Soybeans:

May soybeans advanced 25.00 cents on heavy volume of 241,654 contracts. Volume was the heaviest since April 9 when 273,738 contracts were traded and May soybeans advanced 12.75 cents while total open interest increased by 8,601 contracts. On April 15, total open interest increased by 7,829 contracts, which relative to volume is approximately 30% above average, meaning that market participants were entering new long positions at an above average rate. The May contract lost 10,403 of open interest, which makes the total open interest increase much more impressive (bullish). As this report is being compiled on April 16, May soybeans are trading 14.25 cents higher and have made a new high for the move at 15.22 3/4, which takes out the previous high of 15.12 made on April 9. The performance of soybeans have been nothing short of outstanding, and though we have recommended a sideline stance, we continue to think there will be a terrific opportunity on the long side at lower levels. Keep in mind, that Chinese soybean cancellations did not occur last year until April and could come later. May soybeans remain on a short and intermediate term buy signal.

Soybean meal:

May soybean meal advanced $8.30 on total volume of 99,285 contracts. Volume was the highest since April 9 when 111,659 contracts were traded and May soybean meal advanced $4.00 while total open interest declined by 850 contracts. On April 15, total open interest increased by a substantial 4,445 contracts, which relative to volume is approximately 75% above average meaning that participants were entering new long positions at a staggeringly high rate as prices climbed to the very high-end of the trading range. The May contract lost 3,936 of open interest, which makes the total open interest increase much more impressive (bullish). As this report is being compiled on April 16, May soybean meal is trading $1.90 higher after making a new high for the move at 494.60. Like soybeans, we think there will be a terrific opportunity to get long at lower levels for the move into new high ground in the late May to mid July period. May soybean meal remains on a short and intermediate term buy signal.

Soybean oil: On April 15, May soybean oil generated a short-term buy signal, which reversed the short-term sell signal of March 20. May soybean oil remains on an intermediate term buy signal.

July soybean oil gained 59 points on volume of 107,821 contracts. Total open interest increased by 4,394 contracts, which relative to volume is approximately 55% above average. The May contract lost 1,832 of open interest, which makes the total open interest increase more impressive (bullish). From April 1 when the rally in soybeans began through April 15, total open interest has increased by 27,047 contracts, which is a major increase during 11 trading days. Higher soybean oil values will support profitable crushing of soybeans for products. As is usually the case after the generation of a buy signal, the market has a tendency to pullback from 1-3 days, and this is the buying opportunity. Until then stand aside.

Corn:

May corn advanced 0.75 cents on volume of 333,839 contracts. Volume increased from the 260,885 contracts traded on April 14 when May corn advanced 4.50 cents and total open interest increased by 3,921 contracts. On April 15, total open interest declined by 9,762 contracts, which relative to volume is approximately 20% above average. The May contract accounted for loss of 28,432 of open interest. Open interest declines have been quite rare during the past 30 days, and the prior one occurred on April 7 when May corn lost 2.50 cents on volume of 361,116 contracts and total open interest declined by 2,832 contracts. Prior to April 7 , the next open interest decline occurred on March 26 when May corn lost 2.00 cents on volume of 149,394 contracts and total open interest declined by 4340 contracts. The open interest decline on April 15 is the largest in well over a month. As this report is being compiled on April 16, May corn is trading 6.25 cents lower. We have recommended a sideline stance in corn and continue to think this is the best course of action for now. May corn remains on a short and intermediate term buy signal.

Chicago wheat:

May Chicago wheat advanced 23.00 cents on heavy volume of 154,155 contracts. Volume increased from the 149,048 contracts traded on April 14 when May Chicago wheat advanced 18.50 cents and total open interest declined by 7,498 contracts. On April 15, total open interest declined by 4,666 contracts, which relative to volume is approximately 20% above average meaning that liquidation was substantial on the advance. The May contract accounted for loss of 10,818 of open interest. For the past 2 days, May wheat has advanced 41.50 cents, but total open interest has declined by 12,164 contracts. This is bearish. As this report is being compiled on April 16, May Chicago wheat is trading 13.25 cents lower after making a new high for the move at $7.11 and has made a low of $6.84 which is below OIA’s key pivot point of $6.85. As we said in yesterday’s report, for May Chicago wheat to continue to advance, the low for the day must be above our key pivot point. The pivot point in yesterday’s report was 6.84 1/8. Chicago wheat remains on a short and intermediate term buy signal. Stand aside.

Kansas City wheat:

May Kansas City wheat advanced 23.50 cents on volume of 34,087 contracts. Total open interest increased by 756 contracts, which relative to volume is approximately 15% below average. The May contract accounted for loss of 2,899 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on April 16, May KC wheat is trading 14.50 cents lower after making a new high for the move at 7.74 1/4. May KC wheat is trading below today’s key pivot point of 7.53 5/8, and until it makes a daily low above that, KC wheat will struggle to advance and likely trade sideways to lower. May KC wheat remains on a short-term sell signal, but an intermediate term buy signal. Stand aside.

Sugar#11: Close out bearish sugar trades after July sugar has violated OIA’s exit point of 17.93 on April 16

July sugar gained 15 points on volume of 164,075 contracts. Total open interest declined by 20,731 contracts, which relative to volume is approximately 360% above average meaning that liquidation was extremely heavy on the modest advance. The May contract accounted for loss of 44,543 of open interest. As this report is being compiled on April 16, July sugar is trading 25 points higher and has made a high of 17.95 which is above our exit point of 17.93. Close out bearish sugar trades and move to the sidelines. July sugar remains on a short-term sell signal, but an intermediate term buy signal.

Cotton:

July cotton lost 99 points on fairly light volume of 28,700 contracts. Volume increased slightly from the 27,364 contracts traded on April 14 when cotton advanced 1.83 cents and total open interest declined by 556 contracts. On April 15, total open interest declined by 1,056 contracts, which relative to volume is approximately 45% above average meaning that liquidation was heavy on the decline. The May contract lost 5,333 of open interest. As this report is being compiled on April 16, July cotton is trading 96 points higher and has made a high of 92.70. It now appears that July cotton may generate a short-term buy signal, which would reverse the short-term sell signal of April 10. July cotton remains on an intermediate term buy signal. Stand aside.

WTI crude oil:

May WTI crude oil lost 30 cents on volume of 517,573 contracts. Total open interest increased by 2,413 contracts, which is minuscule and dramatically below average. The May contract accounted for loss of 28,061 of open interest. As this report is being compiled on April 16, May WTI crude oil has made a new high for the move at $104.99, which is the highest print since March 3 when the April contract made a high of $105.22. After making today’s high between 5:15 a.m. -5: 30 a.m. CDT, the market has sold off and hasn’t gotten close to testing the high made in the early morning before the pit session opened. As a result, the May contract is currently trading 33 cents lower on the day and has made a low of 103.12. We have been advising a stand aside posture because we do not like the fundamentals of the market and managed money is massively long. Additionally, the dismal performance of Brent crude oil with respect to price and open interest is another negative factor. The massive increase in crude oil stocks in the latest EIA report does not support higher prices. Continue to stand aside.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.0 million barrels from the previous week. At 394.1 million barrels, U.S. crude oil inventories are above the average range for this time of year. Total motor gasoline inventories decreased by 0.2 million barrels last week, and are near the lower limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 1.3 million barrels last week and are below the lower limit of the average range for this time of year. Propane/propylene inventories rose 0.8 million barrels last week but are near the lower limit of the average range. Total commercial petroleum inventories increased by 14.5 million barrels last week.

Brent crude oil: On April 15, June Brent crude oil generated a short and intermediate term buy signal.

June Brent crude oil advanced 29 cents on volume of 547,246 contracts. Total open interest declined by 3,149 contracts, which relative to volume is approximately 65% less than average. The May contract accounted for loss of 10,408 of open interest. June Brent crude made a high of 109.75, which is its highest print since 110.51 made on March 4. The price and open interest action of Brent crude has been absolutely abysmal and reinforces our view that prices are likely to head lower once the current rally has burned itself out. To provide context on the dismal performance of Brent crude oil consider from the time the rally began on April 3 through April 15, June Brent crude advanced $4.59, however total open interest declined by 2,193 contracts. In summary, buyers and sellers were liquidating as the market moved higher. Stand aside.

Natural gas:

May natural gas advanced 8 ticks on volume of 222,536 contracts. Total open interest declined by 5,650 contracts, which relative to volume is average. The May contract accounted for loss of 21,613 of open interest. As this report is being compiled on April 16, May natural gas is trading 2.3 cents lower and has made a daily low of $4.523, which is above yesterday’s low of 4.511. In yesterday’s report, we recommended the initiation of bullish positions and stated that we didn’t think May natural gas would trade much below 4.475.  Unfortunately, there is not a good exit point for natural gas on the chart and we recommend using 4.475 as a reasonable place to exit bullish positions. We are disappointed that on April 16, the market is trading lower, which violates our 3 day pullback protocol making it the 4th day of a pullback. This is a yellow alert indicating there may be something wrong with the bullish trade. Tomorrow is the natural gas EIA report, which is released at 9:30 a.m. CDT. Be sure to have appropriate risk management in place.

Euro:

The June euro lost 11 pips on volume of 124,438 contracts. Total open interest declined by 1,734 contracts, which relative to volume is approximately 40% less than average. As this report is being compiled on April 16, the June euro is trading 14 pips higher on the day. The euro remains on a short and intermediate term buy signal. Stand aside.

Canadian dollar: As recommended in yesterday’s report, bearish positions should be closed out due to the violation of our exit point of 90.66 and 90.58. Clients should be on the sidelines.

The June Canadian dollar lost 14 pips on volume of 39,624 contracts. Total open interest declined by 1,008 contracts, which relative to volume is average. As this report is being compiled on April 16, the June Canadian dollar is trading 22 pips lower and has made a new low for the move at 90.49. In yesterday’s report, we stated the Canadian dollar should not dip below yesterday’s low of 90.66 and the low should not exceed 90.58. Additionally, we stated if the Canadian dollar was trading lower today, that it would be negative because it violates OIA’s 3 day pullback protocol. It appears the Canadian dollar may be in the process of reversing the recent short and intermediate term buy signals. Stand aside. 

Gold:

June gold lost $27.20 on heavy volume of 199,031 contracts. Surprisingly, volume was not higher. For example, on March 28 246,499 contracts were traded and the range on that day was 1286.10-1299.40 ($13.30) and June gold closed at 1294.30. On April 15 gold made a high of 1328.40 while the low was 1284.40, or a range of $44.00. The low on April 15 was exactly the same low on April 4, 2014. Open interest reflected a lack of panicking and increased only 100 contracts. To break this number down further: the June contract lost 967 of open interest while August and October gained 791 and 259 contracts of open interest. On April 14, June gold generated a short-term buy signal, and we think the massive decline on Tuesday has warranted an entry on the long side at the low-end of the trading range with fairly low risk. If June gold trades below 1284.40, we advise liquidating bullish positions.

S&P 500 E mini:

The S&P 500 E mini gained 15.00 points on heavy volume of 2,615,208 contracts. Total open interest increased by only 4,019 contracts, which is minuscule and dramatically below average. Since the rally began on April 14, the E mini has advanced 27.75 points, however, open interest has increased only 6,431 contracts, which is not exactly a show of confidence on the part of new participants. April 16 is the 3rd day of the countertrend rally after the E mini generated a short-term sell signal on April 11.

Today, clients should consider liquidating out of the money calls and/or initiate new long puts with the following caveat: If the June E mini continues to rally beyond 1863.50, new all-time highs may be in the offing. Alternatively, clients may decide to wait until tomorrow before making a decision about purchasing long out of the money calls and the initiation of new long puts.  The logic behind OIA’s recommendations is that today’s rally should be the extent of the countertrend move. A continued move higher could mean that the market is going to test the April for high of 1892.50.