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July Chicago corn closed 7 1/2 cents lower on volume of 292,753 contracts. Open interest declined by 1,668 contracts. It was good to see the decline in open interest because it may indicate that longs are ready to throw in the towel. The market action was terrible, and the problems started on Sunday when July corn opened at 7:00 PM Eastern daylight time on April 15. The close on Friday, April 13 was $6.20 3/4, but on Sunday, July corn gapped down lower at $6.18 1/2 at the opening and made a high of $6.18 3/4 shortly thereafter. The market then traded 5 cents to 6 cents lower throughout the evening, and by the re-opening for the day session on April 16 at 10:30 AM Eastern daylight time, the high for July corn remained 618 3/4. In other words, the market didn’t have the strength to overcome the high made shortly after the Sunday night opening. From the opening of the day session on Monday, the market proceeded to trade lower for the remainder of the day, which ended at 2:15 PM Eastern daylight time. Although July corn generated a short-term sell signal on April 11, and May corn generated an intermediate term sell signal on April 16. Do not short the market despite the sell signal. I would like to see more liquidation in corn before contemplating long positions. One important point supporting the bull camp on April 16 was that the May-July bull spread widened to 10 cents from 8 1/2 cents the day before. Also, volume on April 16 was the lowest since April 5, 2012 when the market traded 288,575 contracts. Considering that corn made a new low for the move and closed lower, lighter volume when the market declined is a positive sign. The widening of May-July spread is bullish. Stand aside for now.
July soybeans closed 16 1/2 cents lower on volume of 220,316 contracts. Open interest increased by 2,165 contracts. The 50 day moving average for July soybeans is $13.43, which is nearly 3 cents below an important low of $13.45 3/4 made on March 22 which was the lowest price for July soybeans since March 13, 2012. Before considering long positions speculators should wait until the market has corrected down to the 50 day moving average. The market continues to be overbought, and is vulnerable to a downside move, especially if the broad market moves lower. Stand aside.
May sugar continued its slide and closed 47 points lower on heavy volume of the 162,154 contracts. Open interest increased by 120 contracts. May Sugar generated an intermediate term sell signal on April 16. Do not short the market at this level. I will be watching the market to see if there is an opportunity for a future short sale. Until I have something new to report, this will be the last entry on sugar.
May crude oil closed 10 cents higher on heavier than normal volume of 687,731 contracts. Open interest increased by 7,494 contracts. The trading range for April 16 was $1.57, which was approximately 30% less than the 21 day average true range of $2.23. The open interest increase was actually quite small in relation to the volume. The 50 day moving average for May crude oil is $104.74, and the market would have to definitively move beyond this level to get me into the bullish camp. On the other hand, as I said in yesterday’s post, the market doesn’t seem like it wants to go lower. Crude oil is currently on a short-term sell signal, but this is not a market to short. Stand aside.
May gasoline closed 7.91 cents lower on volume of 185,414 contracts. Open interest increased on the decline by 9,932 contracts. The increase in open interest was massive in relation to the volume. As a matter of fact, this is the biggest increase of open interest on the down move since March 6, when gasoline closed down 2.81 cents and open interest increased by 11,745 contracts. The massive increase in open interest indicates there is a major difference of opinion between longs and shorts with respect to the direction of gasoline, however the shorts are clearly in control. Although I don’t think the bull market in gasoline is over yet, there could be a further shakeout of exuberant longs before a major upside move can resume. Stand aside.
May copper closed unchanged on volume of 81,501 contracts. Open interest increased by 1,023 contracts. Since April 9, the market is on a short-term sell signal, however, an intermediate term sell signal has not been generated. Stand aside.
June gold closed $10.50 lower on light volume of 122,836 contracts. Open interest increased on the decline by 621 contracts. Volume was lighter than on April 13 when gold traded 134,993 contracts and the market fell $20.40. Also, volume on April 16 was the lightest since April 11 when the 119,736 contracts were traded. Decreasing volume on the decline is a positive for gold. Speculators should be consulting with their investment advisor or broker about accumulating gold during this period of consolidation.
May silver closed 1.7 cents lower on light volume of 48,151 contracts. Open interest increased by 1,085 contracts. Volume was the lightest since April 2 when 45,897 contracts changed hands. The trading range for silver on April 16 was 52 cents, which was almost half of the 21 day average true range of $1.03. Silver has a number of obstacles to overcome before it can be considered a good candidate for a long position. First, May silver crossed beneath its 50 day moving average on March 14 and has not been above it since. Currently, the 50 day moving average is at $33.26 and the 200 day moving average is $34.41. The market is on a short and intermediate term sell signal. Do not short the market. Stand aside.
The June Euro climbed 56 points on heavier than normal volume of 304,212 contracts. Open interest increased on the price advance by 5,169 contracts. Relative to volume, the open increase was below average, but price and open interest moved in the same direction on the up move, which is a rarity in the Euro. There is talk of a repatriation of funds into the euro due to asset sales by European banks. The market reached the 1.3000 support level on April 16 and then rallied to a high of 1.3154. I will be watching to see if the market continues to rally which may give speculators an opportunity to implement bearish positions. Stand aside for now.
The June Australian dollar closed 22 points lower on volume of 118,891 contracts. Open interest declined by 4,454 contracts. Please see the post of April 13, to get the points of resistance in the Australian dollar. Despite being on a short-term sell signal, the market looks like it has made a short-term bottom. Stand aside for now.
S&P 500 E mini:
The June S&P 500 E mini closed 1.10 points lower on heavy volume of 1,960,238 contracts. Open interest increased by 8,681 contracts. Long put protection should be in place.