E-mail comments and questions to: garry@openinterestanalyst.com
For those of you who trade stocks, please see the April 29 Weekend Wrap for my analysis of Apple Computer. In the report I gave my rationale for thinking Apple had made a temporary top.
Soybeans:
July soybeans closed 16 cents higher on very light volume of 197,781 contracts. Total open interest declined on the advance by 9,577 contracts. Open interest in the July contract declined by 9,207 contracts on volume of 107,784 contracts. Since May 2 when soybeans made their high at $15.12 1/2, open interest in the July contract has declined by 55,775 contracts. During the past three trading sessions, soybeans have advanced a total of 51 cents and total open interest has declined by 7,164 contracts. This is negative open interest action in relation to price, however, open interest in the July contract has declined with price since May 2 and this is positive. In other words, there has been greater liquidation in the July contract that in the back months. The reason this is important is because the bulk of open interest and volume is in the July contract.
Corn:
July corn advanced 5 cents on light volume of 232,706 contracts. Open interest declined by 8,117 contracts. During the past four trading sessions corn has advanced a total of 44 cents and open interest has declined by 27,573 contracts. Open interest in the July contract declined by 2,795 contracts. There continues to be massive liquidation corn and at this juncture, speculators should stand aside.
Crude oil:
June crude oil lost 25 cents on healthy volume of 636,371 contracts. Open interest declined by a massive 25,959 contracts. The liquidation in crude since May 4 has been massive. Speculators should stand aside.
Gasoline:
June gasoline lost 4.27 cents on volume of 157,965 contracts. Open interest declined by 1,162 contracts. June gasoline closed at $2.8782, which is below its 200 day moving average for both the continuation chart and the June chart. In earlier posts, I mentioned that I thought gasoline would find support at the 200 day moving average. However, gasoline has been much weaker than I thought considering the summer driving season is upon us. Stand aside.
Copper:
July copper closed essentially unchanged on volume of 65,008 contracts. Open interest increased by 1,046 contracts. The copper market has collapsed this week, and as I write this on May 18, copper is 3.45 cents lower. The market is massively oversold and will have a rally at some point. Speculators should be patient and wait for the right opportunity to establish bearish positions. There is some minor support at the $3.40 level. Stand aside.
Gold:
June gold closed $38.30 higher on heavy volume of 241,908 contracts. Open interest increased by a massive 16,891 contracts. As I pointed out in yesterday’s post, the capitulation volume of over 300,000 contracts on May 16 was a sign the market had reached an important low. The terrific volume and open interest action that characterized trading on May 17 confirms the market should be traded from the long side. As I write this on May 18, June gold is $15.80 higher. Although the market has not generated a short or intermediate term buy signal, it appears that gold has found a bottom. This enables speculators to calibrate reasonable risk parameters for their trades. Please consult with your investment advisor or broker regarding the accumulation of gold for the longer-term.
Silver:
July silver closed 82.4 cents higher on volume of 55,089 contracts. Open interest increased by a minuscule 103 contracts. The small open interest increase in silver contrasts sharply with the massive increase of open interest in gold. Like gold, I think silver made in import low on May 16, which was very close to the low made on December 29, 2011. Silver has not generated a short or intermediate term buy signal. Stand aside
Euro:
The June Euro closed essentially unchanged on 321,728 contracts. Open interest increased by 8378 contracts. The market is top-heavy with shorts, and is vulnerable to a short-term rally. As I have pointed out previously, the 1.2600 level provides tremendous support. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini closed 21.25 points lower on the heaviest volume (2,913,069 contracts) seen in many months. Open interest declined by 10,271 contracts. The cash S&P 500 index closed at 1304.86 which is under its 150 day moving average of 1312. The market is massively oversold and is liable to have a short-term rally at any time. Long put protection should already be in place.
