Soybeans:

May soybeans gained 12.75 cents on volume of 236,269 contracts. Open interest declined 1,852 contracts, which in relation to volume is approximately 50% less than average. The March contract accounted for loss of 9,913 of open interest. The market remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

Soybean meal: On February 28, May soybean meal generated an intermediate term buy signal.

May soybean meal gained $7.00 on heavier than normal volume of 101,193 contracts. Volume was the highest since February 22 when 125,673 contracts were traded and soybean meal declined $9.30 while open interest declined 1,835 contracts. On February 28, open interest increased heavily by 5,042 contracts, which in relation to volume is approximately 100% above average, meaning that new longs were entering the market and driving prices higher. The March contract accounted for loss of 3,512 of open interest, which makes the total open interest increase that much more impressive. February 28 was the first time since February 19 that open interest increased on a price advance. On February 19, soybean meal advanced $15.90 on volume of 127,471 contracts, but open interest increased only 885 contracts. As this report is being compiled, May soybean meal is trading $5.50 lower. This is not unexpected considering that soybean meal rallied from a low of $420.30 on February 26 to its high made on February 28 of 440.80. Clients should take advantage of the setback to implement bullish positions, and should use the February 27 low of $424.30 as an exit point.

Soybean oil:

May soybean oil lost 55 points on volume of 114,996 contracts. Open interest declined 500 contracts, which in relation to volume is approximately 75% below average. The March contract lost 3,951 of open interest. Soybean oil remains on a short and intermediate term sell signal, but clients should wait for a rally to the 50 day moving average of 51.07 before implementing bearish positions.

Corn:

May corn gained 8.25 cents on volume of 313,435 contracts. Volume declined approximately 100,000 contracts from February 27 when corn advanced 0.50 cents and open interest declined 19,222 contracts. On February 28, open interest declined 10,017 contracts, which in relation to volume is approximately 10% above average. The March contract accounted for loss of 15,950 of open interest. Though corn remains on a short and intermediate term sell signal, we advise against implementing short positions at this juncture. Ethanol prices have been moving up steadily and are now at their highest level since February 11. Stand aside.

Wheat: As we said in yesterday’s report, we will begin reporting on wheat again when we see a trading opportunity.

Crude oil:

May crude oil lost 71 cents on volume of 455,826 contracts. Open interest advanced 115 contracts, which is minuscule and dramatically below average. There have been 5 times since February 20 that crude oil has closed lower and the cumulative decline amounts to $6.38. The average daily volume for 5 days is 524,341 contracts, which is dramatically below the year to date average daily volume of 589,197 contracts. The average daily volume for February was 607,384 contracts. We brought up the issue of low volume on declines a couple of days ago, but the pattern continues. The reason this is important is that there are large numbers of longs who have not liquidated and will be forced to by lower prices. This should produce heavier volume days. During the 5 days of declines, open interest has declined only 871 contracts, which again confirms significantly more liquidation ahead. As this report is being compiled, April crude oil is trading $1.35 lower, and has made a new low for the move at $90.04. In previous reports, we said there would not be much of a rally after the short-term sell signal on February 22. This turned out to be an understatement. If long puts were not implemented at higher levels, we would not chase the market.

Copper:

May copper lost 1.95 cents on volume of 70,709 contracts. Open interest declined by 490 contracts, which in relation to volume is approximately 75% below average. However, February 28 was the 8th consecutive day that open interest declined. On February 21, copper generated a short and intermediate term sell signal. As this report is being compiled, copper is trading 3.95 cents lower and has made a new low for the move at $3.4725. Unfortunately, the market did not rally up to the 362-3.64 level, which would have been a reasonable point to implement bearish positions. Do not chase the market.

Gold:

April gold lost $17.60 on volume of 205,523 contracts. Open interest declined 967 contracts, which in relation to volume is approximately 75% below average. Stand aside.

Platinum: On February 28, April platinum generated an intermediate term sell signal.

April platinum lost $16.60 on volume of 12,402 contracts. Open interest declined 177 contracts, which in relation to volume is approximately 40% less than average. As this report is being compiled, April platinum is trading $9.80 lower and has made a new low for the move at $1565.50. Platinum is now on a short (generated on February 22) and intermediate term sell signal. However, do not chase the market.

Silver:

May silver lost 55.3 cents on volume of 51,805 contracts. Volume was the lowest since February 13 when 45,923 contracts were traded and May silver closed at $30.932. On December 28, open interest declined 525 contracts, which in relation to volume is approximately 50% less than average. As this report is being compiled, silver is trading 7.8 cents higher, although it is made a new low for the move at $27.925. Stand aside.

Euro:

The March euro lost 64 points on volume of 283,929 contracts. Open interest declined 1,166 contracts, which in relation to volume is approximately 75% less than average. On February 26, the euro generated a short-term sell signal, but as of March 1 has not generated an intermediate term sell signal. As this report is being compiled, the March euro is trading 44 points lower, and has made a new low for the move at 1.2967. The euro never rallied up to the 1.3200 area, which would have enabled clients to implement bearish positions. Do not chase the market.

S&P 500 E mini:

The S&P 500 E mini lost 2.50 point on volume of 2,215,400 contracts. Open interest declined by a massive 53,064 contracts, which in relation to volume is average, but a very large decline nonetheless. During the past 3 days beginning on February 26, open interest has declined 48,838 contracts while the E mini has advanced 26.00 points. This is bearish open interest action relative to the price advance. We continue to recommend writing calls on out of the money options on the E mini.