Soybeans:

May soybeans lost 3.50 cents on volume of 242,982 contracts. Volume shrank approximately 21,000 contracts from February 25 when soybeans lost 8.50 cents and open interest declined 4,206 contracts. On February 26, open interest declined by 11,818 contracts, which in relation to volume is approximately 100% above average, meaning that liquidation was extremely heavy. The March contract accounted for a loss of 21,578 of open interest. Despite soybeans recent poor performance, it remains on a short-term buy signal, but an intermediate term sell signal. At this juncture we would advise against entering short positions.

Soybean meal:

May soybean meal gained $2.30 on volume of 85,212 contracts. Open interest declined 4,856 contracts, which in relation to volume is approximately 120% above average, meaning that liquidation was heavy and exceeded the liquidation in soybeans. The March contract accounted for loss of 5,808 of open interest. We remain friendly to soybean meal, and it is highly likely a short-term buy signal will be generated on February 27.

Soybean oil: On February 26, May soybean oil generated an intermediate term sell signal

May soybean oil lost 1.05 cents on volume of 139,717 contracts. Open interest declined by 2,790 contracts, which in relation to volume is approximately 25% below average. Now that soybean oil is on a short and intermediate term sell signal, clients should approach the market from the short side. Before implementing bearish positions, wait for a rally to at least the 50 day moving average of 51.07. The next area of resistance is at 51.48 and 51.89. Keep in mind that managed money is net short according to last week’s COT report. Undoubtedly, they are more heavily net short as of February 26, and this will add more fuel to a short covering rally.

Corn:

May corn gained 9.25 cents on volume of 402,437 contracts. Volume increased by approximately 97,500 contracts from February 25 when corn gained 1.25 cents and open interest declined 2,475 contracts. On February 26, open interest declined 5,660 contracts, which in relation to volume is approximately 40% less than average. The March contract accounted for loss of 35,428 of open interest. There was buying in the March 2013 through December 2014 contracts which brought the total open interest down to a relatively small number. The March-May corn spread widened to 10.25 cents premium to March. Despite the widening of the spread, it is not helping to boost corn prices. The market remains on a short and intermediate term sell signal. Stand aside. 

Wheat:

May wheat gained 5.75 cents on volume of 147,101 contracts. Open interest declined 7,856 contracts, which in relation to volume is approximately 110% above average, meaning that liquidation was very heavy. May wheat made a new low for the move at $6.97 3/4. Wheat remains on a short and intermediate term sell signal. Stand aside.

Crude oil:

April crude oil lost 48 cents on light volume of 408,997 contracts. Open interest declined 822 contracts which is minuscule and dramatically below average. However, this was the first open interest decline on a price decline since February 20 when crude lost $1.88 and open interest declined 6,084 contracts on volume of 708,940 contracts.

The average daily volume for January was 572,742 contracts. However, the average daily volume for the 4 days of declines (February 20 – $1.88, February 21 – 2.38, February 25 -93 cents, February 26 -48 cents) averaged 546,467 contracts, or approximately 26,000 contracts less than the average daily volume for January. For those 4 days, open interest declined only 986 contracts. In short, during the 4 day period that crude oil declined by a total of $5.67, open interest has declined by a minute 986 contracts. The pattern of lackluster volume during a large decline of crude oil prices and a minor decline of open interest continues to confirm that large numbers of longs have not liquidated. April crude oil generated a short-term sell signal on February 22, but has not yet generated an intermediate term sell signal.Use put options to implement bearish positions.

Copper:

May copper gained 2.20 cents on heavy volume of 112,361 contracts. Volume was the highest since February 21 when 128,326 contracts were traded and copper declined 5.50 cents while open interest declined by 6,568 contracts. On February 26, open interest declined by a whopping 5,552 contracts, which in relation to volume is approximately 100% above average, meaning that liquidation was very heavy. For the past 6 consecutive trading sessions beginning on February 19, open interest declined 18,749 contracts, while copper has declined 17.05 cents. Although open interest action is acting in a bullish congruent fashion with the price decline, copper remains on a short and intermediate term sell signal which was generated on February 21. As we have stated before, copper should be traded from the short side. Wait for a rally to the $3.62-3.64 area to implement bearish positions.

Gold:

April gold gained $28.90 on heavy volume of 270,504 contracts. Volume increased approximately 80,000 contracts from February 25 when gold advanced $13.80 and open interest declined 6,302 contracts. On February 26, open interest declined by 6,132 contracts, which in relation to volume is approximately 10% below average. During the past 2 days, April gold has advanced $42.70 while open interest has declined 12,434 contracts. This is bearish open interest action relative to the price advance. As this report is being compiled, April gold is trading $21.50 lower. Stand aside.

Platinum:

April platinum lost $4.20 on volume of 17,862 contracts. Open interest declined 1,167 contracts, which in relation to volume is approximately 155% above average, meaning that liquidation was heavy. Platinum made a new low for the move at $1581.00 which is the lowest price since early January 2013. On February 22, platinum generated a short-term sell signal, but has not generated an intermediate term sell signal. Stand aside.

Silver:

March silver gained 27.3 cents on huge volume of 131,560 contracts. Volume was the highest since November 28 when 163,326 contracts were traded and March silver closed at $33.77. On February 26, open interest declined by a massive 7,694 contracts, which in relation to volume is approximately 130% above average, meaning that participants were massively liquidating as the market rallied. This is bearish open interest action relative to the price advance. During the past 2 trading sessions, March silver has advanced 80 cents while open interest has declined 11,405 contracts. As this report is being compiled on February 27, silver is trading 42.5 cents lower. Silver remains on a short and intermediate term sell signal. Stand aside.

Euro: On February 26, the March euro generated a short-term sell signal.

The March euro lost 66 points on very heavy volume of 452,787 contracts. Volume declined by approximately 10,000 contracts from February 25 when the euro lost 59 points and open interest increased 2,295 contracts. On february 26, open interest increased by 161 contracts for the second day in a row, however, this is minuscule and dramatically below average. As is usually the case, we should see a bounce in the euro now that it has generated a short-term sell signal. Look for the rally to meet resistance at 1.32. At that point, clients should be looking to enter bearish positions.

S&P 500 E mini:

The S&P 500 E mini gained 5.25 points on heavy volume of 2,959,175 contracts. Open interest increased by 18,137 contracts, which in relation to volume is approximately 65% less than average. As this report is being compiled, the E mini has rallied 23.00 points. We continue to think the market is in a corrective phase and one of the more conservative ways of taking advantage of the rally is to write out of the money calls in the E mini.