March corn closed 5 1/2 cents lower on heavy volume of 479,438 contracts. Open interest increased 7244 contracts. The increase in open interest essentially offset the decline in open interest on February 8 of 4834 contracts. It is really rather amazing to watch all the new longs enter this market and yet corn prices have gone nowhere. I believe corn prices are going lower, and my opinion at this juncture is to stand aside.
March soybeans closed $.04 lower on heavy volume of 244,529. Open interest increased by 3611 contracts. As I’ve said before, I’m friendly to the market, however one should buy soybeans on a pullback with sell stop protection based upon sound money management principles and risk tolerance.
March sugar closed five points higher on very heavy volume of 167,867 contracts. Open interest increased by 4568 contracts. There is a battle going on between the longs and shorts and it appears that the shorts are in control. The interesting aspect of February 9 action was that the range in sugar was 51 points, which is less than its 21 day average true range and 57 points, yet the market had the heaviest volume going back to the fourth quarter of last year. As I’ve said before, we are in a period of seasonal weakness for sugar and the best course of action is to stand aside.
March crude oil closed $1.13 higher on volume of 669,719 contracts. Open interest increased by 7661 contracts. There is no change in my view one crude oil. Continue to stand aside.
March gasoline closed 3.76 cents higher on volume of 139,408 contracts. Open interest increased by 2430 contracts. The gasoline market has advanced 14.43 cents during the past five trading sessions. The market is extremely overbought, and at this point it is best to wait for a setback to the 2.70-2.80 area.
April gold closed $9.90 higher on volume of 172,356 contracts. Open interest declined by 1071 contracts. Stand aside and wait for a further pullback.
March silver close $.21 higher on volume of 54, 944 contracts. Open interest increased by 34 contracts. Stand aside.
The March euro closed 37 points higher on volume of 308,942 contracts. Open interest increased on the rally by 5960 contracts. This is the first time since January 24 that price increased and open interest increased as well. This could be the harbinger of two different outcomes. First, it could possibly indicate a top, that is new buyers are rushing in because they think that a further rally is possible, but it is a fake out and could represent the high for the move. The second possibility, is that this is the beginning of the further rally, and this increase in open interest represents smart new money entering the market. Regardless, stand aside until there is more clarification in the direction of the euro.
S&P 500 E mini:
March S&P 500 E mini closed higher by 1.25 points on volume of 1,758,330 contracts. Open interest increased by 20,196 contracts. The market made a new high for the move at 1352.75 and then pulled back for the rest of the day to close fractionally higher. Everybody seems to be bullish on the market and that worries me. The market is over extended and long put protection should be in place.