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Soybeans:

May soybeans lost 7.50 cents on extremely light volume 117,166 contracts. Total open interest declined by a massive 10,067 contracts, which relative to volume is approximately 240% above average meaning liquidation was extremely heavy on the decline.

As this report is being compiled on April 7, May soybeans are trading 6.75 cents lower, and the trend will continue on the downside if the daily high is below OIA’s key pivot point for April 6 of 9.74 7/8. The high on April 7 has been 9.84. A short-term buy signal will be generated if the daily low is above OIA’s key pivot point for April 7 of 9.90 5/8. We think this is unlikely.

Soybean meal:

May soybean meal lost $4.30 volume of 56,254 contracts. Total open interest declined by 1,280 contracts, which relative to volume is approximately 10% below average. As this report is being compiled on April 7, May soybean meal is trading 3.30 lower, and the trend lower will accelerate if the daily high is below OIA’s key pivot point for April 7 of 325.10. A short-term buy signal will be generated if the May contract makes a daily low above OIA’s key pivot point for April 7 of 331.80. Like soybeans, we consider this to be remote.

Corn:

May corn lost 1.50 cents on light volume of 149,671 contracts. Total open interest declined by 1,073 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on April 7, May corn is trading 1.50 lower. May corn remains on the short and intermediate term sell signal.

Chicago wheat:

May Chicago wheat lost 8.50 cents on volume of 89,629 contracts. Total open interest increased by 1,455 contracts, which relative to volume is approximately 35% less than average. As this report is being compiled on April 7, May Chicago wheat is trading 3.00 cents higher. May Chicago wheat remains on a short-term buy signal, but an intermediate-term sell signal.

Kansas City wheat:

May Kansas City wheat lost 10.75 cents on volume of 21,922 contracts. Total open interest declined by 693 contracts, which relative to volume is approximately 30% above average mean liquidation was heavy on the decline. As this report is being compiled on April 7, May Kansas City wheat is trading 3.50 lower while Chicago wheat is trading 2.50 higher. May Kansas City wheat remains on a short-term buy signal, but an intermediate-term sell signal.

Cotton: On April 6, May and July cotton generated a short and intermediate term buy signal.

July cotton gained 1.07 cents on volume 33,266 contracts. Total open interest increased by 2,182 contracts, which relative to volume is approximately 160% above average meaning that aggressively longs were heavily entering the market and driving prices to new high for the move (65.46).  The May contract moved to a premium over July by 47 points. This is bullish. As this report is being compiled on April 7, May cotton is trading 1.13 cents higher and has made a new high for the move of 66.66. Now that cotton is on a short and intermediate term buy signal, it should have a pullback lasting from 1-3 days and this will be the opportunity to initiate bullish positions if you were so inclined.

WTI crude oil: May WTI will generate a short term buy signal on April 7. Conceivably, it may generate an intermediate term buy signal tomorrow.This would occur if the daily low is above OIA’s key pivot point for April 7 of 51.34.

May WTI crude oil advanced $3.00 on surprisingly light volume of 639,105 contracts. Volume was the weakest since March 30 when May WTI lost 19 cents on volume of 583,742 contracts and total open interest increased by 162 contracts. On April 6, total open interest increased by a hefty 17,597 contracts, which relative to volume is average, however considering the bearish views being held by most in the financial markets, the open interest increase is very impressive. This shows that new buying was pushing prices higher, not distressed short sellers.The May contract lost only 26 of open interest.

As this report is being compiled on April 7, May WTI is trading higher again, this time by $1.79 and has made a new high for the move at 53.94, which is the highest print since March 5 (54.00). Tomorrow is the EIA report, and this may cause WTI to pull back now that the market is on a short-term buy signal. The correction could last from 1-3 days. The correction would be favor selling out of the money puts.

Brent crude oil:

May Brent crude oil gained $3.17 on extremely low volume of 394,071 contracts. Total open interest declined by 7,083 contracts, which relative to volume is approximately 25% below average.The May contract lost 20,465 open interest. For the past two days, open interest action in Brent has been bearish and bullish for WTI. As this report is being compiled on April 7, May Brent is trading 72 cents higher while the May WTI contract is trading +1.62. In order for May Brent crude to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for April 7 of 58.39. The low on April 7 has been 57.02.

Gold: On April 6, June gold generated a short term buy signal, but remains on intermediate term sell signal.

June gold gained $17.70 on very light volume of 115,079 contracts. Total open interest declined increased by a massive 7,672 contracts, which relative to volume is approximately 160% above average meaning that huge numbers of new longs were entering the market and driving prices to a new high for the move (1224.50), which is the highest print since 1223.70 made on March 2.

As this report is being compiled on April 7, June gold is trading $7.90 lower and has made a daily low of 1207.50, which is below yesterday’s print of 1212.60. After the generation of a buy signal, the market has a tendency to pull back from 1-3 days and this is the opportunity to enter bullish positions if you are so inclined. In the past, we have called your attention to the bearish head and shoulders pattern on the weekly chart for gold and silver. Clients should keep this in mind when considering bullish positions.

Platinum: On April 6, July platinum generated a short

July platinum gained $25.90 on volume of 9158 contracts. Total open interest declined by 72 contracts. As this report is being compiled on April 7, July platinum is trading 3.10 lower on the day. Platinum should pullback for a couple of days before resuming its uptrend. It does not have the bearish head and shoulders pattern on the weekly chart.

Silver:

May silver gained 40.9 cents on volume of 40,954 contracts. Total open interest increased by a massive 2,011 contracts, which relative to volume is approximately 100% above average, meaning that aggressive new longs were entering the silver market and driving prices to a new high for the move (17.310).This is the first positive performance with respect to open interest that we had seen during the entire rally which began a couple of weeks ago. As this report is being compiled on April 7, May silver is trading 22.5 cents lower. May silver remains on a short and intermediate term buy signal. Again, we warn that silver has a bearish head and shoulders pattern on the weekly chart.

Coffee: On April 7, May and July coffee will generate a short term buy signal, but remain on an intermediate term sell signal.

July coffee advanced 5.10 cents on heavy volume of 45,653 contracts. Volume fell from April 2 when 56,672 contracts were traded and coffee advanced 6.05 cents while total open interest increased by 3412 contracts. On April 6, total open interest declined by an astounding 7,646 contracts, which relative to volume is an amazing 460% above average meaning that liquidation was off the charts heavy on the advance as prices move to a new high for the move of 1.4735.

There were eight contract months in which open interest declined totaling 8,140, which means the amount of net new buying totaled only 494 contracts. In summary, it was panicked short-sellers driving prices higher not new buying. This explains why the market has pulled back on April 7, and is likely to continue the correction now that a short-term buy signal has been generated. The setback could last from 1-3 days and this is the opportunity to initiate bullish positions.