March corn closed two cents lower on volume of 341,629 contracts. Open interest increased by 633 contracts. USDA supply demand report will be released Thursday morning. Stand aside.
March soybeans closed $.01 lower on volume of 192,680 contracts. Open interest increased by 2673 contracts. Stand aside until USDA crop report is released.
March sugar closed 10 points lower on heavy volume of 160,499 contracts. Open interest increased 644 contracts. The volume on February 6 and 7 was the highest since September 16, 2011 when sugar traded 174,737 contracts. It is apparent that the small increase in open interest, combined with unusually heavy volume, indicates that old longs were being replaced by new longs and old shorts were being replaced by new shorts. As I’ve stated before, I am friendly to the market, but sugar has some obstacles to overcome. First, it has to move above 24.82 and the daily low has to be above 24.82. Second, it must move above its 200 day moving average of 25.27 and the daily low must be above 25.27. Third, sugar’s 50 day simple moving average (23.72) must cross above its 200 day simple moving average. Stand aside.
March crude oil closed $1.50 higher on very heavy volume of 1,150,665 contracts. Open interest increased by 12,132 contracts. This was the smallest increase in open interest since January 30. Much like sugar, the heavy volume combined with the relatively small increase in open interest indicates that old longs were being replaced by new longs and old shorts were being replaced by new shorts. Stand aside.
March gasoline closed unchanged on volume of 147,624 contracts. Open interest increased 817 contracts. Stand aside and wait for lower prices.
April gold closed $23.50 higher on volume of 173,457 contracts. Open interest increased a minuscule 459 contracts. The volume was relatively low considering the size of the move and the small increase in open interest shows a lack of enthusiasm on the part of new buyers. Stand aside and wait for lower prices.
March silver closed $.44 higher on fairly healthy volume of 64,356 contracts. Open interest increased by 570 contracts. Stand aside.
The March euro closed 1.23 cents higher on volume of 383,654 contracts. Open interest declined by 8820 contracts. It is clear that longs and shorts are closing out their positions as the euro moves higher. The market took out its old high of 1.3237 made on January 27. I still think this market can continue to move higher. If the euro continues to move higher, it will have a major negative impact on the dollar index and this will be bullish for commodities and equities. Stand aside.
S&P 500 E mini:
The March S&P 500 E mini closed 5.75 points higher on volume of 1,502,880 contracts. Open interest increased a minuscule 555 contracts. It is of concern that as the market moved into new high ground volume was light and that open interest increased by a very small amount. The volume in the cash S&P 500 also shows that there is a reduced amount of activity as the market moves higher. The market looks tired and in my opinion is vulnerable to a setback, perhaps a substantial one. Additionally, the NASDAQ 100 E mini was up 3.50 points but the number of issues advancing was 49 and 50 issues declined. Since the NASDAQ 100 has been one of the strongest indices to date, the poor breadth may be another indication that the market is in a topping phase. Long put protection should be in place.
I am not including commentary on the 10 year treasury note and copper because the good money has been made on these trades. I had suggested that positions be taken at significantly lower prices, but there is much higher risk at these levels. Stand aside until further notice.