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September soybeans gained 10.25 cents on very low volume of 140,842 contracts. Open interest declined by 10,105 contracts, which in relation to volume is more than 200% above average. Keep in mind that the September contract will be going off the board and therefore there will be a considerable amount of liquidation in the September contract. As indicated in the August 26 report, for soybeans to take another leg higher, it has to penetrate the July 20 soybean high for the August contract of $17.77 3/4.Soybean meal:
October soybean meal gained $6.30 on volume of 68,001 contract. Open interest declined by 2,357 contracts, which in relation to volume is approximately 10% above average. Like soybeans, we are seeing liquidation in the September contract as we get closer to first notice day.
December corn lost 6.25 cents on volume of 217,347 contracts, open interest declined by a whopping 19,210 contracts, which in relation to volume is approximately 250% above average.
December wheat declined by 6.25 cents on volume of 80,824 contracts. Open interest declined by 17,940 contracts, which in relation to volume is a staggering high number and represents over 20% of the volume.
October crude oil lost 12.00 cents on light volume of 417,074 contracts. Volume was the lightest since July 30 when 390,132 contracts were traded. On August 24, open interest increased by 7,807 contracts, which in relation to volume is somewhat below average. On August 27, the market rocketed higher on the impending hurricane Isaac. As indicated in the COT report, managed money has been piling into the long side of crude oil. We suspect that much of this is in anticipation of further tensions in the Middle East and new money printing programs by the ECB and the Federal Reserve. Although the market remains on a short and intermediate term buy signal, speculators should be wary of being long at current levels.
October heating oil lost 2.25 cents on volume of 138,029 contracts. Open interest declined by 4,817 contracts, which in relation to volume is about 10% above average. On August 27, heating oil rocketed up to a new high of $3.1915, but has sold off and is trading about unchanged.
October gasoline lost 3.79 cents on volume of 134,351 contracts. Open interest declined by 2,328 contracts, which in relation to volume is somewhat less than average. On August 27, October gasoline rocketed approximately 10.00 cents higher and has pulled back and is trading 4.31 cents higher.
September copper lost .0090 on volume of 65,937 contracts. Open interest declined by 552 contracts. Although the rally has been less than impressive, with the possibility of quantitative easing and other money printing programs, it is best to stand aside, especially with copper being on a short-term buy signal.
December gold gained 10.00 cents on light volume of 108,983 contracts. Open interest increased by 6,477 contracts, which in relation to volume is approximately 200% above average. Although the market is acting well, the lack of volume, which in part is caused by the summer holiday season, is indicating a lack of participation by the speculative community. Wait for a pullback before implementing bullish positions.
September silver gained 16.5 cents on volume of 64,245 contracts. Open interest declined by 2,388 contracts, which in relation to volume is approximately 20% above average. Although silver’s advance has been impressive, the open interest action leaves a lot to be desired. It is encouraging that during the past three trading sessions silver has traded at elevated volume levels. On Friday, silver closed above its 200 day moving average for the first time since early March, which is another sign that the rally in silver is for real. The market is massively overbought and is due for a setback, and these should be used to establish bullish positions.
The September Euro declined by 47 points on volume of 230,898 contracts. Open interest declined by 1,516 contracts. On August 22, the September Euro generated a short-term buy signal, which means the very least that speculators should not short the market.
10 Year Treasury Notes:
The September 10 year treasury note lost 3.5 points on volume of 964,066 contracts. Although volume was down approximately 100,000 contracts from August 23, notes reached a new high at 133-30.5. Open interest declined by 11,632 contracts. During the past four sessions notes have advanced 34 points, but open interest during this time frame has declined by 68,662 contracts. This is bearish open interest action in relation to price, and in our view confirms the bearish treasury note market. As indicated in the August 26 report, bearish positions can be used as a hedge against any disappointment emanating from Jackson Hole this coming weekend.
S&P 500 E mini:
The September S&P 500 E mini gained 9.75 points on volume of 1,574,715 contracts. Open interest increased by 33,584 contracts, which in relation to volume is somewhat below average, but an impressive number nonetheless. Although the market certainly can rally from here, it looks tired and toppy. Our preference has been for long positions in Apple computer and long put protection on the E mini.