March corn closed 8 3/4 cents higher on volume of 352,494 contracts. Open interest declined by 1,955 contracts. This is the second day in the last four where open interest declined on a rally. On February 16, corn was up 9 1/4 cents and open interest declined 7,627 contracts. The decline in open interest during the two recent rallies indicates to me that both longs and shorts are getting tired of the consolidation phase and are closing out positions. Stand aside.
March soybeans closed 1 1/4 cents higher on healthy volume of 214,506 contracts. Open interest increased by 5,660 contracts. As I have indicated before, those that are long from lower levels should be moving up stops to protect capital and profits. If not long at lower levels, stand aside.
May sugar closed 24 points higher on very heavy volume of 163,455 contracts. Open interest increased by a very robust 5,215 contracts. The market fulfilled its last requirement for me to suggest that long positions be implemented. The markets low was 24.29, which was above my pivot point of 24.24. Pullbacks are opportunities to establish long positions and I suggest that 23.81, which was Tuesday’s low be used as a sell stop. The rally in petroleum products may have been a factor supporting recent increases in sugar due to the potential of increasing ethanol consumption. We really won’t know its impact until we see a significant decline in gasoline prices.
April crude oil closed $.03 higher on very light volume of 559,139 contracts. Open interest increased by a whopping 15,512 contracts. The market had an extremely narrow daily range of $1.11, which was the smallest range since December 23 when the range was $.91. The significant increase in open interest, combined with light volume and a fractional move in the closing price, tells me that the participation by speculators is fairly light compared to rallies of the past. However, those that are participating have fiercely held views about the direction of the market. The geopolitical outlook will determine the direction of crude oil prices. Stand aside.
April gasoline closed 1.45 cents higher on volume of 168,302 contracts. Open interest increased by 5,835 contracts. April gasoline made a new high for the move at 3.2748. The market continues to be massively overbought, especially on a seasonal basis. There will be a correction at some point, and therefore it’s best to wait for lower prices before entering into new longs.
April gold closed $12.80 higher on very good volume of 194,180 contracts. Open interest increased by a very healthy 9,246 contracts. The market made a new high at 1783.40, and appears to be heading to its November 8 high of 1808.00. Although it is tempting, do not chase this market. I want point out that the gold volatility Index (ticker symbol GVZ) during February is at lows last seen in August of 2011. This means that from a volatility point of view, gold calls, or calls on the etf GLD would be relatively cheap.
March silver closed about $.17 lower on very heavy volume of 93,427 contracts. Open interest increased by 420 contracts. As I’ve said before, I prefer gold over silver. Do not chase this market higher.
The March euro closed 20 points lower on light volume of 238,653 contracts. Open interest declined by 965 contracts. If positions have been implemented using any combination of long puts, short calls, or short positions, use the February 9 high of 1.3325 to exit any of the aforementioned positions.
S&P 500 E mini:
The S&P 500 E mini closed 4.00 points lower on very light volume of 1,442,444 contracts. Open interest declined by 11,004 contracts. The continued light volume indicates to me that there is a lack of speculator participation in the market at this high level. The cash market for the S&P 500 also shows a lack of volume. Long put protection should be in place.
10 Year Treasury Notes:
March 10 year notes closed 13 points higher on volume of 1,131,835 contracts. Open interest increased by a minuscule 6,311 contracts. Since February 1, the market conveys a lack of conviction on the upside and seems to have more conviction on the downside. It is too early to enter this market on the short side. Stand aside.