open interest declined by 2,931 contracts. As I’m writing this on March 29, crude oil is $2.10 lower and has broken the support area of $104.50. For a number of weeks, I have been cautioning speculators to stand aside in this market due to the great deal of uncertainty pertaining to the geopolitical situation. If the high of $105.70 stands on March 29, a short-term sell signal will be generated. This does not mean that speculators should rush in to short the market. The tensions with Iran have not lessened and any serious threat could send the market sharply higher. Stand aside.
Gasoline:
May New York gasoline closed 2.43 cents lower on extremely heavy volume of 219,522 contracts. Open interest declined for the fifth day in a row by 5,927 contracts. It is clear that massive liquidation is underway and during the past five days, open interest has declined by 25,737 contracts. During the five-day timeframe, gasoline has advanced 1.69 cents. This is bearish price and open interest action. Stand aside.
Gold:
April New York gold closed $27.00 lower on extremely heavy volume of 379,099 contracts. Open interest declined by 9,911 contracts. The gold market went on a sell signal on March 15, and as I have said in previous posts, speculators should be using the sell signal to accumulate gold at lower prices. Do not short this market.
Silver:
May New York silver closed 78 cents per ounce lower on light volume of 48,225 contracts. Open interest increased by a massive 4,402 contracts. The price and open interest action for the past couple of weeks is decidedly bearish. Despite this, silver has not generated a sell signal. Stand aside.
Euro:
The June Euro closed 13 points lower on volume of 239,706 contracts. Open interest declined by 1,234 contracts. The market continues to trade in a pattern that suggests there is support at current levels. Stand aside.
Australian Dollar
The June Australian dollar generated a short-term sell signal on March 28. The market has been moving lower for a while, but the open interest action from the beginning of the decline on February 29 has not been all that bearish. I will continue to monitor the market to provide speculators with my best judgment about when and if to enter bearish positions.
S&P 500 E mini:
The June S&P 500 E mini closed 6.25 points lower on volume of 1,764,489 contracts. Open interest increased by 8,794 contracts. Volume was the highest since March 15 when 2,308,797 contracts were traded. The market appears to be setting itself up for a correction. Long put protection should already be in place.
Interest Rates:
June 10 year treasury notes closed essentially unchanged on volume of 1,070,755 contracts. Open interest continued its bearish pattern by declining 10,792 contracts. The market made a new high for the move at 129-27. We continue to see the pattern of liquidation as the note market moves higher. In previous posts, I have suggested for bearish positions that a money stop can be used, or a hard stop can be placed at the March 14 high of 130-01. As I said in yesterday’s post, if the equities market moves sharply lower, notes are going to rally. As I write this on March 29, notes have rallied 11 points and the S&P 500 is 10.50 points lower. If speculators are stopped out on the current rally, I will be looking for another spot for speculators to re-enter bearish positions.
