November soybeans lost 10.50 cents on very light volume of 156,440 contracts. Open interest increased by 1,107 contracts. Soybeans have had four consecutive days of successive lower highs, and on September 10, another lower high is likely. Nothing of significance is likely to occur until the release of the supply demand report by the USDA on September 12. We recommend that speculators stand aside unless they have significant profits.
October soybean meal closed $1.10 lower on volume of 57,667 contracts. Open interest declined by 2,356 contracts, which in relation to volume is approximately 25% above average. This is the fifth day in a row that open interest has declined by a significant amount and now totals 14,781 contracts and the five-day decline is $11.20. Although an open interest decline is not unusual for a market that is trading sideways to lower, it is troubling the decline of open interest is this massive. The open interest decline for soybeans during this five-day period totaled 9,448 contracts while soybeans declined 27.00 cents. Soybean meal trades approximately 30 to 50% less volume than soybeans, yet the open interest decline for soybean meal in five days has been approximately 55% more than soybeans. Stand aside until after the report, unless speculators have significant profits.
December corn lost 1.00 cents on volume of 155,691 contracts. Open interest increased by 3,674 contracts, which in relation to volume is slightly less than average. There is nothing new to report on corn and we recommend standing aside until after the crop report on September 12.
December wheat gained 13.25 cents on volume of 79,230 contracts. Volume declined approximately 7,000 contracts from September 6 when wheat advanced 24.00 cents and open interest declined by 899 contracts. On September 7, open interest increased by a massive 5,483 contracts, which in relation to volume is a huge 240% increase above average. As we have stated numerous times, we are friendly to wheat, however, if there is a somewhat bearish number in the corn report, wheat likely will be taken down with it. It is important to reiterate that September is generally a weak month for commodities and equities. Stand aside until after the crop report, and we will apprise readers when we determine the time to enter the market on the long side.
October crude oil gained 89.00 cents on volume of 560,581 contracts. Volume declined approximately 150,000 contracts from September 6 when crude oil gained 17.00 cents and open interest increased by 27,361 contracts. On September 7, open interest increased by 10,688 contracts, which in relation to volume is approximately 25% less than average. From August 15 to September 7, open interest has increased by 103,542 contracts while crude oil has increased only $1.80. The fact that the massive increase of open interest can only move prices by $1.80 indicates there is a real battle going on between longs and shorts. So far the longs are winning the battle, but not by much. Stand aside.
October heating oil closed .0064 higher on volume of 130,891 contracts. Open interest increased by 351 contracts. Stand aside.
October gasoline gained 2.86 cents on volume of 161,667 contracts. Volume increased by approximately 13,000 contracts from September 6 when gasoline gained 4.12 and open interest increased by 6,464 contracts. On September 7, open interest declined by 237 contracts after making a new high for the move at $3.0541. Although there have been some bullish developments in gasoline, there is no reason to be involved in the market at current levels.
Copper: On September 7, December copper generated an intermediate term buy signal.
December copper closed 12.85 cents higher on heavy volume of 82,396 contracts. Volume was the highest since August 23 when copper traded 83,526 contracts and prices increased by 3.80 cents while open interest declined by 2,698 contracts. On September 7, open interest increased by 3,414 contracts, which in relation to volume is approximately 25% above average. The market has been very strong of late and much of this has been due to the proposed Chinese stimulus program. Although copper is on a short and intermediate term buy signal, the market is massively overbought and new long positions should not be entered at current levels. As this report is being compiled on September 10, December copper is trading 4.50 cents higher.
December gold closed $34.90 higher on heavy volume of 232,102 contracts. Volume was the highest since July 27 when gold traded 335,400 contracts and gold prices advanced $2.90 while open interest declined 5,015 contracts. On September 7, open interest increased by 8,396 contracts, which in relation to volume is approximately 15% above average. The market is massively overbought and speculators should not enter new long positions at current levels.
December silver gained $1.01.6 on disappointing volume of 64,346 contracts. Volume increased by approximately 6,000 contracts from September 6 when silver gained 34.5 cents and open interest increased by 110 contracts. On September 7, open interest increased by a mere 876 contracts, which in relation to volume is approximately 50% less than average. During the past two days, silver has advanced $1.36.1 while open interest has increased by only 986 contracts. The market remains massively overbought and the meager increase of open interest indicates that speculators are not willing to make commitments at stratospheric prices. Do not enter new long positions, and longs with profits should consider taking partial profits. There is likely to be considerable fireworks in the days ahead with the Federal Reserve meeting and the ruling by the German Supreme Court on funding of the bailout program for Europe.
The September Euro gained 1.50 cents on volume of 337,310 contracts. Volume on September 7 was nearly equal to the volume on September 6 when 337,331 contracts were traded and the Euro advanced 47 points while open interest increased by 1,783 contracts. The relatively low at volume on September 7 compared to the magnitude of the price increase indicates that shorts are not panicking out of the Euro. On September 7, open interest declined by 2,382 contracts, which in relation to volume is approximately 70% less than average. Although the Euro traded sharply higher, volume didn’t increase substantially and the open interest decline was relatively meager. The direction of the Euro will be based upon the ruling made by the German Supreme Court on September 12. Stand aside.
10 Year Treasury Notes:
The December 10 year treasury note closed 9 points higher on heavy volume of 1,526,303 contracts. Open interest increased by a massive 50,625 contracts, which in relation to volume is approximately 10% above average. This will be the last report on notes until there is a significant new development. The market is trading at the high end of its range, and there is no reason to be long at current levels, yet it doesn’t make sense to be short either. When there is something major to report, we will let our readers know.
S&P 500 E mini:
The S&P 500 E mini gained 7.25 points on volume of 1,501,789 contracts. Open interest declined by 13,791 contracts as the market forged a new high for the move at 1438.75. Please review the September 9 Weekend Wrap about the S&P 500. Long put protection is advised.