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July soybeans closed 7 1/2 cents higher on volume of 234,258 contracts. Open interest increased by 6,271 contracts. The market underperformed corn and wheat for the first time in quite a while, and it remains to be seen whether the correction will continue. The market made its high of $14.53 1/4 on April 10 and has been trading sideways to lower since then. As I write this on April 20, soybeans have rallied to make new high for the move at $14.58 3/4. Despite the rally, speculators should remain cautious at these levels. Stand aside.
July corn closed 18 cents higher on volume of 408,285 contracts. Open interest increased by 1,120 contracts. April 18 and 19 saw minor increases in open interest on a close higher and a close lower. My interpretation of this is this is that unprofitable longs, and profitable shorts are liquidating, but they are being replaced by new shorts and new longs, which explains the minor increase in open interest on heavy volume. In other words, you have shorts who continue to think the market is going lower, and bottom pickers who think the market is going higher. The action of the May-July bull spread continues to act in bullish fashion and the spread widened by 1 1/4 cents on April 19 with May selling at a 9 cent premium to July. Stand aside for now.
June crude oil closed 40 cents lower on light volume of 544,648 contracts. Open interest declined by a whopping 22,793 contracts. The open interest decline was heavy in relation to the volume. Over the course of the past three days open interest has declined by 58,865 contracts, which is a significant decline in open interest in relation to the volume of the past three days. Crude oil has declined by 59 cents during the past three days, which makes the decline in open interest a somewhat positive factor. My only trepidation is that the open interest decline has been heavy in relation to the price decline. Remember, open interest declines when both longs and shorts agree it is time to liquidate. The market remains on a short-term sell signal, however, do not short the market. Stand aside.
June gasoline closed 3.31 cents lower on heavy volume of 236,096 contracts. Open interest declined by 1,136 contracts. The market made a new low for the move at $3.0988 per gallon, which was the lowest price since February 14 when the market reached a low of $3.0900. The 50 day moving average for June gasoline is $3.24, and the 150 and 200 day moving averages are $2.92 and $2.91 respectively. Preferably, I would like to see the market correct down to the 290 area before contemplating long positions. The market is on a short-term sell signal, but speculators should not short the market. Stand aside.
May copper closed 35 ticks lower (essentially unchanged) on relatively heavy volume of 78,867 contracts. Open interest increased by 1,192 contracts. The copper market has been on a short-term sell signal since April 9, but has not yet generated in intermediate term sell signal. Stand aside.
June gold closed $1.80 higher on heavier than normal volume of 174,358 contracts. Open interest increased by a minuscule 339 contracts. Volume was the highest since April 10, however the trading range on Thursday was only $23.70, which is $3.20 less than the 21 day average true range of $26.90. Thursday’s market action indicates that there were speculators liquidating, and they were being replaced by new longs and shorts. This this would explain the high volume, smaller than usual range, fractional higher close and a minor increase in open interest. The market has been on an intermediate term sell signal since mid-March, and this should be used as an opportunity to acquire gold at lower prices. Please consult with your investment advisor or broker.
May silver closed 29 cents higher on heavier than normal volume of 59,654 contracts. Open interest increased by 894 contracts. Like gold, volume was the highest since April 10 when silver traded 67,721 contracts. The market remains on an intermediate term sell signal, however, do not short the market. Stand aside.
The June Euro closed 6 points higher (essentially unchanged) on heavier than normal volume of 303,626 contracts. Open interest increased by 595 contracts. Volume was the highest since April 16 when 304,212 contracts were traded and the market closed 56 points higher. From April 16 through April 19, open interest has increased by a total of 11,244 contracts and the June Euro has added 53 points in that time frame. This is positive market action, and as I indicated in the post of April 18, speculators should stand aside due to increases of open interest and the upcoming elections being held over the weekend in France. As I write this on April 20, the Euro is up 80 points. Continue to stand aside.
The June Australian dollar closed 28 points lower on heavier than normal volume of 141,013 contracts. Open interest increased by 798 contracts. The market continues to act poorly, and for speculators who wish to implement bearish positions, the March 28 high of 1.0388 should be used as an exit point. As I said in yesterday’s post, the performance of the Australian dollar will to a great extent, depend upon the perceived economic conditions in China. In my view, speculators should definitely avoid the long side of the Australian dollar.
S&P 500 E mini:
The June S&P 500 E mini lost 5.75 points on extremely heavy volume of 2,633,094 contracts. Open interest increased by a minuscule 6,476 contracts. Similar to a number of other commodities that traded on April 19, the S&P 500 E mini had higher than normal volume, but open interest increases did not reflect much conviction either way. This kind of action underscores the tremendous amount of uncertainty that permeates the financial markets. Long put protection should already be in place.