Volume and open interest analysis from May 3, 2012

E-mail comments and questions to: garry@openinterestanalyst.com

Soybeans:

July soybeans closed 11 1/2 cents lower on volume of 255,535 contracts. Open interest declined by 2,877 contracts. For the second day in a row the volume in soybeans was greater than the volume in corn. The market is undergoing a much needed corrective phase. Stand aside.

Corn:

July corn closed 3 cents higher on very light volume of 196,273 contracts. Total open interest increased by a minute 38 contracts. Part of the light volume can be explained by a the 9 1/4 cent range, which is significantly less than the 21 day average true range of 13 1/2 cents. I dug deeper into the open interest stats and found that open interest for July and September declined by 2,973 contracts. The May contract, which is going off the board shortly lost 1,263 contracts of open interest. The loss of open interest in the three front months was offset by open interest increases in the contract months of December 2012 through contracts for 2013. It is important to note that the bulk of volume is in the July contract with September far behind. On May 3, these two months represented volume of 134,839 contracts with July accounting for approximately 107,000 contracts of volume. Also, July has the largest amount of open interest and it declined on the 3 cent price advance, which indicates there is continuing liquidation. Also of note was that the July contract gained 3 cents, but the September and December contracts lost 1 1/2 and 1 3/4  cents respectively. On May 3, the USDA reported that cumulative exports for the current season represents 86.4% of projected usage by the USDA. This is 4.4% above the five-year average for this time of year. In short, corn exports are robust. I am getting much more very friendly to corn and want to see further market action before suggesting that long positions be implemented.

Crude oil:

June crude oil lost $2.68 on heavier than normal volume of 678,769 contracts. Open interest increased on the decline by 8,409 contracts. Volume was the highest since April 16 when 687,731 contracts were traded. The heavier than normal volume can be explained by the range expansion that occurred on May 3 when the trading range expanded to $3.06 from the 21 day average true range of $1.96. The market has been on a short-term sell signal since March 29, 2012, and as I write this on May 4 crude oil is down $4.69. Stand aside.

Gasoline:

June gasoline closed 2.57 cents lower on fairly light volume of 143,502 contracts. Open interest increased for the second day in a row by 3,842 contracts. During the past four days volume has been light even though gasoline lost a total of 9.45 cents. Another positive on May 3, was that backwardation increased between June and August and September. In other words, the June contract went down less than the July and August contracts. The market made a new low at 3.0450, which was the lowest price for June gasoline since February 8, 2012. The market has been on a short-term sell signal, and as I write this on May 4, June gasoline is down 9.40 cents. Stand aside.

Copper:

July copper closed 5.10 cents lower on fairly light volume of 54,134 contracts. Open interest declined by 922 contracts. The market remains on a short-term sell signal, but copper is on an intermediate term buy signal. In order for long positions to be implemented a short-term buy signal must be generated and open interest action has to be positive. Stand aside.

Gold:

June gold closed $19.20 lower on heavier than normal volume of 176,245 contracts. Open interest declined by 5,252 contracts. Volume was the highest since April 25 when 176,739 contracts were traded. Consult your investment advisor or broker about accumulating gold positions for the longer-term.

Silver:

July silver lost 63 1/2 cents on fairly light volume of 46,722 contracts. Open interest increased on the decline by 237 contracts. Stand aside.

Euro:

The June Euro lost 12 points on volume of 236,311 contracts. Open interest increased by 4,044 contracts. On Sunday, May 6, the French elections will be held, and this will certainly have an impact on Euro trading. Stand aside.

S&P 500 E mini:

The June S&P 500 E mini lost 11.50 points on relatively heavy volume of 1,764,635 contracts. Open declined by 16,900 contracts. As I write this on May 3, the S&P 500 E mini is lower by 18.75 points. As I pointed out numerous times before, long put protection should already be in place.