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July soybeans closed 9.50 cents higher on light volume of 169,801 contracts. Total open interest declined by 866 contracts and open interest in the July contract declined by 5,904 contracts on volume of 81,935. The market made a low of $13.17 1/2 on June 1 and has rallied approximately 43 cents to the high of $13.60 1/4 on June 5. During this time, open interest declined by a total of 5,040 contracts. Soybeans and soybean meal are entering a period of seasonal strength and since soybeans topped out on April 30 through June 5, open interest has declined by a total of 33,411 contracts. The 50 day moving average on the continuation chart is $14.18 and $14.20 on the July contract. Key pivot points to watch for in the July contract are: $13 96 1/4 and $14.09 1/4. If the market is able to close above these pivot points, it has a shot at turning a short-term sell signal into a buy signal. The buy signal would occur on a close above $14.25 7/8 provided that the daily low was above this number. The market remains on an intermediate term buy signal and once the short term buy signal is generated, bullish positions can be implemented.
July soybean meal closed $3.90 higher on volume of 65,971 contracts. Total open interest declined by 2,509 contracts and open interest in the July contract declined by 5,792 contracts on volume of 36,300. Since soybean meal topped out on April 30, open interest has declined by 15,570 contracts through June 5. The performance of soybean meal has been outstanding versus soybeans. For example, from the time that soybean meal and soybeans topped out on April 30 through June 5, soybeans lost 10.36% and soybean meal lost 8.15%. Furthermore, on a year-to-date basis, soybean meal is blowing soybeans out of the water by gaining 25.39% versus beans at 9.98%. I have always been partial soybean meal because of its outstanding performance. Key pivot points to watch in the July contract are: $409.50 and $414.60. For the market to generate a short-term buy signal, soybean meal would have to close above $420.60 and the low the day would have to be above this as well.
July corn closed 1/2 cent lower on relatively heavy volume of 340,581 contracts. Total open interest increased by 463 contracts and open interest in the July contract declined by 11,161 contracts on volume of 157,718. There was a huge amount of buying in the back months that offset the massive open interest decline in the July contract. Despite the fact that corn was essentially unchanged, the bull spread in the July-December 2012 contracts continued to widen. On June 5, the spread widened by 15 1/2 cents premium to July. Since bottoming out on May 31, the July-December bull spread has widened by 26.50 cents, which indicates there is healthy near-term demand for corn. In the June 1 post, I said that corn had reached a temporary bottom, and as I write this on June 6, July corn is 13 cents higher. Corn remains on a short and intermediate term sell signal. Stand aside.
July wheat lost 14.5 cents on volume of 133,857 contracts. Open interest declined 458 contracts. On June 5, wheat generated an intermediate term sell signal. Do not short the market at this juncture. Stand aside.
July crude oil gained 30 cents on volume of 478,692 contracts. Open interest increased by 10,156 contracts. The open interest increase was about average in relation to volume. This is the third day in a row that open interest has increased and the three day total is 18,783 contracts. As I pointed out in yesterday's post, crude oil is in the value area and the market is massively oversold. Stand aside.
July gasoline gained 1.40 cents on light volume of 123,941 contracts. During the past two sessions July gasoline has gained a total of 2.79 cents, and open interest has increased by 10,213 contracts. As I pointed out yesterday, gasoline is priced at its 104 week moving average, and is clearly in a value zone. A rally to the 200 day moving average of $2.87 is likely. Stand aside.
July copper closed 1.80 cents lower on volume of 64,179 contracts. Open interest increased by 3,014 contracts. During the past five trading sessions the total open interest increase has been 13,474 contracts. The market bottomed on June 4 at $3.2380 and rallied to a high of $3.3515 on June 5. In a number of previous posts, I have mentioned that copper is massively oversold and is likely to have a good-sized rally As I write this on June 6, copper is 7.85 cents higher. The target area to implement bearish positions is in the $3.64 area. Stand aside.
August gold closed $3.00 higher on very light volume of 102,956 contracts. Open interest increased by 508 contracts. The low volume can be partially explained by the very narrow range on June 5 of $12.30 versus the 21 day average true range of $28.00. The market is acting well and as I write this on June 6, gold is trading $17.70 higher and is likely to close near its 50 day moving average of $1624.25. The market remains on a short and intermediate term sell signal, but this could change rather quickly. On a short-term basis, the market needs to close over new $1628.10 and $1641.50. For gold to generate a short-term buy signal, it would have to close above $1653.40 and the low of the day would have to be above this number. The intermediate term buy signal is approximately $20.00 above the short term buy signal. I encourage readers to review the June 3 and May 27 Weekend Wrap about gold and the gold ETF GDXJ.
July silver gained 39.8 cents on volume of 48,081 contracts. Open interest increased by 705 contracts. Stand aside.
The June Euro lost 47 points on volume of 265,211 contracts. Open interest increased by 7,250 contracts. I have been warning for number of days that the market is massively oversold and loaded with speculative shorts. The market made a low of 1.2288 on June 1 and has rallied to a high of 1.2575 on June 6. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini gained 12.00 points on volume of 2,145,884 contracts. Open interest increased by 38,591 contracts. The market has been due for a rally because of its massive oversold condition. As I write this on June 6, the S&P 500 E mini is up 21.00 points. Maintain long put protection.