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September soybeans lost 43.25 cents on light volume of 182,681 contracts. Volume increased by approximately 13,000 contracts from August 3 when soybeans gained 12.25 cents and open interest increased by 2,368 contracts. On August 2, soybeans fell 15.25 cents and on the decline volume traded was 188,536 contracts. On August 1, soybeans fell 18.00 cents and volume traded was 266,281 contracts. It is a positive development that volume shrank on a much larger decline than the two other named examples. On August 6, open interest declined by 4,792 contracts, which in relation to volume is an average decline. This is positive for soybeans and one would have thought the decline of open interest would have been significantly above average. The market will continue to trade on low volume until August 10 when the fireworks begin.
September soybean meal lost $12.30 on volume of 68,203 contracts. Volume increased from August 3 when soybean meal closed $3.90 higher and open interest declined by 746 contracts. On August 6, open interest increased by 1,120 contracts and this is attributable to increases in open interest for the October and December contracts while the August and September contracts showed a decline.
September corn lost 7.00 cents on volume of 198,538 contracts. Volume shrank approximately 44,000 contracts from August 3 when corn gained 16.00 cents and open interest increased by 9,649 contracts. On August 6 open interest increased by 905 contracts, which in relation to volume was 50% below average.
September wheat gained 2.00 cents on volume of 88,108 contracts. Volume was the lowest since July 30 when 81,680 contracts were traded and wheat increased by 16.50 cents while open interest increased 3,519 contracts. Also, volume shrank approximately 23,000 contracts from August 3 when wheat prices increased by 26.25 cents and open interest increased by 3,182 contracts. We are friendly to wheat but would like to see it trade lower over the next couple of weeks before implementing bullish positions. On August 8, Russia will hold a conference regarding the future of wheat exports, and this has the potential to an explosive force in the market.
September crude oil gained 80.00 cents on volume of 419,723 contracts. Volume shrank approximately 209,000 contracts from August 3 when crude oil gained $4.27 and open interest increased by 12,779 contracts. On July 19, crude oil generated a short-term buy signal and as of August 7 has not generated in intermediate term buy signal. As this report is being written on August 7, September crude oil is trading $1.69 higher on the day.
Heating oil: on August 6 September heating oil generated a short-term buy signal.
Gasoline: On August 6, September gasoline generated in intermediate term buy signal.
September gasoline lost 0.88 cents on extremely light volume of 93,156 contracts. Volume was the lowest since July 16 when 90,031 contracts were traded and gasoline advanced 3.86 cents while open interest increased 1,176 contracts. As mentioned above, gasoline generated in intermediate term buy, which reversed the intermediate term sell signal generated on July 24. On July 16, gasoline generated a short-term buy signal. Normally, short and intermediate buy signals would generate a recommendation of long positions. However, the end of the summer driving season is nearly upon us and from a seasonal point of view, gasoline tends to top out in late August or early September. As this report is being written on August 7, September gasoline is trading 7.07 cents higher.
September copper gained 2.15 cents on volume of 43,867 contracts. Volume shrank by approximately 22,000 contracts from August 3 when copper gained 7.70 cents and open interest declined by 3,342 contracts. The volume on August 6 was the lowest since July 18 when 38,089 contracts were traded and copper advanced 1.85 cents while open interest increased by 230 contracts. On August 6, open interest increased by 719 contracts, and as of August 7 copper is trading 5.25 cents higher. The stock market is making new highs for the move and it appears that markets are in a “risk on” environment. As such, we will continue to watch copper for now and wait until the rally has run its course before suggesting bearish positions be implemented.
December gold gained $6.90 on total volume of 86,532 contracts. We went back to our records starting on April 1 and could not find any day when volume was below August 6th. The lowest volume from April 1 through August 6 occurred on April 20 when 96,776 contracts were traded and gold gained $1.40 while open interest increased 2,514 contracts. It appears that gold is limbo for the moment, and will need some kind of catalyst to get the speculative crowd excited about the metal again. The market remains on a short-term buy signal, but has not generated in intermediate term buy signal as of August 7. For gold to generate an intermediate term buy signal, the market would have to trade above the $1640 level.
September silver gained 6.2 cents on extremely light volume of 23,674 contracts. Volume declined approximately 21,000 contracts from August 3 when silver gained 80.6 cents and open interest increased by 603 contracts. The speculative community has thrown in the towel on silver and it needs a catalyst to get moving again. The market remains on a short and intermediate term sell signal.
The September Euro gained 18 points on light volume of 210,178 contracts. Volume fell approximately 90,000 contracts from August 3 when the Euro gained 2.02 cents and open interest declined 3273 contracts. The Euro remains on a short and intermediate term sell signal. Stand aside because the market could have a surprise rally.
S&P 500 E mini:
The S&P 500 E mini gained 1.00 point on volume of 1,174,245 contracts. Volume was the lowest since July 3 when 1,048,431 contracts were traded and the index closed 10.50 points higher while open interest increased by 388 contracts. On August 6, open interest declined by 8,760 contracts as the market made a new high for the move at 1395.75. Although the S&P 500 E mini is on a short and intermediate term buy signal and the sentiment indicators also indicate that the market is likely to move higher, the open interest stats on recent upside moves have been terrible. Looking back on the past nine trading sessions, there have been five days when the market closed positively and the table below shows the poor performance of open interest.
Longs and shorts have been liquidating during the five days when the market closed positively. This is not to say the S&P 500 emini cannot continue to move higher. It can with the help of speculative shorts who will eventually get blown out as the market anticipates QE3. Based upon the current pattern of open interest declines on rallies, the first sign of a top may be a heavy volume day when open interest increases massively. This could occur when the announcement of QE3 is made, or a “buy the rumor, sell the news” environment.
Date Increase Open Interest (contracts)
August 6 1.00 -8760
August 3 27.00 -17,755
July 27 27.75 -17,166
July 26 20.75 -27,935
July 2 5.50 -6024
Total 82.00 – 77,640 contracts