Soybeans:

May soybeans lost 8.50 cents on volume of 263,685 contracts. Volume declined approximately 130,000 contracts from February 22 when May soybeans lost 26.75 cents and open interest declined by 10,475 contracts. The March contract accounted for loss of 15,163 of open interest. On February 25, total open interest declined by 4,206 contracts, which in relation to volume is approximately 35% less than average. Soybeans made a new low for the move at $14.21 1/2, which is the lowest price since February 19 when it reached 14.21. As this report is being compiled on February 26, May soybeans have made a slightly lower low at 14.20 1/2. Despite the move lower, soybeans remain on a short term buy signal, but an intermediate term sell signal. Stand aside.

Soybean meal:

May soybean meal lost $1.90 on volume of 84,295 contracts. Volume declined approximately 41,000 contracts from February 22 when May soybean meal lost $9.30 and open interest declined by 1,835 contracts. On February 25, open interest declined by 3,639 contracts, which in relation to volume is approximately 70% above average. Soybean meal remains on a short and intermediate term sell signal. Stand aside.

Soybean oil: On February 25, May soybean oil generated a short-term sell signal.

May soybean oil lost 58 points on volume of 139,768 contracts. Volume declined approximately 4,500 contracts from February 22 when soybean oil lost 95 points and open interest increased by 418 contracts. On February 25, open interest increased by 2,181 contracts, which in relation to volume is approximately 40% less than average. The March contract accounted for loss of 6,173 of open interest, but there was sufficient buying in the back months to bring total open interest to a positive number. The past 2 days have seen total open interest increases while soybean oil prices have declined, which means that new shorts were piling in and driving prices lower The March contract has had hefty losses of open interest during those 2 days. It is more than likely an intermediate term sell signal will be generated on February 26. Stand aside.

Corn:

May corn advanced 1.25 cents on volume of 304,943 contracts. Volume declined approximately 9,500 contracts from February 22 when corn lost 1.25 cents and open interest declined by a massive 39,148 contracts. On February 25, open interest declined by 2,475 contracts, which in relation to volume is approximately 60% below average. The March contract accounted for loss of 28,172 of open interest. Despite the lackluster performance, the March-May corn spread widened to 8 cents premium to March. As this report is being compiled, the spread continues to widen, which should give corn more upside momentum. Corn remains on a short and intermediate term sell signal.

Wheat:

May wheat lost 13.50 cents on volume of 125,388 contracts. Open interest declined by 1,528 contracts, which in relation to volume is approximately 50% less than average. The March contract accounted for loss of 14,105 of open interest, but the May 2013 through September 2014 contracts showed open interest increases. As this report is being compiled, wheat has made a new low for the move at 6.97 3/4, which is the lowest price for May wheat since June 2012. The next area of support is $6.79 and 6.70. Stand aside.

Crude oil:

April crude oil lost 93 cents on light volume of 458,827 contracts. Volume increased by approximately 63,000 contracts from February 22 when crude oil advanced 29 cents and open interest increased by 4,864 contracts. On February 25 open interest increased by 2,359 contracts, which in relation to volume is approximately 75% below average. Crude oil made a new low for the move at $92.07 which is the lowest price since December 31 when April crude made a low of 91.01. The average daily volume for January was 572,742 contracts. However, the average daily volume for the 3 days of declines (February 20 – $1.88, February 21 – 2.38, February 25 -93 cents) averaged 585,624 contracts, or slightly above the average daily volume for January. For those 3 days, open interest declined only 164 contracts. In short, during the period that crude oil declined a total of $5.19, open interest has essentially remained steady. However, we know there are large numbers of longs that have not liquidated yet.

The relatively low volume on the 3 day decline is more evidence that longs are digging in their heels. Another interesting fact… On December 31, total open interest for crude oil stood at 1,473,345 contracts and April crude oil closed at $92.73. On February 25, total open interest was 1,654,911 contracts and April crude oil closed at 93.11, very near to the December 31 closing price. The difference between the open interest total on February 25 and December 31 is 181,566 contracts. The total open interest number shows there was a considerable amount of buying that occurred above the December 31 closing price. Whether these are commercial interests or speculators, the fact remains that huge numbers of longs are showing losses on their positions. When this is combined with the relatively light volume during the 3 days of recent declines, there is overwhelming evidence that a large amount of liquidation is ahead. On February 22, crude oil generated a short-term sell signal and we strongly advised that put options be purchased. Additionally, we said there probably wouldn’t be much of a rally after the sell signal because it occurred around the 50 day and 50 week moving averages. If crude oil closes under its 200 day moving average of $92.14, selling should accelerate. The market is extremely weak. Stay with long put positions.

Copper:

May copper gained 1.05 cents on heavy volume of 108,597 contracts. Volume increased approximately 2,400 contracts from February 22 when copper lost 1.90 cents and open interest declined 775 contracts. On February 25, open interest declined by 837 contracts, which in relation to volume is approximately 60% less than average. Copper generated a short and intermediate term sell signal on February 21, and we suggest that clients wait for a rally to the $3.62-3.64 area before implementing bearish positions.

Gold:

April gold gained $13.80 on volume of 190,374 contracts. Volume increased approximately 37,000 from February 22 when gold lost $5.80 and open interest declined by 528 contracts. On February 25, open interest declined by 6,302 contracts, which in relation to volume is approximately 35% above average, meaning that liquidation was fairly heavy on the price advance. This is bearish. The market has been overdue for a rally and gold is finally moving to the upside on February 26, trading 29.50 higher on heavy volume. Stand aside.

Platinum:

April platinum gained $13.30 on volume of 14,255 contracts. Open interest increased by 379 contracts, which in relation to volume is  average. On February 22, April platinum generated a short-term sell signal, but on February 26 has not generated an intermediate term sell signal. On February 26, April platinum has made a new low for the move at 1581.00, which is the lowest price since January 9 when it made a low of 1574.00. Stand aside.

Silver:

March silver advanced 52.7 cents on heavy volume of 90,763 contracts. Volume increased by approximately 31,000 contracts from February 22 when silver lost 23.9 cents and open interest increased by 595 contracts. On February 25, open interest declined by 3,711 contracts, which in relation to volume is approximately 55% above average meaning that liquidation was heavy despite the fairly large advance. This confirms the continuing bearish market action. On February 26, silver is trading 38.3 cents higher and has made a new high for the move at $29.43, which is the highest price since February 20 when March silver reached 29.615. In the February 21 report, we stated: “Possibly, a temporary bottom is in the making with the low on February 20 of $28.255, February 21, 28.290 and the low on February 22 is 28.335.”

Euro:

The March euro lost 59 points on huge volume of 462,565 contracts. Volume on February 25 took out the high on February 7 when 452,064 contracts were traded and the euro declined 1.22 cents, while open interest declined 4,615 contracts. On February 25, open interest increased by 2,295 contracts, which in relation to volume is approximately 75% below average. However, this is the first time that open interest increased since the euro began declining on February 4. This indicates that new shorts are entering the market and driving the euro lower. Interestingly, it is more than likely the euro will generate a short-term sell signal on February 26. As our readers know, when a sell signal is generated, there is a high likelihood of a countertrend rally lasting 1-2, and sometimes 3 days. This will likely blowout all the new shorts making the euro a candidate for new bearish positions.

S&P 500 E mini:

The S&P 500 E mini lost 27.25 points on extremely heavy volume of 3,123,512 contracts. Volume was the highest since December 18, 2012 when 3,378,187 contracts were traded and the March S&P 500 E mini closed at 1445.75.  On February 25, open interest increased by 41,784 contracts, which in relation to volume is approximately 45% less than average. The E mini made a low of 1481.75, which is the lowest price since January 22 when it made a low of 1475.00. On February 25, the number of stocks trading above their 50 day moving average fell to 1375, which is below the 200 day moving average of 1379. In short, the percentage of stocks above their 50 day moving average fell from a high of 89.54% on January 22 to 58.84% on February 25. As we said in earlier reports, the declining number of stocks above their 50 day moving average has been a sign that the foundations underneath the market have been weakening. The correction has more to go, and as we have suggested before, a conservative way to play the current market is to write out of the money calls on the E mini.