Soybeans:

July soybeans lost 15.00 cents on extremely low volume of 148,860 contracts. Volume was the lowest since April 4 when 148,189 contracts were traded and July soybeans advanced 0.75 cents. The range on April 4 was 21.75 cents, which compares to the 38.75 cent range on April 21. In other words, volume was nearly the same on a narrow range day versus a wider range. On April 21, total open interest declined 3,200 contracts, which relative to volume is approximately 15% below average. The May contract lost 6,089 of open interest. In summary, the range on April 21 was the largest since March 12 (38.00) when 249,686 contracts were traded, yet volume shrank dramatically on the 21st while prices declined by the largest amount since April 11 when 203,874 contracts were traded and open interest increased by 4,047 contracts. Our conclusion: market participants are refusing to liquidate as prices move lower. This brings up one of two scenarios. Either those holding on are correct and prices will be moving higher shortly, or they are on the wrong side of the trade at this particular time. We think it’s the latter and that upward momentum has stalled. As this report is being compiled on April 22, July soybeans are trading 11.00  cents lower and have made a new low for the move at $14.70. Soybeans remain on a short and intermediate term buy signal, but we see no reason to be involved in the market at this particular time

Soybean meal:

July soybean meal lost $1.90 on volume of 65,023 contracts. Total open interest declined by a massive 3,954 contracts, which relative to volume is approximately 140% above average. The May contract lost 8,727 of open interest. As this report is being compiled on April 22, July soybean meal is trading $3.10 lower and has made a daily low of $470.10, which is slightly below yesterday’s low of 470.40. Although soybean meal’s loss was minor, the massive decline of open interest was disproportionately heavier than soybeans, which had a below average open interest decline. For some strange reason, managed money has always favored soybeans over soybean meal despite the fact that soybean meal has been the outperformer. Like soybeans, we see no reason to be involved in the market at this juncture. We are looking for a strong rally from the late May through mid July period.

Soybean oil:

July soybean oil lost 40 points on volume of 78,336 contracts. Total open interest declined by 2,803 contracts, which relative to volume is approximately 40% above average meaning the open interest decline was substantially above average, but this is healthy considering the massive open interest increase seen in the past couple of weeks. As this report is being compiled on April 22, July soybean oil is trading 28 points lower and has made a daily low of 42.90, which is above yesterday’s low of 42.89. Today is the 3rd day of the pullback after the generation of the short-term buy signal on April 15 Usually, this would be an opportunity to initiate bullish positions. However, as we said yesterday, our concern is that decline in soybeans and soybean meal could drag soybean oil along with it. The 20 day moving average for the July contract is 42.08, which is slightly above the April 11 low of 42.01. This is an ideal spot for the exit point, and the April 11 low is only about 90 points away from current prices. The July contract made its high on April 16 at 43.95. July soybean oil remains on a short and intermediate term buy signal.

Corn:

July corn lost 6.75 cents on volume of 311,739 contracts. Volume increased from April 17 when 267,462 contracts were traded and July corn lost 3.00 cents while total open interest increased by 3,243 contracts. On April 21, total open interest declined by 10,565 contracts, which relative to volume is approximately 35% above average, meaning that liquidation was fairly heavy on the decline. The open interest decline on April 21 was the largest since March 5 when it declined by 10,204 contracts and corn declined 2.25 cents on volume of 387,520 contracts. The May contract lost 20,958 of open interest. As this report is being compiled on April 22, July corn is trading 8.75 cents higher on low volume. Corn remains on a short and intermediate term buy signal, but at this juncture we see no reason to be involved in the market.

Chicago wheat:

July Chicago wheat lost 23.50 cents on volume of 108,303 contracts. Volume was the heaviest since April 16 when 156,564 contracts were traded and July wheat lost 14.50 cents while total open interest increased by 170 contracts. On April 21, total open interest declined by 4,364 contracts, which relative to volume is approximately 55% above average meaning that liquidation was heavy on the decline. The May contract lost 8,033 of open interest. As this report is being compiled on April 22, July Chicago wheat is trading 3.25 cents higher. Stand aside.

Kansas City wheat:

July Kansas City wheat lost 23.25 cents on volume of 24,221 contracts. Total open interest declined by a massive 2,090 contracts, which relative to volume is approximately 250% above average meaning that liquidation was massive. This is not surprising considering the recent COT report showed that managed money was long KC wheat by ratio of 8.68:1 compared to Chicago wheat of 1.80:1. In short, there is far more selling pressure in KC wheat than in Chicago wheat. As this report is being compiled on April 22, July KC wheat is trading 5.00 cents higher on the day. July KC wheat remains on a short-term sell signal, but an intermediate term buy signal.

Cotton: If July cotton holds its low for the day, it will generate a short-term buy signal, which will reverse the short-term sell signal generated on April 10. July cotton remains on an intermediate term buy signal.

July cotton lost 13 points on very light volume of 15,343 contracts. However, open interest declined by a massive 1,538 contracts, which relative to volume is approximately 300% above average meaning that liquidation was massive. The May contract accounted for loss of 2,917 of open interest. As this report is being compiled, on April 22, July cotton is trading 1.09 cents higher on the day and has made a daily high of 93.49 and a low of 92.15, which is above OIA’s key pivot point of 92.04. Although the market is somewhat overbought, relative to the 20 day moving average of 92.13, it is not overly so. At this juncture, we do not think cotton will see much of a setback, unless it reverses the short-term buy signal of today. However, we think it would be wise to wait one more day before considering bullish positions. We think the April 21 low of 91.55, which was the lowest print since April 15 (90.51) would be a reasonable exit point for bullish positions.

WTI crude oil:

June WTI crude oil advanced 28 cents on light volume of 424,034 contracts. Volume shrank dramatically from April 17 when 555,756 contracts were traded and June WTI advanced 34 cents while total open interest increased by 6,600 contracts. On April 21, total open interest declined by a substantial 14,025 contracts, which relative to volume is approximately 35% above average meaning that liquidation was heavier than usual. The May contract accounted for loss of 41,128 of open interest. As this report is being compiled on April 22, June WTI is trading $2.06 lower and is currently making new lows on heavy volume. We have been warning about the massive long position of managed money and have advised clients to stay on the sidelines. Many trend followers will be bailing out on this move and with the long to short ratio of managed money standing at 11.23:1, there is plenty of fuel for the downside. June WTI will not generate a short or intermediate term sell signal on April 22.

Natural gas:

May natural gas lost 4.4 cents on volume of 206,878 contracts. Volume shrank dramatically from the 406,021 contracts traded on April 17 when May natural gas advanced 21.1 cents and total open interest declined by 1,114 contracts. On April 21, total open interest declined by 4,880 contracts, which relative to volume is approximately 10% below average. As this report is being compiled on April 22, May natural gas is trading 3.4 cents higher on the day MMaintain bullish positions recommended in the April 14 report. At this juncture, there is no reasonable exit point if the market pulls back further. Clients should have healthy profits on positions if they were initiated when recommended.

Euro:

The June euro lost 23 pips on volume of volume of 41,258 contracts. Volume on April 21 was the lowest of 2014. On April 21, open interest declined by 713 contracts, which relative to volume is approximately 25% less than average. As this report is being compiled on April 22, the June euro is trading 5 pips higher on lackluster volume. The euro remains on a short and intermediate term buy signal, however, we see no reason to be involved in the market.

Gold: On April 17, June gold generated a short-term sell signal, and it looks increasingly likely that an intermediate term sell signal will be generated. This will be our last report on gold until we see a trading opportunity.

June gold lost $5.40 on light volume of 105,062 contracts. Total open interest declined by 1,010 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on April 22, June gold is trading $4.40 lower. In the report of April 14, (written on April 15) we recommended that bullish positions be initiated and that the low of 1284.40 be used as an exit point. In the report of April 16, written on April 17, we recommended that clients exit those positions because it was apparent the short-term buy signal generated on April 14 was false. Loss on this trade should have been minimal.

Platinum: On April 21, July platinum generated an intermediate term sell signal after generating a short-term sell signal on April 16.

S&P 500 E mini:

The June S&P 500 E mini gained 6.50 points on anemic volume of 535,487 contracts. Volume on April 21 was the lowest for any day in 2014. Total open interest declined by 814 contracts, which is minuscule and dramatically below average. Since generating a short-term sell signal on April 11, the E mini has rallied every day and as this report is being compiled on April 22 is trading 12.50 points higher making it the 6th consecutive day of an advance. During this time, open interest has declined by 21,376 contracts. The volume on April 21 and 22 is troubling and as this report is being compiled approximately 90 minutes before the close, volume in the June E mini is not close to 1 million contracts. Despite the move higher on April 22, the low of the day has been 1860.75, which is below OIA’s key pivot point for April 22 of 1864.60. The June E mini must make a low above the pivot point for it to reverse the short-term sell signal generated on April 11. We are concerned about the lackluster quality of the rally, and continue to recommend  maintaining long puts if holding long equity positions.