Soybeans: On May 9, July soybeans generated a short-term buy signal, but remains on an intermediate term sell signal.

July soybeans advanced 18 cents on volume of 123,338 contracts. Open interest increased by a massive 6,537 contracts, which relative to volume is approximately 110% above average. Making the total open interest increase more impressive was the fact that May lost 907 of open interest. For the past 2 days, open interest relative to volume has increased dramatically and soybeans have advanced strongly each day. This is bullish. The USDA report was released Friday morning and as this report is being compiled, July soybeans are trading 4 cents lower and have made a low of $13.90. This is 3 cents above the low of 13.87 made on May 9. For those clients wanting to get long soybeans, we would recommend using the 13.87 level as an exit point for long positions.

Soybean meal: On May 9, July soybean meal generated a short-term buy signal, but remains on an intermediate term sell signal.

July soybean meal gained $5.60 on volume of 59,637 contracts. Open interest increased by 463 contracts, which relative to volume is approximately 60% less than average. The May contract accounted for loss of 1,022 contracts. For those clients wanting to get long, we would use the May 9 low of $406.20 as an exit point.

Corn:

July corn gained 15.75 cents on volume of 219,593 contracts. Volume was the highest since May 6 when corn lost 24.75 cents on 221,077 contracts and open interest increased 3,500 contracts. On May 9, total open interest declined 1,264 contracts, which relative to volume is approximately 75% below average. The May contract accounted for loss of 1,366 contracts. Open interest action relative to price has been acting in a bearish fashion for the past several days. As this report is being compiled on May 10, July corn is trading 14.75 cents lower and has made a low of $6.25, which is the lowest price since April 29 when corn made a low of 6.25. Although corn generated a short-term buy signal on May 3, it looks vulnerable to reverse that signal, but this will not occur until May 13 at the earliest. Stand aside.

Wheat:

July wheat gained 17.50 cents on volume of 105,529 contracts. Open interest declined by 3,934 contracts, which relative to volume is approximately 50% above average, meaning that longs and shorts were liquidating heavily as the market advanced. This is bearish open interest action relative to the price advance. The May contract accounted for loss of 141 of open interest. On May 2, July wheat generated a short-term buy signal, but the market has not done much in the intervening period. Corn is more likely to generate a short-term sell signal early next week than wheat. Stand aside.

Coffee:

July coffee gained 3.75 cents on volume of 44,913 contracts. Volume was the highest since April 18 when 46,689 contracts were traded. On May 9, open interest increased by 620 contracts, which relative to volume is approximately 40% less than average. Compared to the action of May 8, volume expanded on May 9 up from 26,519 while open interest increased 50% less than the increase on May 8 of 1160 contracts. We suspect there was a considerable amount of old longs and shorts liquidating, which offset new longs and shorts entering the market. Keep in mind that according to the latest COT report, managed money is short coffee by a ratio of 1.59:1.

On May 8, July coffee generated a short-term buy signal, but remains on an intermediate term sell signal. As is usually the case after the generation of a buy signal, a pullback lasting 1-2 and possibly 3 days is likely. On May 9, coffee made a new high for the move at $1.4875, which is the highest price since March 5 when it made a high of 1.4995. As this report is being compiled on May 10, July coffee is trading 3.10 cents lower and has made a low for the day at $1.44. July coffee could snap back to its 50 day moving average of 1.403, and at least to 1.413. On the upside, we see resistance at the $1.49 level. Preferably, we would like to see one more day of downside action before recommending the initiation of bullish positions. Stand aside.

 Crude oil:

June WTI crude oil lost 23 cents on volume of 701,619 contracts. Open interest increased by only 2,208 contracts. However, the June contract lost of 23,830 of open interest, which makes the relatively small increase of total open interest respectable. On May 6, June crude oil generated a short and intermediate term buy signal. We have warned clients ever since the generation of the buy signals (see reports of May 6 and May 8) that they should wait for a pullback to the $93.52 area. On May 10, June crude oil is trading $1.71 lower and has made a low of $93.37. Clients should use this low as an exit point for bullish positions.

Brent crude:

Brent crude oil gained 13 cents on light volume of 691,584 contracts. Open interest declined by 12,468 contracts, which relative to volume is approximately 25% below average. Brent crude remains on a short and intermediate term sell signal, and has not had the strength to generate a short-term buy signal like WTI. This remains a cautionary sign for WTI bulls. Preferably, we want to see Brent on a short-term buy signal as well.

Heating oil:

June heating oil gained 2.19 cents on volume of 146,683 contracts. Open interest declined by 269 contracts. The June contract accounted for loss of 5,151 of open interest. Open interest action during the past several days has been less than impressive considering the strength in heating oil. However, managed money is short heating oil according to the COT report and liquidation by shorts is to be expected. On May 7, June heating oil generated a short-term buy signal, but remains on an intermediate term sell signal. Ever since June heating oil generated a short-term buy signal on May 7, we have been cautioning clients to wait for a pullback. On May 10, as this report is being compiled, heating oil has made a low of $2.8535, which broke the low the May 8 low of $2.8982. We see resistance for heating oil at the 50 day moving average of $2.94-$2.95. The low on May 10 should be used as an exit point for longs

Gasoline:

June gasoline advanced 3.13 cents on volume of 136,487 contracts. Open interest increased by a robust 5,726 contracts, which relative to volume is approximately 65% above average. The June contract accounted for a gain of 956 of open interest. For the past 2 days, June gasoline has advanced 5.17 cents while open interest has increased 12,717 contracts. The open interest increases for both days has been very strong relative to volume. Despite the improving price of gasoline, it has not yet generated a short or intermediate term buy signal. Stand aside. As it stands, crude oil and heating oil are on short-term buy signals and Brent crude and gasoline are on short-term sell signals.

Natural gas:

June natural gas closed unchanged on volume of 339,333 contracts. Open interest declined by 4,829 contracts, which relative to volume is approximately 40% less than average. Although natural gas is on a short-term sell signal, it has been an orderly decline. Open interest on the decline has been acting in a bullish congruent fashion. Our downside target for June natural gas is $3.80-3.83. Continue to stand aside in the short-term, however we really like the long side of natural gas in the intermediate term.

Australian dollar:

The Australian dollar lost 1.16 cents on extremely heavy volume of 177,130 contracts. Volume was the highest since April 15 when 212,824 contracts were traded. Also, volume was the 3rd highest for 2013. On May 9, open interest increased by 6,846 contracts, which relative to volume is approximately 50% above average. For the past 4 sessions, the Australian dollar is lost 2.54 cents, while open interest has increased by 18,356 contracts. This is bearish open interest action relative to the price decline. On April 23, OIA announced that the June Australian dollar had generated a short and intermediate term sell signal. On April 29 and 30 we recommended writing out of the money calls. This trade is working well and clients should stay with this position.

Euro:

The June euro lost 1.43 cents on volume of 282,443 contracts. Open interest increased by 1,532 contracts, which relative to volume is approximately 70% below average. As this report is being compiled on May 10, the euro is trading 28 points lower and has made a new low for the move at 1.2938. It appears likely the dollar index will generate a short-term buy signal on May 13, and interest rates have risen sharply during the past 2 days, which is supporting a higher dollar. Although the euro remains on a short-term buy signal, but an intermediate term sell signal, it appears to be only a matter of time before a short-term sell signal is generated.

S&P 500 E mini:

The S&P 500 E mini lost 4.25 points. Open interest increased by 31,671 contracts, which relative to volume is approximately 35% less than average. We continue to advise put protection, because we feel the market is vulnerable to a severe downside correction.