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

See the analysis of Apple Computer below.

Soybeans:

For the week, July soybeans gained 44 cents. The Commitment of Traders Report, which is tabulated on Tuesday and released Friday showed that in the managed money category, speculators added 11,811 contracts to their long positions and liquidated 1,959 contracts of their short positions. Commercial interests liquidated 188 contracts of their long positions and added 18,317 contracts of their short positions.

The May-July soybean spread went into a inverted (backwardation) position for the first time with May gaining 6 cents for the week,  and May selling at a 3 1/4 cent premium to July. This is indicative of strong near-term demand. Soybean meal continues to be the leader and for the week July meal closed 6.20% higher, while July soybeans closed 3.64% higher.

Corn: 

For the week, July corn closed 22 1/2 cents higher. The Commitment of Traders Report showed that in the managed money category, speculators liquidated 15,266 contracts of their long positions and added 30,192 contracts to their short positions. Commercial interests added 5,957 contracts of their long positions and liquidated 53,357 contracts of their short positions. It appears that large speculators were liquidating long positions and taking up short positions as the market traded at the lower end of the range. Commercial interests were doing the opposite by liquidating their short positions at the lows.

The May-July corn spread widened by 18 cents for the week, and May corn now sells at a 27 1/2 cent premium over July. This is indicative of the very strong cash market and solid near-term demand. The impetus for the 18 cent move higher on Friday was the report that China had purchased approximately 1.44 million metric tons of corn for the 2012-2013 season. This was the largest sale on record since 1991. Despite the strength in the corn market, the wheat market was even stronger having closed 27 cents higher on the week. The fundamentals for wheat are considered fairly bearish, but there is a high net short interest on the part of managed money speculators. As a consequence, I believe wheat will trade approximately in tandem with corn. The corn market remains on a short and intermediate term sell signal. Do not short the market.

Crude oil:

For the week, June crude oil closed $1.05 higher. The Commitments of Traders Report showed that in the managed money category speculators liquidated 1,482 contracts of their long positions, and also liquidated 4,680 contracts of their short positions. Commercial interests liquidated 13,972 contracts of their long positions, and also liquidated 12,445 contracts of their short positions.

Gasoline:

For the week, June gasoline gained 3.45 cents. The Commitment of Traders Report showed that in the managed money category, speculators liquidated 5,757 contracts of their long positions and added 695 contracts of their short positions. Commercial interests liquidated 7,097 contracts of their long positions, and also liquidated 14,740 contracts of their short positions.

Copper:

For the week, July copper gained 11.85 cents. The Commitment of Traders Report showed that in the managed money category, speculators liquidated 1,909 contracts of their long positions and also liquidated 1,896 contracts of their short positions. Commercial interests added 2,960 contracts of their long positions and also added 2,534 contracts to their short positions.

Gold:

For the week, June gold added $22.00. The Commitment of Traders Report showed that in the managed money category, speculators liquidated 2,064 contracts of their long positions and added 2,162 contracts of their short positions. Commercial interests added 3,325 contracts of their long positions and liquidated 4,965 contracts of their short positions.

Silver:

For the week, July silver lost 30.9 cents. The Commitment of Traders Report showed that in the managed money category speculators added 333 contracts to their long positions, and also added 2,743 contracts to their short positions. Commercial interests added 2,060 contracts to their long positions and liquidated 522 contracts of their short positions. 

Euro:

For the week, the June Euro gained 43 points. The Commitment of Traders Report showed that in the leveraged funds category speculators liquidated 3,924 contracts of their long positions and also liquidated 9,303 contracts of their short positions. Please scroll down to read the commentary on the Dollar Index.

Australian Dollar:

For the week, the Australian dollar gained 1.10 cents. The Commitment of Traders Report showed that in the leveraged funds category, speculators liquidated 3,734 contracts of their long positions and also liquidated 782 contracts of their short positions. On Friday, the market pierced 1.0388, which was the exit point for bearish positions. Speculators should now be out of the Australian Dollar.

S&P 500 E mini:

For the week, the June S&P 500 E mini gained 23.50 points. The Commitment of Traders Report showed that in the leveraged funds category, speculators added 7,373 contracts to their long positions and also added 2,961 contracts of their short positions. Below, please see the analysis of the Dollar Index.

Apple Computer: 

I follow the market action of Apple Computer very closely because of its impact on major indices. Its weight is responsible for approximately 13% of the movement of the NASDAQ 100, and approximately 4% of the S&P 500. Everyone witnessed the spectacular rally on April 25 when Apple closed $49.72 higher, but they may have overlooked some very important data that tells a different story. Although, I believe Apple will eventually take out the high of $644.00 made on April 10,  there is a good possibility the stock may have made a temporary top. This is consistent with my belief that the broad market indices are in a topping process. Very often, if speculators only look at price, they will be easily deceived. It is the collection of many other data points (price included) that provide insight into what is more likely to happen than not.

Apple Volume Analysis:

In order to provide context regarding volume, it is important to know the benchmarks that I am using to measure volume performance. The year to date (82 trading days) average volume per day is 21,564,740. The 20 day average volume per day is 28,257,004.

First, the volume on the big rally day was 32,346,800. Although this was above 20 day average volume, it was lower volume than the previous three days when Apple closed lower on each of those days. Prior to April 25, the previous rally day occurred on April 17 when volume reached 36,624,400 and Apple closed $29.57 higher. In short, volume was 4,277,600 shares higher on the 17th than it was on April 25 when Apple closed up $49.72 after a terrific earnings report.  

On April 26, volume collapsed to 19,145,100 shares, which is 10% below year to date average volume per day of 21,564,740 shares, and 31% below Apple’s 20 day average volume. As bad as that sounds, it gets much worse. Volume on April 26 was the lowest since March 23, 2012 when 15,374,500 shares were traded.

On April 27, volume continued to collapse to 14,527,500 shares, which fractionally broke the low made on March 12 when 14,545,700 shares were traded.

The lack of strong volume on the 25th indicates to me that the market is saturated with longs. For the most part, anyone who wants to own Apple has already purchased shares. The sharp contraction of volume along with price declines in the two days that followed the report confirms a lack of new buyers to purchase shares. Normally, contractions in volume accompanied by price declines after a large move to the upside would be positive. However, in this case, the upside move only put the stock near its 20 day moving average. The move on the 25th did not propel the stock into new high territory, and in order to do so, more buyers have to be willing to pay ever-increasing prices for shares. I have mentioned it before, but it is worth mentioning again; corrections of any magnitude occur when stocks run out of new buyers to move the price higher. The inability of investors to move stock prices higher causes them to start taking profits, which starts the ball rolling on the downside. The dismal volume during the past three trading days after a spectacular earnings report is highlighting that there are fewer new buyers willing to purchase shares. 

Price and Performance Analysis:

On April 25 Apple made a high of $618.00 and closed at $610. 00 The market was unable to break above the key point of resistance of $620.25 made on April 18, 2012. This high was made by the continuation of the rally of April 17. After making the high of $620.25, Apple fell to close near the lows of the day at $608.34, and the stock continued to fall for the next four days. The fact that the market was unable to pierce, let alone close above $620.25 on April 25 and the two trading days thereafter is very revealing about the strength of the move.

On April 26, Apple closed $2.30 lower and the range for the day was $12.56, which is less than its 21 day average true range at $17.84. Also, the high for the day was $614.69, which was below the high of $618.00 made the previous day.

 On April 27, Apple closed $4.70 lower and the range for the day was $7.20. The high for the day was $606.18, which was below the high of April 26. The close on April 27 was $603.00, which is below the 20 day moving average close of $606.78.  It is important to note that on April 26 and 27 the S&P 500 advanced 12.67 points, or.91%, the Dow Jones Industrial Average advanced 137.59 points or 1.05%, and the NASDAQ 100 advanced 31.72 points, or 1.17%. During those two days Apple lost 7.00 points or 1.15%.

From April 10, when Apple reached its all-time high of $644.00 through April 27, Apple has fallen $33.23, or 5.22%. During this time frame the NASDAQ 100 is 1.36 points higher or.05%, and the S&P 500 is 21.16 points higher or +1.53%. The Dow Jones Industrial Average is 298.72 points higher, or 2.31%.

It remains to be seen whether the recent move in Apple is the pause that refreshes, or a sign of possible weakness in the broad indices. If Apple can close above $620.25, the stock will probably test  the $644.00 level.

Dollar Index:

The cash dollar index may generate a short-term sell signal this week. For this to occur, the daily high must be below 79.177. On April 27, the cash dollar index closed at 78.709, which was fractionally lower than the close of 78.820 made on April 2.

The components and weights of the dollar index are as follows: Euro 58.6%, Japanese Yen 12.6%, British pound 11.9%, Canadian dollar 9.1%, Swedish krona 4.2%, Swiss Franc 3.6%. Currently, the two strongest currencies are the British pound and Canadian dollar. Together, they comprise 21% of the movement of the index. The currency with the heaviest weight is the Euro. Although the market has been slow to rally, it looks like it wants to go higher. The direction of the Japanese Yen is a difficult call to make, and therefore its impact on the dollar index is hard to calibrate. The Swiss franc is very much tied the performance of the Euro and along with the Swedish krona will have a minor impact on the index.

Since April 16, the Dollar Index has displayed lower highs and lower lows. A further decline in the dollar could send commodities soaring along with equities. Additionally, it could be the catalyst for an upward move in the precious metals.