March corn closed 7 1/4 cents higher on volume of 237,427 contracts. Open interest increased by 2031 contracts. As I mentioned in my recent weekend wrap, the market has formidable resistance in the 6.64 area. Additionally, for the market to move higher, the daily low has to be at least 6.37. Until that occurs, the market will trend lower. As the market trends lower, we should see the beginning of liquidation and open interest reduction. I do like this market on the long side in the future, but not now.
March soybeans closed 3 3/4 sent lower on volume of 101,330 contracts. Open interest increased by 486 contracts. As stated in my weekend wrap, the market should correct down to at least its 50 day moving average of 11.73. To partially confirm the downtrend, the market must close under 11.90 1/8 and and the final confirmation would occur when the daily high is no more than 11.79 1/2.
March sugar closed 52 points lower on light volume of 86,277 contracts. Open interest increased by 6464 contracts. Relative to its volume, the open interest increase was fairly large on the down move. This is of concern because it indicates that short sellers were taking a very aggressive positions. As I have pointed out before, the period just ahead is one of seasonal weakness. The key pivot points to watch for on the downside are 24.19 and 23.92. If the market's daily high is not more than 23.92, we could see a further test to the low end of the trading range, which is in the 22.80 area. Previously, I suggested that stops be placed at 22.82. If the high in March sugar is less than 23.92, I would suggest long positions be liquidated. Once the data confirms that the market has turned around, long positions can then be re-entered.
March copper closed 1 1/4 cent lower on volume of 49,803 contracts. Open interest increased by 2224 contracts. The market reached a new high for the move of $3.939. As I've said before, partial positions should have been liquidated with sell stops in any remaining positions based upon your risk tolerance and sound money management principles.
February gold closed $5.50 higher on heavy volume of 344,707 contracts. Open interest decreased 3545 contracts and the market made a new high at 1739.80. This is the second day in a row that open interest has decreased on a rally. During the past two days, gold has risen $32.30 and open interest has declined 4,832 contracts. This two day action is problematic for longs in that the market made two consecutive new highs for the move on heavy volume, yet open interest declined. In my Sunday wrap, I said I would provide the open interest stats from the low that gold made on December 29 through January 27. From the low of 1523.90 to the high made on January 27 of 1739.80, open interest has increased a total of 8086 contracts. In other words, the market has rallied $216 and the net total increase in open interest has increased by a minuscule amount. The open interest stats confirm quite the opposite of the bullish narrative surrounding gold's rebound, at least as far as futures are concerned. The fact is both longs and shorts have been liquidating as the market has been moving higher. This is bearish.
March silver closed lower by a little bit more than $.04 on lackluster volume of 33,980 contracts. Open interest declined by 91 contracts. Stand aside.
The March euro continued its rebound closing up 97 points on volume of 331,913 contracts. Open interest declined by 4663 contracts. During the past three days, the euro has increased by 1.82 cents and open interest has declined by 13,598 contracts. This is consistent with a market that is in a bearish trend. Stand aside and wait for higher prices before implementing short sales or long puts.
S&P 500 E mini:
March S&P 500 E mini closed 2.75 lower on volume of 1,731,900 contracts. Open interest declined by a whopping 70,159 contracts. This is an extremely large number, and it indicates that both longs and shorts are uncomfortable being in the market at this level. As a matter of fact, the previous three days increase in open interest has been wiped out by Friday's decrease. Long put protection is imperative at these levels.
10 year Treasury Notes:
March 10 year treasury notes closed nine points higher on volume of 1,088,337 contracts. Open interest increased a healthy 37,821 contracts. If not already long from lower levels, stand aside. Partial profits should be taken at these levels with a stop protection on longs based upon your risk tolerance and sound money management principles. Do NOT attempt short this market.
The most recent stats from the AAII are as follows:
Bullish- 48.4 +1.2% (chg from previous week)
Bearish 18.9 -4.7%
Neutral 32.7 +3.5%