Soybeans:
For the week, March soybeans lost 28 cents, May -22.00, July -20.75. The COT report showed that managed money added 8,397 contracts to their long positions and liquidated 4,897 contracts of their short positions. Commercial interests added 13,798 contracts to their long positions and also added 18,624 contracts to their short positions. As of the latest report, managed money is long soybeans by a ratio of 6.98:1 which is up significantly from the previous week of 5.44:1 and the ratio of 2 weeks ago of 5.23:1.
Soybean meal:
For the week, March soybean meal lost $13.00, May -11.40, July -10.50. The COT report showed that managed money added 4,275 contracts to their long positions and also added 3,464 contracts to their short positions. Commercial interests added 244 contracts to their long positions and also added 961 contracts to their short positions. As of the latest report, managed money is long soybean meal by a ratio of 3.30:1, which is down from the previous week of 3.72:1, a higher than the ratio of 2 weeks ago of 2.81:1.
Soybean oil:
For the week, March soybean oil lost 19 points, May +16, July +18. The COT report showed that managed money liquidated a massive 8,632 contracts of their long positions and added 7,929 contracts to their short positions. Commercial interests added 13,657 contracts to their long positions and liquidated 2,057 contracts of their short positions. As of the latest report, managed money is now short soybean oil by a ratio of 1.23:1, which is a reversal from the previous week when managed money was long by a ratio of 1.08:1. Two weeks ago, managed money was short by a ratio of 1.07:1.
We continue to advocate long positions in soybean oil. Sell stops should be placed at, or slightly below the February 13 low of 50.56.
Corn:
For the week, March corn lost 10.25 cents, May -11.75, July -13.75. The COT report showed that managed money liquidated a massive 31,293 contracts of their long positions and added 10,730 contracts to their short positions. Commercial interests did the opposite of managed money by adding 32,501 contracts to their long positions and liquidating 8,904 contracts of their short positions. As of the latest report, managed money is long corn by a ratio of 2.93:1, which is down substantially from the previous week of 3.72:1 and the ratio of 2 weeks ago of 3.62:1. This week’s ratio is the lowest that we’ve seen since in quite a while. This indicates there is a good possibility a temporary low is for corn.
Wheat:
For the week, March wheat lost 14.00 cents, May -14.00, July -11.75. The COT report showed that managed money liquidated 3,492 contracts of their long positions and added 361 contracts to their short positions. Commercial interests liquidated 1,259 contracts of their long positions and also liquidated 7,981 contracts of their short positions. As of the latest report, managed money is now short by a ratio of 1.41:1 which is up from the previous week of 1.35:1 and the ratio of 2 weeks ago of 1.30:1. This is the highest short to long ratio that we’ve seen in quite a while. Like corn, this may indicate that a temporary bottom is near for wheat.
Our relative strength analysis for the grains encompasses price performance and long to short ratios., which gives clients a rading on where managed money is crowded. Clearly, managed money doesn’t seem to realize that the best long play in the grain sector is soybean oil. Even during the most recent COT report, when managed money went to a net short position in soybean oil, the only commodity that outperformed it was wheat, and managed money increased its net short in wheat as well. On a year-to-date basis, soybean oil is outperforming soybeans by a ratio of of almost 3.75:1, yet the soybean long to short ratio is more than 7 times the ratio of soybean oil
Performance Year to Date: Performance COT Tabulation Long to Short Ratio on February 12
(February 6-February 12)
March soybean oil +3.86% -3.47% short 1.23:1
March soybeans +1.06% -5.00% long 6.98:1
March corn +0.07% -4.49% long 2.93:1
March soybean meal -2.38% -6.43% long 3.30:1
March wheat -4.60% -3.37% short 1.41:1
We are listing the performance for the grains from February 4, when they made their highs through February 13 when the grain complex made their lows. In this time frame, soybean oil was the best performer with wheat ranking number two.
Performance February 5-13
March soybean oil -2.49%
March wheat -2.90%
March corn -4.60%
March soybeans -4.85%
March soybean meal -6.93%
Crude oil:
For the week, March crude oil gained 14 cents. The COT report showed that managed money added 8,107 contracts to their long positions and added 375 contracts to their short positions. Commercial interests added 10,179 contracts to their long positions and also added 2,350 contracts to their short positions. As of the latest report, managed money is long crude oil by a ratio of 9.02:1, which is up from the previous week of 8.84:1, and the same as the ratio of 2 weeks ago of 9.03:1.
We have been warning our readers for quite some time about the disproportionately large increase in open interest and the failure of crude oil to move significantly higher with this. Although, we don’t have the final open interest stats for Friday, from January 30 when crude oil made a high of $98.24 and closed at $97.94 through February 14 when it closed at $97.31, open interest increased by 96,734 contracts, a loss of 63 cents. In short, since crude made its high, open interest action relative to price has been bearish. We envision crude oil dipping to its 50 day moving average of $93.08. This may be somewhat conservative because we believe the major equity indices are about to undergo a correction. With the high long to short ratio, there are a large number of speculative longs that will run for the exit once it becomes apparent that crude oil is headed lower.
Heating oil:
For the week, March heating oil lost 2.80 cents, April -1.36, May +.0057. The COT report showed that managed money added 8,140 contracts to their long positions and liquidated 2,592 contracts of their short positions. Commercial interests added 5,472 contracts to their long positions and also added 11,390 contracts to their short positions. As of the latest report, managed money is long heating oil by a ratio of 3.52:1, which is up substantially from the previous week of 2.74:1 and the ratio of 2 weeks ago of 2.75:1.
Gasoline:
For the week, March gasoline gained 7.57 cents, April +5.67, May +4.84. The COT report showed that managed money added 3,682 contracts to their long positions and also added 2,938 contracts to their short positions. Commercial interests added 1,609 contracts to their long positions and liquidated 646 contracts of their short positions. As of the latest report, managed money is long gasoline by a ratio of 8.65:1, which is down substantially from the previous week of 11.10:1 and the ratio of 2 weeks ago of 9.73:1.
Natural gas:
For the week, March natural gas lost 11.9 cents. The COT report shows that managed money liquidated 3,643 contracts of their long positions and added 8,641 contracts to their short positions. Commercial interests added 7,619 contracts to their long positions and also added 4,803 contracts to their short positions. As of the latest report, managed money is short by a ratio of 1.31:1 which is up from the previous week of 1.25:1 and the ratio of 2 weeks ago of 1.28:1.
Copper:
For the week, March copper lost 2.25 cents. The COT report showed that managed money added 52 contracts to their long positions and liquidated 396 contracts of their short positions. Commercial interests liquidated 6,033 contracts of their long positions and also liquidated 9,393 contracts of their short positions. As of the latest report, managed money is long copper by a ratio of 2.06:1, which is up from the previous week of 2.02:1, and the ratio of 2 weeks ago of 1.70:1.
Gold:
For the week, April gold lost $57.40. The COT report shows that managed money added 881 contracts to their long positions, and added a massive 12,847 contracts to their short positions. Commercial interests added 4,335 contracts to their long positions and liquidated 5,688 contracts of their short positions. As of the latest report, managed money is long by a ratio of 2.41:1, which is down substantially from the previous week of 3.28:1 and the ratio of 2 weeks ago of 3.21:1.
Platinum:
For the week, April platinum lost $37.00. The COT report showed that managed money liquidated 1,029 contracts of their long positions and also liquidated 1,095 contracts of their short positions. Commercial interests added 247 contracts to their long positions and also added 796 contracts to their short positions. As of the latest report, managed money is long platinum by a stratospheric ratio of 22.84:1, which is up substantially from the previous week of 14.75:1 and the ratio of 2 weeks ago of 16.27:1.
From the February 6 report: Platinum made its high at $1744.50
February 6 is the 16th day that open interest has increased since platinum generated a short and intermediate term buy signal on January 11. In prior reports, we have cautioned that platinum is massively overbought relative to its 50 day moving average and the long to short ratio. The large price advance, combined with heavy volume and a heavy increase of open interest tells us that a top or temporary top is likely in place. Additionally, the high of $1744.50 was accompanied by a volume spike of 1,068 contracts (approximately 5% of total volume) on the 15 min. chart, which occurred at 2:30 a.m. February 6. Since then, platinum has never been close to retesting that high.
We caution clients to stand aside because of the overbought situation on a price basis, the stratospheric long to short ratio and the froth in the market. As we said in the February 5 report, the problems of high production costs of South African platinum mines has been appearing in various news reports. We believe latecomers have piled in, which is almost always a negative sign for bulls. During the past year, platinum has had two major tops. The first one occurred on February 22, 2012 at 1731.80, and the second at $1731.20 on October 5, 2012. Stand aside.
Since topping out on February 6, through February 14, platinum lost $25.60. However, during this time open interest has declined only 1,572 contracts. In order to put this number in perspective consider the following: The move higher began on December 31, and ended temporarily on February 6. During this time, open interest increased by 13,969 contracts. In our view, a substantial number of of the new longs will be forced to liquidate as platinum prices correct to their 50 day moving average of 1638.00. On Friday, April platinum closed 1677.70. There have been reports of disappointing auto sales in Europe, plus precious metals are clearly in downtrends. Additionally, there is the risk of a correction, and possibly a severe one in equities, which would negatively impact platinum prices due to its value as an industrial metal. We continue to like platinum, but not at current prices.
Palladium:
For the week, March palladium gained $1.65. The COT report showed that managed money added 689 contracts to their long positions and liquidated 276 contracts of their short positions. Commercial interests liquidated 41 contracts of their long positions and added 1,287 contracts to their short positions. As of the latest report, managed money is long palladium by a ratio of 11.54:1, which is up substantially from the previous week of 9.99:1, and about the same as the ratio of 2 weeks ago of 11.25:1.
Silver:
For the week, March silver lost $1.592. The COT report showed that managed money liquidated 2,218 contracts of their long positions and added 1,514 contracts to their short positions. Commercial interests added 2,047 contracts to their long positions and also added 998 contracts to their short positions. As of the latest report, managed money is long silver by a ratio of 6.56:1 which is down substantially from the previous week of 10.34:1 and the ratio of 2 weeks ago of 7.43:1.
Canadian dollar:
For the week, the March Canadian dollar lost 43 points. The COT report showed that leveraged funds liquidated 4,172 contracts of their long positions and also liquidated 3,688 contracts of their short positions. As of the latest report, leveraged funds are long the Canadian dollar by a ratio of 2.84:1, which is up substantially from the previous week of 2.44:1 and slightly above the ratio of 2 weeks ago of 2.79:1.
Australian dollar:
For the week, the March Australian dollar lost 16 points. The COT report showed that leveraged funds liquidated a massive 19,070 contracts of their long positions and added 2,291 contracts to their short positions. As of the latest report, leveraged funds are long the Australian dollar by a ratio of 2.46:1, which is down substantially from the previous week of 3.11:1 and the ratio of 2 weeks ago of 3.35:1. This is the lowest long to short ratio in quite a while.
Swiss franc:
For the week, the March Swiss franc lost 62 points. The COT report showed that leveraged funds liquidated 914 contracts of their long positions and also liquidated 1,356 contracts of their short positions. As of the latest report, leveraged funds are long the Swiss franc by a ratio of 1.94:1, which is up somewhat from the previous week of 1.71:1, but down from the ratio of 2 weeks ago of 2.24:1.
British pound:
For the week, the March British pound lost 2.82 cents. The COT report showed that leveraged funds liquidated 13,095 contracts of their long positions and added 7,878 contracts to their short positions. As of the latest report, for the first time in many months, leveraged funds are short by a ratio of 1.33:1, which is a dramatic reversal from the previous week when they were long by a ratio of 1.20:1, and the ratio of 2 weeks ago of 1.56:1.
Ever since the British pound generated a short and intermediate term sell signal on January 17, the market has moved straight down with the exception of two rallies that lasted 3 days each. The market is dramatically oversold, and the fact that leveraged funds have only begun to get net short tells us a major rally is around the corner.
Euro:
For the week, the March euro lost 8 points. The COT report showed that leveraged funds liquidated 9,481 contracts of their long positions and added 2,047 contracts to their short positions. As of the latest report, leveraged funds are long the euro by a ratio of 1.42:1, which is down slightly from the previous week of 1.66:1, but above the ratio of 2 weeks ago of 1.30:1.
Japanese yen:
For the week, the March Japanese yen lost 71 points. The COT report showed that leveraged funds added 3,592 contracts to their long positions and liquidated 3,410 contracts of their short positions. As of the latest report, leveraged funds are short by a ratio of 3.54:1 which is down substantially from the previous week of 4.17:1 and the ratio of 2 weeks ago when managed money was short by a ratio of 4.32:1.
S&P 500 E mini:
For the week, the March S&P 500 gained 4.70 points. The COT report showed that leveraged funds added 2,799 contracts to their long positions and also added 27,832 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 1.91:1, which is up slightly from the previous week of 1.87:1, but down slightly from the ratio of 2 weeks ago of 2.00:1.
American Association of Individual Investors survey
Recent wk 2 weeks ago 3 weeks ago
Bullish 42.3 42.8 48.0
Bearish 28.7 29.6 24.3
Neutral 29.0 27.7 27.7
For the past week, we have been emphasizing the importance of the declining number of stocks that are above their 50 day moving averages while the indices were climbing higher. In order to bring this into sharper focus, we are providing the percentage of stocks that were above their 50 day moving averages on January 22 and the number on February 15 for the S&P 500 and the New York Composite Index. January 22 was the date that the percentage of stocks above their 50 day moving averages made their highs. We like to use the New York composite index because it represents approximately 2,000 stocks, from large to small cap, and the S&P 500 is the most commonly used benchmark.
Percent of stocks above 50 day moving average January 22-February 15 price gain
January 22 February 15
S&P 500………………..93.4% 85.00% + 2.28%
NYSE Composite… 89.54% 77.99% + 1.60%
The current percentage of stocks above their 50 day moving average in the S&P 500 and the New York Composite Index is the lowest for 2013. On January 8, the percentage dipped to 85.20 on the S&P 500. The the 50 day moving average of the percentage of stocks above their 50 day moving averages is 77.35%, for the New York Composite and is 82.06 for the S&P 500. In short, the foundation of the index, which is individual stocks are weakening, which makes the strength of the indices illusory.
Another area of concern is the massive open interest increase relative to the minor price advance from February 1 through February 14. For example, open interest has increased by 172,775 contracts from February 1 through February 14, but the S&P 500 has advanced only 11.75 points. This is a disproportionately large increase of open interest relative to the price advance, and it has barely moved the index. We view this as a very negative sign for continued upside moves. We are not even taking into account the potential for an economic setback resulting from enforced cuts to the federal budget beginning on March 1.
