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Soybeans:

For the week, July Chicago soybeans closed 8.75 cents higher. The Commitment of Traders Report, which is tabulated on Tuesday and released on Friday, showed that in the managed money category, speculators added 771 contracts to their long positions and liquidated 653 contracts of their short positions. Commercial interests added 2,371 contracts to their long positions and liquidated 3,701 contracts of their short positions. 

As I have said before, the untold story of the bean complex is the outstanding performance of soybeans meal against soybeans. The outperformance continued this week with soybean meal, advancing 4.06% versus soybeans, which advanced 1.77%. On a year-to-date basis, soybean meal advanced 28.50% and soybeans advanced 18.13%. The all-time high for soybean meal was made on July 14, 2008 when it reached for $456.80 per ton. The all-time high for soybeans was made on July 3, 2008 when the bean contract hit a high of $16.63 per bushel.

On a daily basis, I report on the market action of soybeans and do not report the action of soybean meal. The reason for this is that liquidity in soybeans is significantly greater than that of soybean meal. However, if readers want an analysis of the daily action of soybean meal, they should drop me a line.

Corn:

For the week, July corn lost 17.75 cents, but despite the downturn, the May-July corn bull spread increased by 1 cent with May selling at a 9.50 cent premium over July. This is bullish market action. The Commitments of Traders Report showed that in the managed money category, speculators liquidated 23,954 contracts of their long positions, and added 24,904 contracts to their short positions. Commercial interests added 17,468 contracts to their long positions, and liquidated 6,079 contracts of their short positions.

Crude oil:

For the week, May crude oil added 56 cents. The Commitment of Traders Report showed that in the managed money category, speculators liquidated 8,911 contracts of their long positions and also liquidated 11,269 contracts of their short positions. Commercial interests liquidated 7,650 contracts of their long positions, and also liquidated 3,369 contracts of their short positions.

Currently, July crude’s 50 day moving average is $105.63 and the close on April 20 was
$103.88. What is remarkable is that crude prices aren’t higher because it is well-known that Iran is having problems exporting their crude. Ever since they were cut off from the international payments system known as SWIFT, Iran is finding itself in the position of having to store their oil. The only way, Iran is able to sell their crude is through barter transactions, which limits the amount of product they can sell. They are unable to facilitate transfers of large sums into Iranian coffers for payment. The effect of this is to limit global supply, and although the market has not reacted to a decrease of supply, (Saudi Arabia is supposed to be making up the shortfall) if the Iranians do not come to the table to negotiate, is quite possible that supply will tighten.

On the other hand, if Iran sees the light and decides that it is in their financial best interest to cooperate with world powers regarding their nuclear program, the SWIFT program could be reactivated. This would allow Iran to start exporting crude again, which would bring additional supply to the market causing a sharp downturn in crude.

Gasoline:

Fo crude the week, May gasoline lost 15.67 cents. The Commitment of Traders Report showed that in the managed money category speculators liquidated 1,301 contracts of their short positions, and also liquidated 658 contracts of their short positions. Commercial interests added 11,381 contracts of their long positions, and also added 13,449 contracts to their short positions.

Copper:

For the week, May copper closed 7.10 cents higher. The Commitment of Traders Report showed that in the managed money category speculators added 481 contracts of their long positions, and also added 1,233 contracts to their short positions. Commercial interests added 4,101 contracts to their long positions and liquidated 540 contracts of their short positions. Please see the April 15 Weekend Wrap for a special report on copper.

Gold: 

For the week, gold closed $17.40 lower. The Commitment of Traders Report showed that in the managed money category, speculators liquidated 1,940 contracts of their long positions, and also liquidated 5,286 contracts of their short positions. Commercial interests liquidated 3,082 contracts of their long positions and added 3,680 contracts to their short positions. As of April 20, gold’s 50 day moving average is 1688.53, and the 200 day moving average is at 1695.72. The moving averages underscore the corrective phase that the market has been traversing during the past several months.

Silver:

For the week, May silver added 26 cents. The Commitment of Traders Report showed that in the managed money category, speculators liquidated 2,026 contracts of their long positions, and also liquidated 508 contracts of their short positions. Commercial interests added 2,744 contracts to their long positions, and also added 2,515 contracts to their short positions.

I wanted to comment on the possibility that silver may be in a bottoming process. Currently, silver is on a short and intermediate term sell signal, however, there are signs the market may be in the process of turning. First, the 50 day moving average ($33.07) crossed above the 150 day moving average ($32.45) at the end of March. This is clearly indicating that the market is exhibiting strength against a longer-term average, which is very positive. The 200 day moving average is at $34.32, which should provide some resistance if the market begins to advance. Second, on the year to date basis silver has advanced 13.27% while gold has advanced only 4.53%. Third, for the week of April 16 through April 19 (Monday-Thursday) silver gained $.27 and open interest increased by 3,336 (Monday-Thursday). Fourth, the average trading range (average true range) for the period of April 16 through April 20 was 55.3 cents per day versus the 21 day average true range of 97.26 cents. This is a classic example of range contraction, which is inevitably followed by range expansion. I believe this expansion will occur on the upside. 

The market bottomed at $30.98 on April 4, which broke the previous low of $31.09 made on March 22. Since the April 4 low, the market has risen 37 cents and has not retested the low. This, in combination of the factors listed above, leads me to believe that the next major move will be to the upside. If you review a silver chart you can see that the market has been in a bottoming process for the past month. In order to make a final determination that the market has in fact bottomed, I would like to see a day when the broad markets are sharply lower and watch how silver trades.

The key upside pivot point for July silver is $32.80. If the daily low is above the pivot point, an intermediate term buy signal will be generated.

Euro:

For the week, the May Euro gained 1.36 cents. The Commitment of Traders Report showed that in the leveraged funds category, speculators added 6,556 contracts to their long positions, and also added 14,323 contracts to their short positions. The market remains on a short and intermediate term sell signal. Much of the recent rally in the Euro has been attributed to the repatriation of funds into the Euro from asset sales outside of Euroland. Please see the Odds and Ends section (below) for a brief analysis of the stock markets of Spain, Italy and France. The performance of these indices during the past couple of months has been abysmal, and this in my view indicates there is much trouble ahead for Euroland.

Australian Dollar:

For the week, the Australian dollar was unchanged. The Commitment of Traders Report showed that in the leveraged funds category speculators added 4,013 contracts to their long positions and liquidated 6,182 contracts of their short positions. See Odds and Ends for a discussion on the minimal impact that the rally in the Shanghai Composite Index has had on the Australian Dollar.

S&P 500 E mini:

For the week, the S&P 500 E mini gained 10.20 points. The Commitment of Traders Report showed that in the leveraged funds category, speculators added 7,176 contracts to their long positions and liquidated 2,390 contracts of their short positions. 

The first half of April generally underperforms the second half of April. Going back to the year 2000, I am listing the best performing years for the first and second each half of April and the worst performing years for the second half of the month. It is readily apparent that there is little correlation between the best performing years in the first half of April, and their subsequent performance in the second half of April. Out of 12 years, only 3 wound up in the minus column, which means that for 9 years, the S&P 500 was in the plus column during the second half of April. Thus, there is a greater likelihood  the market will advance through the end of April.

Best Year’s Performance of S&P 500 April 1-April 15, 2000-2012
2009 +6.72%
2003 +5.48%
2010 +3.69%
2007 +2.09%
2001  +1.95%
2012  -2.74%

Best Year’s Performance of S&P 500 April 16-April 30, 2000-2011
2000 +6.75%
2001  +5.18%
2008 +3.73%
2011  +3.09%
2009 +2.50%
2003  +2.48%

Worst Year’s performance of S&P 500 April 16-April 30, 2000-2011
2002 -2.48%
2010  -2.10%
2004 -1.70%

Odds and Ends:

British Pound:
The 50 day moving average is very shortly going to close above the 200 day moving average. Speculators should be aware of the potential impact of a rising British pound on the FTSE 100. The relative strength of the British pound has increased when compared to the strength of the FTSE 100 index. For example, on March 20, 2012, the spot British pound was 1.5860, and by April 20 it had risen to 1.6120, or an increase of 2.6 cents. On March 20, 2011, the FTSE 100 closed at 5891.41, and on April 20 the market closed at 5772.15, or a loss of 119.26 points. The deleterious effect of a rising British Pound on the British equities market is not to be underestimated. See next paragraph.

The FTSE 100:
There is solid support at the 200 day moving average which is currently 5570.41. This support goes back to early January. The last time the FTSE 100 was significantly below the 200 day moving average was on December 30, 2011. Speculators should watch for the downside penetration of the 200 day moving average and if the high for the day is below the 200 day moving average, a sell signal would be generated in the FTSE 100. Also, the 50 day moving average, which is currently at 5846.02 may act as a point of resistance. The last time the market closed above the 50 day moving average was on April 2, 2011 when the FTSE 100 closed at 5874.89 only fractionally above the 50 day moving average. I wanted to give  speculators some parameters to watch for in the event they trade the British pound or the FTSE 100.

Spain Bolsa De Madrid Ibex 35 Index:
During the past 2 months, Spain’s Ibex index has crashed by over 20%. The market topped out on February 9, 2012 at 8902.10 and on April 20 closed at 7040.60. The index is heavily weighted with banks that represents 30.17% of the index’s movement. Spain is now the poster child  for fiscal recklessness, and the massive decline of the index in a short period  is telling speculators that something major is about to happen.

French CAC 40 Index:
The key equity index of France is looking terrible, and on Friday made a new low of 3155.36, which was the lowest price since January 13 when the CAC 40 made a low of 3151.69. On April 20, the market closed at 3188.58 which is below the 200 day moving average of 3242.17. The market topped out on March 16 at 3600.48. Thus, in a little more than a month, the index has fallen 411.90 points or approximately 11%. The upcoming French elections will undoubtedly have a  large impact upon the index.

Milano Italia Borsa 35 (FTSE MIB):
Italy’s Milan 35 Index made its top for 2012 at at 17,158.65 on March 19. Since then, the index has fallen to close at 14,401.78 on April 20, a drop of 2,756.87 points, which is approximately a 14% drop in one month.

The terrible performance of the major indices of Spain, France, Italy emphasizes the real possibility that the world’s financial markets may be on the edge of a precipice. Markets often foretell events before they happen, and the terrible performance of the three markets may indicate that a rare “black swan event” is about to occur.

Shanghai Composite Index:
On April 20, the Shanghai Composite Index closed at 2406.86, which is the highest close since March 19 when the index closed at 2410.18. Additionally the market closed above its 50 day moving average of 2373.49. Since March 29, 2002 the market has rallied 154.70 points from the closing price of 2252.16, or approximately 7%. The 200 day moving average is at 2445.94, and this may provide some resistance. I’ve written before about the connection between the Chinese markets and the Australian Dollar. Since March 29 when the rally began in the Shanghai Composite Index, The Australian Dollar has only rallied a scant 38 points or .37% through April 20. If the Shanghai Composite Index continues to rally without having any bullish effect on the Australian Dollar, this may be additional corroboration to begin to implement bearish positions in the Australian Dollar. As I’ve indicated before, any bearish positions should use the March 28 high of 1.0388 as an exit point.