Soybeans:

May soybeans lost 13.00 cents on volume of 179,901 contracts. Volume shrank dramatically from the 273,738 contracts traded on April 9 when May soybeans advanced 12.75 cents and total open interest increased by ,8601 contracts. On April 10, total open interest declined only 938 contracts, which relative to volume is approximately 75% below average. The May contract lost 13,431 of open interest. As this report is being compiled on April 11, May soybeans are trading 18.00 cents lower on the day and have made a daily low of 14.60 3/4. The low volume and the minor decline of open interest indicates that longs are digging in and refusing to liquidate. On April 11, volume is light as well, which means that further liquidation is ahead. In short, the market has to wash out longs before soybeans can begin a new rally into early summer. Prior to the April 9 USDA report, we advised clients to move to the sidelines because we thought that further grains would be negligible. Soybeans remain on a short and intermediate term buy signal.

Soybean meal:

May soybean meal lost $2.60 on volume of 92,969 contracts. Total open interest increased by 2,087 contracts, which relative to volume is approximately 10% below average. The May contract lost 8,737 of open interest. As this report is being compiled on April 11, May soybean meal is trading $6.10 lower and has made a new low for the move at 472.60. Soybean meal remains on a short and intermediate term buy signal. Stand aside.

Corn:

May corn lost 1.00 cent on heavier than normal volume of 365,007 contracts. Volume declined substantially from the 639,980 contracts traded on April 9 when May corn lost 4.75 cents and open interest increased by 7,739 contracts. On April 10, open interest increased again, this time by 11,104 contracts, which relative to volume is approximately 20% above average. The May contract lost 29,722 of open interest. For the past 2 days beginning on April 9, corn has declined 5.75 cents while total open interest has increased 18,843 contracts. This is bearish open interest action relative to the price decline. With the huge number of speculative longs in the market, it would have been healthy to have open interest decline on April 10, especially since corn’s price action has been disappointing to say the least. We expect to see further price declines next week led by managed money who hold huge numbers of long positions.

Chicago wheat:

May Chicago wheat lost 6.75 cents on huge volume of 163,326 contracts. Volume declined from the 203,301 contracts traded on April 9 when May Chicago wheat lost 12.00 cents and total open interest increased by 4,207 contracts. On April 10, open interest increased again, this time by a minor 699 contracts, which relative to volume is approximately 80% below average. The May contract lost 11,951 of open interest. As this report is being compiled on April 11, May Chicago wheat is trading 1.25 cents higher and has not taken out yesterday’s low of $6.56 1/4. Remarkably, May Chicago wheat remains on a short-term buy signal and an intermediate term buy signal, but we do not expect this to last.

Kansas City wheat: On April 10, May Kansas City wheat generated a short-term sell signal, but remains on an intermediate term buy signal.

May Kansas City wheat lost 10.75 cents on fairly heavy volume of 33,565 contracts. Total open interest declined by a massive 2,179 contracts, which relative to volume is approximately 160% above average meaning that liquidation was extremely heavy on the decline. Compare this to the open interest action in Chicago wheat when open interest increased on the decline. The May contract lost 5,148 of open interest. Usually, after the generation of a sell signal, the market tends to have a countertrend rally lasting from 1-3 days. Wait for the rally before considering bearish positions.

Sugar #11:

July sugar advanced 5 points on heavy volume of 182,118 contracts. Total open interest declined by 735 contracts, which is minuscule and dramatically below average. The May contract accounted for loss of 30,025 of open interest, which means there was sufficient open interest increases in the forward months to bring the total open interest number down significantly below average. As this report is being compiled on April 11, July sugar is trading 23 points lower and has made a low for the day at 17.42. In the April 8 report, we recommended taking another shot at the bearish side using 17.93 as an exit point. If this trade was initiated, clients should have profitable positions. Continue to hold bearish positions in sugar. 

Cotton: On April 10, May cotton generated a short-term sell signal, but remains on an intermediate term buy signal.

May cotton lost 1.42 cents on extremely heavy volume of 56,675 contracts. Volume was higher than the 56,095 contracts traded on March 26 when May cotton topped out at 97.35 and closed 2.45 cents lower on what was a key reversal day. Additionally, volume was the highest since February 13, 2014 when 58,512 contracts were traded. On April 10, total open interest declined by 1,320 contracts, which relative to volume is approximately 10% below average. The May contract lost 11,498 of open interest. As this report is being compiled on April 11, May cotton is trading 25 points lower and has made a new low for the move of 88.63. As is usually the case after the generation of a sell signal, the market tends to have a countertrend rally lasting from 1-3 days. Wait for the rally before contemplating bearish positions.

WTI crude oil:

May WTI crude oil lost 20 cents on volume of 532,957 contracts. Volume fell dramatically from April 9 when 789,212 contracts were traded and May WTI advanced $1.04 while total open interest increased by 16,174 contracts. On April 10, open interest increased by 16,855 contracts, which relative to volume is approximately 30% above average. The May contract lost 15,861 of open interest, which makes the total open interest increase much more impressive (bullish). As this report is being compiled on April 11, May WTI is trading 61 cents higher and has made a new high for the move at $104.44, which is the highest print since 104.48 made on March 3. May WTI remains on a short and intermediate term buy signal. We have no recommendation at this juncture.

Natural gas: On April 10, May natural gas generated a short-term buy signal, which reversed the short-term sell signal generated on March 12. May natural gas remains on an intermediate term buy signal.

May natural gas advanced 6.9 cents on very heavy volume of 509,470 contracts. Volume was slightly above the 508,698 contracts traded on February 24 when May natural gas closed at $4.518. On April 10, open interest increased by a hefty 13,503 contracts, which relative to volume is average. However, the May contract lost 25,968 of open interest, which makes the total open interest increase much more impressive (bullish). Usually, after the generation of a buy signal, the market tends to have a countertrend decline, which lasts from 1-3 days. Wait for this to occur before contemplating bullish positions. From April 2 through April 10, May natural gas has advanced every day with the exception of April 4. Additionally, May natural gas is overbought relative to the 20 day moving average of $4.447 and the 50 day moving average of 4.497.

Euro: On April 10, the June euro generated a short-term buy signal, which reversed the short-term sell signal generated on April 3. The June euro remains on an intermediate term buy signal.

The June euro advanced 39 pips on light volume of 137,346 contracts. Total open interest increased by a healthy 3,343 contracts, which relative to volume is average. As this report is being compiled on April 11, the June euro is trading 4 pips higher and has made a new high for the move at 1.3903. We expect to see a countertrend decline after the generation of the buy signal, however, we do not feel comfortable trading the euro from the long side at current lofty prices.

British pound: We are suspending coverage on the British pound until such time that we see a trading opportunity.

Canadian dollar: 

 The June Canadian dollar lost 52 pips on volume of 50,420 contracts. Total open interest declined by 1,135 contracts, which relative to volume is approximately 10% below average. As this report is being compiled on April 11, the June Canadian dollar is trading 39 pips lower and has made a daily low of 90.90. Ever since the Canadian dollar generated a short-term buy signal on April 1, we have been cautioning clients not to chase the market, and the past 2 days action shows this was a wise course of action. Interestingly, the countertrend decline occurred after the June Canadian dollar generated an intermediate term buy signal on April 9. Continue to stand aside.

Gold:

June gold advanced $14.60 on light volume of 134,677 contracts. Total open interest increased by healthy 4,195 contracts, which relative to volume is approximately 25% above average. Gold made a new high for the move at $1324.90 and the high on April 11 is slightly below that at 1324.20. As we said in yesterday’s report: for June gold to generate a short-term buy signal, the daily low must be above OIA’s key pivot point of $1318.20. The low on April 11 is 1314.00. Continue to stand aside.

Platinum: July platinum will generate a short-term buy signal on April 11.

July platinum advanced $21.20 on volume of 9,911 contracts. Total open interest increased by only 66 contracts, which is minuscule and dramatically below average. Open interest action was most definitely a disappointment relative to the price advance and volume. Based upon the buy signal on April 11, platinum should experience a correction lasting from 1-3 days. Wait for this to occur before contemplating bullish positions, especially since the open interest increase on yesterday’s advance was disappointing.

S&P 500 E mini:

The June S&P 500 E mini lost 37.75 points on volume of 2,382,628 contracts. Total open interest increased by a substantial 44,432 contracts, which relative to volume is approximately 25% below average, but an open interest increase on the decline is bearish. As this report is being compiled on April 11, the E mini is trading 12.75 points lower and has made a daily low of 1812.75, which is the lowest print since the 1810.50 low made on February 20. We think there is more downside ahead and clients with long equity positions should maintain long put protection and decide whether to maintain long out of the money calls. It is anybody’s guess how far this correction will carry.

10 year Treasury Note: The June 10 year Treasury Note generated a short-term buy signal, but remains on an intermediate term sell signal.