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July soybeans closed 8 cents lower on volume of 218,881 contracts. Open interest declined by 8,599 contracts. This was the second day in a row that open interest declined, and the two-day total is 18,205 contracts. During this time, soybeans declined by 35 1/2 cents. Although this is positive market action, many more speculative longs have to liquidate before it is safe to enter the market. Stand aside.
July corn closed 15 3/4 cents lower on volume of 271,384 contracts. Open interest increased by 5,765 contracts. It is important to note the increase in open interest occurred in the back months, specifically September 2012 through 2013 contracts. For the July contract, open interest declined only 147 contracts on volume of 143,620 contracts, which is the month with the most speculative interest. It is interesting to note that for the past couple of weeks, volume has increased on advances and has decreased on declines. As I write this on May 10, July corn is 16 1/4 cents lower on a higher than expected carry out per the USDA Monthly Supply Demand Report. I will be watching the market to determine a future course of action. For anyone long, sell stops should have been triggered at $6.04 or $5.99.
June crude oil lost 20 cents on volume of 660,026 contracts. Open interest declined for the third day in a row by 17,303 contracts. During the three day time frame, open interest has declined by 40,190 contracts while price has declined by only $1.68. The build up in open interest during the past month is now in the process of being liquidated as speculators continue to lose money. The market generated in intermediate term sell signal on May 7 and has been on a short-term sell signal since March 29. Stand aside.
June gasoline closed 2.97 cents higher on heavy volume of 227,394 contracts. Open interest increased by a mere 49 contracts. The open interest action has been negative in that during the past two trading sessions gasoline advanced 5.00 cents, but open interest declined 390 contracts. Also, the trading range on May 9 was 5.18 cents, which is less than the 21 day average true range of 5.99 cents, yet volume surged and open interest was negligible. This indicates that speculators were essentially exchanging contracts: old longs and shorts were liquidating and were being replaced by new longs and shorts. An interesting side note is that the range on May 8 was 8.23 cents, but the volume on May 8 was 81,170 contracts less than on May 9.
July copper closed 1.80 cents lower on volume of 77,596 contracts. Open interest declined by 500 contracts. During the past two days open interest has declined by 2,830 contracts and price has declined by 11.40 cents. The market remains on a short-term sell signal and an intermediate term buy signal. Stand aside.
June gold closed $10.30 lower on heavy volume of 237,116 contracts. Open interest increased for the third day in a row by 4,672 contracts. The open interest increase for three consecutive days, during which time the gold price declined in each of those days is atypical behavior. I cannot remember a time when I saw this kind of negative price and open interest pattern in gold. The three session loss totaled $51.00 and open interest increased by 13,081 contracts. Please consult your investment advisor or broker before embarking on a plan to acquire gold for a longer-term investment.
July silver lost 21.8 cents on volume of 52,159 contracts. Open interest declined by 70 contracts. Stand aside.
The June Euro lost 82 points on heavy volume of 334,349 contracts. Open interest increased by 10,196 contracts. The Euro has declined 6 days in a row for total loss of 2.84 cents. Open interest has increased by a total of 51,912 contracts. Stand aside.
On May 9, the cash dollar index broke out and generated a new short and intermediate term buy signal. It is rare that a buy signal would be given on the same day for the short and intermediate term. Dollar strength has major negative implications for variety of markets.
S&P 500 E mini:
The June S&P 500 E mini lost 7.50 points on very heavy volume of 2,528,663 contracts. Open interest increased on the decline by 25,512 contracts. As I pointed out in yesterday's post, I think the market is making a temporary bottom, but who knows how long this bottom will remain intact. Long put protection should be in place.