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Soybeans:
July soybeans lost 8 cents on volume of 227,309 contracts. Total open interest declined by 13,372 contracts and open interest in the July contract declined by 10,426 contracts on volume of 73,678. The massive decline in total open interest is attributable to the steep price decline in the November contract of 24.25 cents, which resulted in an open interest decline of almost 5000 contracts. The July-November soybean spread widened by 16.25 cents, premium to July. On June 19, July soybeans generated a short-term buy signal, and as a consequence, readers should be looking to implement bullish positions. However, it is mandatory to consult with your investment advisor and broker regarding timing entry points and stop placement. The 50 day moving average on the soybean continuation chart is $14.21, and this is a good frame of reference when analyzing a price point for entry. The USDA acreage update and quarterly grain stocks report is on June 29.
Soybean meal:
July soybean meal gained $1.60 on fairly heavy volume of 91,006 contracts. Total open interest increased by 2,456 and open interest in the July contract declined by 5,037 contracts on volume of 31,862. During the past three trading sessions, the increase of volume and open interest in soybean meal has been far superior to soybeans. The soybean meal market is on a short and intermediate term buy signal, and speculators should be consulting with their investment advisor or broker regarding timing, entry points and stop placement. The 50 day moving average on the soybean meal continuation chart is $412.55.
Corn:
July corn lost 25.25 cents on heavy volume of 437,468 contracts. The massive liquidation in corn continued with total open interest declining by 13,617 and open interest in the July contract declining by 20,566 contracts on volume of 159,272. As I have mentioned before, there could be some real fireworks in the July contract as it gets closer to first notice day on June 29. The market remains on a short and intermediate term sell signal. The 50 day moving average on the corn continuation chart is $6.10 1/2, which is where we could see some resistance. Stand aside.
Wheat:
July wheat lost 2.25 cents on heavy volume of 164,659 contracts. Total open interest declined by 1,015 contracts and open interest in the July contract declined by 10,783 on volume of 63,181 contracts. The market made a new high for the move at $6.82, which is the highest price since May 29 when wheat reached $6.84. However, the market pullback and closed at $6.61 3/4. On June 21, July wheat generated a short-term buy signal, but remains on an intermediate term sell signal, though that could change to a buy signal on Monday, June 25. The 50 day moving average for the July contract is $6.34 1/2 and on the continuation chart is $6.31 1/2. Additionally, on the continuation chart the 50 day moving average is above the 150 day moving average. Relative to its 50 day moving average, wheat is massively overbought, and the generation of the short-term buy signal in this particular situation could be an indication of an impending pullback. Do not enter long positions in wheat.
Crude oil:
August crude oil lost $3.25 on heavy volume of 715,207 contracts. Open interest increased by 15,323 contracts, and relative to volume the open interest increase was about average. The market made a new low for the move at $77.93, which was the lowest price for crude oil since the week of October 3, 2011 when crude made a low of $76.25. Stand aside.
Gasoline:
August gasoline lost 5.53 cents on heavy volume of 181,949 contracts. Open interest declined by 407 contracts. Gasoline closed at its lowest price since the late November early December period of 2011. I believe we could see a good-sized rally in gasoline, but it will be a very difficult move to catch. The futures are highly volatile, and the options have very little liquidity. The market remains on a short and intermediate term sell signal. Stand aside.
Gold:
August gold lost $50.30 on heavy volume of 222,430 contracts. Astoundingly, open interest only declined by 34 contracts. This tells me that old longs and old shorts were liquidating and new longs and new shorts were entering the market, which accounts for essentially unchanged open interest. Gold generated a short-term buy signal on June 6, and although a short-term sell signal was not generated on June 21, it is highly likely this will occur on June 22. Gold has been on an intermediate term sell signal. Readers should be consulting with their investment advisors or brokers regarding the acquisition of gold for the long term.
Silver:
July silver lost $1.55 on heavy volume of 98,139 contracts. Open interest increased by 6,034 contracts, which in relation to volume was a very heavy increase. Silver crashed through multiple support levels and much damage has been done to the chart. Unlike gold, silver never generated a short-term buy signal and has remained on a short and intermediate term sell signal for many months. With a series of higher weekly lows during the past six weeks, it appeared that silver might be bottoming. However, all of this was dispelled with yesterday’s action. Stand aside.
Euro:
The September Euro lost 1.13 cents on volume of 364,835. Open interest increased by 15,534 contracts, which is a significant open interest increase in relation to the volume. For quite some time, I have suggested to readers that there is no reason to be involved in the Euro. Its movement is based upon news from Europe and it is foolish to speculate on what finance ministers may do or say. I think there are other trades, namely soybeans and soybean meal, that offer a greater degree of predictability with excellent profit potential. Stand aside.
S&P 500 E mini:
The S&P 500 E mini closed sharply lower with the loss of 32.50 points on heavy volume of 2,714,669 contracts. Open interest increased by 30,014 contracts, which in relation to the volume was a an anemic increase. In other words, the open interest action did not indicate much conviction by shorts or longs. There were many explanations for the decline, which range from a short sale recommendation from a major investment bank, to the imminent ratings downgrade of major banks.
The September E mini closed at 1318.25, which is approximately 20 points below its 50 day moving average of 1337.00. On June 19, I said that the S&P 500 cash index had generated a short and intermediate term buy signal, and the September E mini generated a short-term buy signal as well. For the intermediate term, I use the cash S&P 500 index instead of the E mini futures because there is not enough trading history for the intermediate term in the new front month. The indices remain on a short and intermediate term buy signal. However, because of potential turmoil in Europe, readers should be consulting with their investment advisor or broker regarding the placement of stops on positions and the maintenance or liquidation of long put protection.
