Special note: The volume figures for crude oil, gasoline, gold, silver, Euro, S&P 500 E mini, and 10 year treasury notes reflect trading that began on Sunday afternoon February 19 and continued through Tuesday afternoon February 21. This was due to Presidents’ Day on Monday, in which the above markets traded on a holiday schedule. Other markets not listed, did not trade on the holiday schedule.
March corn closed 12 1/4 cents lower on healthy volume of 422,785 contracts. Open interest declined 5,719 contracts. The market continues to consolidate in a range between 6.25 and 6.45. Stand aside.
March soybeans closed 3 1/2 cents higher on volume of 207,934 contracts. Open interest declined 4,106 contracts. Soybeans made a new high at 12.76. Sell stops on long positions should be in place to protect capital and profits. If not long, stand aside.
May sugar closed 70 points higher on very heavy volume of 176,165 contracts. The volume was higher than September 12, 2011 when sugar traded 175,599 contracts. On that day, sugar climbed 54 points to close at 28.18, and open interest increased by 5,815 contracts. Open interest on Tuesday increased by a very heavy 10,744 contracts and the move of February 21 was definitely the stronger of the two. The high for Tuesday was 24.50 which matched the high of January 24. Additionally, the market penetrated my key pivot point of 24.24 and closed above that pivot point at 24.47. The market appears to be breaking out, but to get a confirmed buy, the daily low must be above 24.24.
April crude oil closed $2.65 higher on volume of 723,166 contracts. Open interest declined by 1,902 contracts. I have two concerns about crude oil. The first one is volume, which was dismal considering that Tuesday’s volume represents trading over a three day time frame. As a matter of fact, trading volume on Tuesday was lower than on Friday, February 17 when crude traded 777,665 contracts and advanced only $.93. During the two day advance, crude oil gained a total of $3.58, but open interest declined 39,947 contracts. Despite the fact that crude oil may be going higher primarily on geopolitical tensions with Iran, the price, volume and open interest action continue to tell me to stand aside.
April gasoline closed 6.09 cents higher on light volume of 126,185 contracts. April gasoline reached a new high of 3.2634 and open interest increased by 5,398 contracts. Volume on the rally was very disappointing and in fact was the lowest volume since February 6 (99,822 contracts). On the other hand, heating oil which climbed 5.76 cents on Tuesday traded 34,931 contracts more than gasoline. The increase in open interest in gasoline was impressive, but speculator participation at these levels was sparse. Remember, the volume for February 21 represents three days of trading starting on Sunday afternoon February 19 and continuing through the afternoon of February 21. Stand aside and wait for lower prices.
April gold closed $32.60 higher on heavy volume of 216,517 contracts. Open interest increased by a robust 16,885 contracts. The volume and open interest action is an extremely impressive. However, gold must must break above and close above the highs of 1765.90 made on February 3 and the December 2 high of 1769.70 made on December 2, 2011. If the market is able to do this, wait for a pullback before entering long positions.
March silver closed $1.21 higher on heavy volume of 84,212 contracts. Open interest increased by a very healthy 3,621 contracts. If one is to be long the precious metals, I think is much better to be long gold than silver. Also, silver is an industrial metal and is therefore affected by the slowing of global economies.
The March Euro closed 88 points higher on volume of 385,308 contracts. Open interest declined 7,975 contracts. The bearish open interest pattern continues in the Euro. As I’ve said before, long puts, and/or short calls, and/or short Euro positions should be implemented on rallies. Use the February 9 high of 1.3325 as an exit point on the aforementioned positions.
S&P 500 E mini:
The March S&P 500 E mini closed essentially unchanged on very light volume of 1,589,878 contracts. Open interest increased by 21,075 contracts. The market reached a new high of 1369.50, but the low volume, which represents three days of market action starting on February 19 shows that there is little enthusiasm on the part of speculators. Long put positions should be in place.
10 Year Treasury Notes:
March 10 year treasury notes closed nine points lower on volume of 1,061,198 contracts. Open interest declined by 22,031 contracts. The market reached a new low for the move at 130-12, which was the lowest price for March notes since January 25, 2012. I’m continuing to monitor notes in order to confirm a possible long put, short call, or outright short position. For now, stand aside.