Soybeans:

May soybeans lost 49 cents on volume of 310,890 contracts. Volume was the highest since February 22 when 393.3491 contracts were traded and May soybeans closed at $14.43 3/4. On March 28, open interest declined by 12,525 contracts, which in relation to volume is approximately 55% above average. The May contract accounted for loss of 15,645 of open interest. As indicated in the Weekend Wrap, the USDA report was universally bearish for all grains. Although the report was most bearish for corn, the reaction from soybeans was far less severe. The key areas of support are 13.44 made on January 11 and 13.37 3/4 made on November 16, 2012. As this report is being compiled, May soybeans are trading 13.50 cents lower and have made a new low for the move at $13 86 1/4. May soybeans generated a short and intermediate term sell signal on March 18. Stand aside.

Soybean meal:

May soybean meal lost $18.50 on heavy volume of 114,748 contracts. Volume was the highest since February 22 when 125,673 contracts were traded and May soybean meal closed at 426.40. On March 28, open interest declined by a massive 11,066 contracts, which in relation to volume is approximately 275% above average. Note the difference in the percentage decline of open interest in soybean meal versus soybeans relative to volume. The May contract accounted for loss of 8,164 of open interest. On March 19, May soybean meal generated a short and intermediate term sell signal. Stand aside.

Soybean oil:

May soybean oil lost 71 points on heavy volume of 139,522 contracts. Volume was the highest since February 26 when 139,717 contracts were traded and May soybean oil closed at 49.39. On March 28, open interest increased by 1,011 contracts, which in relation to volume is approximately 60% less than average. The May contract accounted for loss of 1,458 of open interest. Soybean oil remains on a short and intermediate term sell signal. Stand aside.

Corn: On March 28, May corn generated a short and intermediate term sell signal.

May corn closed down the 40 cent limit on huge volume of 655,122 contracts. Volume traded on March 28 was the highest for the past year and surpassed the January 11 volume high of 569,660 contracts and the July 11 volume high of 550,005 contracts. The remarkable aspect of trading on March 28 was that open interest increased 16,834 contracts, which in relation to volume is average, but a large number nonetheless considering the magnitude of the decline. With the high number of managed money longs in the market, it would have been expected that open interest would decline. In short, speculative longs are digging in, which means there is a massive amount of liquidation ahead. As this report is being compiled, May corn is trading 45.25 cents lower,  and volume is close to matching that of March 28. Corn should be  traded only from the short side, but clients should stand aside at this juncture. Usually, a decline of the magnitude seen on March 28 and April 1 would cause corn to have a short-term rally. This rally may provide an opportunity to implement bearish positions. Clients who took our recommendation and wrote out of the money calls should stay with these positions. As we advised in the report of March 26, everyone should be out of the market based upon our recommendation of a sell stop at $7.20 basis May, with the exception of the short call position.

Wheat:

May wheat lost 49 cents on volume of 193,109 contracts. Volume was the highest since November 9, 2012 when 231,721 contracts were traded and May wheat closed at $9.08. On March 28, open interest declined by 4,539 contracts, which in relation to volume is approximately 5% below average. Wheat remains on a short and intermediate term sell signal. Stand Aside.

Crude oil:

May crude oil gained 65 cents on light holiday volume of 385,611 contracts. Open interest increased by 8,681 contracts, which in relation to volume is approximately 5% less than average. For the past 5 trading sessions beginning on March 22, open interest has increased 66,811 contracts and May crude oil has advanced $4.78. Brent crude oil advanced $3.05 in the same 5 day period  While this is bullish open interest action relative to the price advance, we remain skeptical of crude being able to move significantly higher. This is because Brent remains on a short and intermediate term sell signal and gasoline remains on a short-term sell signal, while heating oil remains on a short and intermediate term sell signal. The disparity between the performance of WTI versus Brent in this five-day time frame, is the reason why WTI is on a short and intermediate term buy signal, and Brent is on a short and intermediate term sell signal. As this report is being compiled, May Brent is trading $1.22 higher and May WTI is trading 38 cents lower. It is likely that Brent crude will generate an intermediate term buy signal on April 2.

Natural gas:

May natural gas lost 4.4 cents on healthy volume of 465,721 contracts. Volume increased approximately 37,000 contracts from March 27 when natural gas advanced 7.7 cents and open interest increased 12,813 contracts. Additionally, volume was the highest since March 21 when 670,643 contracts were traded and open interest increased by 24,867 contracts while May natural gas declined by 2.4 cents. On March 28 open interest increased again, this time by a massive 16,652 contracts, which in relation to volume is approximately 40% above average. The open interest increase on March 28 was the largest since March 22 when open interest increased 24,937 contracts on volume of 340,600 contracts and natural gas declined by 9 ticks. The open interest increase on March 28 when prices declined was greater than on March 27 when natural gas prices advanced. On March 28, natural gas made a new high for the move at $4.121, and then reversed to close lower. Since the move was accompanied by a higher than normal volume and a huge increase in open interest, it is another reason to be a skeptic about imminent higher prices.

For the past 9 trading sessions beginning on March 18, open interest has increased 120,239 contracts while natural gas has advanced 12.2 cents. The massive open interest increase compared to the relatively small advance, is of concern. There is heavy selling as the market advances, which is capping prices. We witnessed the same phenomenon in corn. Speculators have rushed in on the long side, which makes anyone long vulnerable to a significant pullback. For clients who are long futures or options, we have suggested they write out of the money calls. However, clients should be very cautious if long natural gas. We recommend sell stops be placed at $3.885. Natural gas remains on a short and intermediate term buy signal.

Copper:

May copper lost 4.10 cents on large volume of 65,196 contracts. Volume was the highest since March 21 when 68,481 contracts were traded and May copper closed at $3.4350. On March 28, open interest increased by 3105 contracts, which in relation to volume is approximately 75% above average, meaning that new shorts were entering the market and driving prices lower. During the past 4 trading sessions beginning on March 25, open interest has increased 11,076 contracts while May copper has declined 6.55 cents. This is bearish open interest action relative to the price decline. As this report is being compiled, copper is trading 2.95 cents lower and has made a new low for the move at $3.3400. Copper remains on a short and intermediate term sell signal. Unfortunately, copper did not reach our target of $3.56, to implement bearish positions. The market looks terrible, but we advise against chasing it. Stand aside.

Gold:

June gold lost $11.40 on light volume of 134,261 contracts. Volume declined dramatically from March 27 when 238,713 contracts were traded and gold advanced $11.50 while open interest declined 1,921 contracts. On March 28, open interest declined by a massive 9,212 contracts, which in relation to volume is approximately 160% above average meaning that liquidation was heavy, although participation in the market was light. It is positive to see volume increased on an advance and shrink when the market declines. However, gold remains on a short and intermediate term sell signal, and we see no reason to be involved in the market at this juncture.

Platinum:

July platinum lost $8.90 on volume of 13,760 contracts. Open interest declined by 367 contracts, which in relation to volume is  average. As we mentioned in the March 31 Weekend Wrap, the long to short ratio is among the lowest we have seen in several months and the spread between platinum and palladium is the lowest since May of 2012. We suspect the market is not far from a turnaround, but it is a long way from generating a short and/or intermediate term buy signal.

Silver:

May silver lost 28.9 cents on volume of 43,845 contracts. Open interest declined by 222 contracts, which in relation to volume is approximately 75% less than average. On April 1, gold and platinum are trading higher on the day, but May silver is trading 36.8 cents lower. Silver remains on a short and intermediate term sell signal. Stand aside.

Australian dollar:

The June Australian dollar lost 30 points on volume of 92,404 contracts. Volume was the highest since March 21 when 107,930 contracts are traded and open interest increased by 8,913 contracts while the Australian dollar advanced 66 points. On March 28, open interest declined by 5,875 contracts, which in relation to volume is approximately 150% above average, meaning that liquidation was fairly heavy on the decline, which is positive since open interest has increased massively on the advance. As we pointed out in the Weekend Wrap, we think the Australian dollar is due for more liquidation. When the June Australian dollar generated a short-term buy signal on March 15, we recommended that our readers write out of the money puts and this trade has been working well.

Euro:

The June euro gained 41 points on light volume of 270,938 contracts. Open interest increased by 4,613 contracts, which in relation to volume is approximately 30% less than average. As this report is being compiled on April 1, the euro is trading 34 points higher and has made a new high for the move at 1.2875. Before considering implementing bearish positions, we want to see the June euro rally to the 1.3035 area. Until then, stand aside.

S&P 500 E mini:

The S&P 500 E mini gained 6.00 points on volume of 1,629,974 contracts. Volume was the highest since March 25 when 2,256,548 contracts were traded and open interest increased by 3,167 contracts while the E mini lost 5.00 points. On March 28, open interest increased by 22,365 contracts, which in relation to volume is approximately 45% less than average. The next week of trading should give us an indication as to how strong/weak the market is going to be for the rest of April. We outlined a scenario in the March 31 Weekend Wrap about how the S&P 500 may trade vis-à-vis the March 2000 high and the October 2007 high. At this juncture, we believe the E mini will struggle in  any continued move to the upside. We have recommended writing calls that are significantly out of the money and depending upon your risk tolerance, this continues to be a prudent strategy.