March corn closed 1 1/2 cents higher on volume of 244,429 contracts. Open interest increased by a substantial 7806 contracts. For the week, open interest increased nearly 30,000 contracts, but corn advanced only 2 3/4 cents. From January 3, when corn made its high of 6.64 1/4, open interest has increased 77,735 contracts through February 3 when corn closed at 6.44 1/2. This is $.20 lower than the high made on January 3. This is bearish. On Thursday, the USDA will issue its supply demand report and this will likely provide the direction for the market at least in the short term.
March soybeans closed higher by 15 1/2 cents on volume of 178,874 contracts. Open interest increased, but by a minuscule 303 contracts. For the month of January, open interest increased 50,773 contracts and price declined by 8.3/4 cents. The build up in open interest has been keeping a lid on soybean prices, but it has not broken the market. I’m getting somewhat more friendly to the market. On February 2, the low in soybeans moved above my key pivot point high of 12.05 3/4. Although the open interest action on January 30 was negative, the remainder of the week provided a lift to prices along with increasing open interest. Pullbacks look like buying opportunities, but new longs should not be added until after the USDA report report. On Thursday, the USDA will issue its supply demand report, and this will provide the direction for the market at least in the short term.
March sugar closed 44 points higher on volume of 109,438 contracts. Open interest increased again by a whopping 7540 contracts. The key pivot point to look for in sugar is 24.86. If sugar can penetrate this price, and if the low for the day is above 24.86, we may be off to the races. Still keep in mind that we are in a period of seasonal weakness.
March crude oil closed $1.48 higher on volume of 754,775 contracts. Open interest increased by 20,659 contracts. The key downside pivot points for crude are 96.70, 95.47, and 94.10. As I’ve said before, this market is subject to geopolitical forces and at this juncture speculators should stand aside.
March gasoline closed 4.55 cents higher on volume of 139,926 contracts. Open interest increased by 4551 contracts. I really like gasoline on the long side, but not at these prices. In the commitment of traders report, managed money added 6705 contracts to their long position and closed out 150 contracts of their short position. The number of speculative longs is at a very lofty level, and therefore it is wiser to wait for a better entry point. Speculators definitely want to be long in the spring and early summer. I think gasoline prices are going much higher. The 50 day moving average is crossing up over the 150 day moving average and will soon be above the 200 day moving average. This is another bullish indicator.
March copper closed higher by 12.05 cents on volume of 69,164 contracts. Open interest increased by 4551 contracts. For the Monday through Thursday time frame March copper lost 10.80 cents and open interest increased by 5078 contracts. The market reached a high of nearly 3.94 on January 27 which nearly matches the high that copper reached on September 19, 2011. If long, sell stops should be in place based upon risk tolerance and sound money management principles. Open interest during the first four days of the week was negative along with price action, and this has heightened my caution on the market. If the outside markets tumble, I believe copper will follow.
April gold closed $19.00 lower on volume of 204,002 contracts. Open interest increased by 1599 contracts. My opinion of this market has not changed. It is overbought relative to its 50 and 200 day moving averages, and the open interest action has been dismal. Stand aside and wait for lower prices.
March silver closed lower by $.42 on volume of 55,922 contracts. Open interest increased by 1131 contracts. Stand aside.
The March euro closed 11 points higher on volume of 357,926 contracts. Open interest declined by 368 contracts. During the past several days, the euro has been consolidating in a range between 1.31 and 1.32. From January 27 when the euro reached its high for the move of 1.3237 through February 3, open interest increased by 6862 contracts and price has increased a minuscule 34 points. Although it may be tempting to short the euro at these levels and have a stop above the January 27 high, my opinion is to stand aside. A major positive political development regarding Euroland could catch the shorts by surprise.
S&P 500 E mini:
The March S&P 500 E mini closed 16.25 points higher on volume of 1,714,787 contracts. Open interest increased by 22,917 contracts. The market continues to move higher, but the risk at these levels is on the downside. Long put protection should be in place.
10 year Treasury Notes:
March 10 year treasury notes closed 27 points lower on fairly heavy volume of 1,355,097 contracts. Open interest went up 2135 contracts. This market is at stratospheric levels, and although I think the market can go higher, I do not think that the long side should be pressed at this price. My opinion at this juncture is to stand aside.