Corn closed down one half cent on volume of 348, 101 contracts this is the highest volume in at least 45 days. Open interest increased by 430 contracts. Stand aside until January 12 USDA crop report.
Soybeans closed $.29 lower on volume of 175, 466. Open interest increased by 6, 394 contracts. Clearly the bears are in control. My recommendation is to stand aside until after the January 12 crop report.
February crude oil closed $.51 lower on volume of 566, 908 contracts. Open interest declined 5, 841 contracts. From January 9 through the 11th, open interest has declined 20, 451 contracts and price during this period has declined $.76. This market is increasingly looking like it’s in a topping formation. For example, crude reached 103.28 on November 17, 2011 and since that time has only been able to exceed that on January 4 when the market touched 103.74. Recommendation is to stand aside.
March copper has been acting well for the last two days. On January 10, copper closed up 8.95 cents on volume of 53, 716. Open interest increased 3, 879 contracts. On January 11 copper closed up 3.30 cents on volume of 54, 133 contracts. Open interest increased by 554 contracts. Copper closed above my pivot point of $3.4943. The healthy volume and sizable increase in open interest indicates that the market wants to go higher. Copper should be traded from the long side.
Gold closed $9 higher on volume of 151, 345 contracts. Open interest declined 3, 634 contracts, which almost wiped out the increase in open interest of 3, 879 contracts made on January 10. Recommendation is to stand aside and wait for a better entry point on the long side.
March silver closed up 7 1/2 cents on volume of 38, 112 contracts. Open interest declined by 463 contracts. Stand aside and wait for a better entry point on the long side.
The euro made a new low for the move at 126.64 on volume of 289, 569 contracts. Open interest increased by 4, 810 contracts. The low was only slightly beneath the previous low of 126.73 made on January 9. Open interest has been increasing on the downside move, which means there are a record number of shorts in the market. If short, have protective buy stops. If not, if not stand aside and wait for a rally to institute new shorts or puts.
March S&P 500 E mini closed 2.25 points higher 1, 803, 336 contracts. Open interest increased by 20, 610 contracts. The high for the day was 1289.50, which was 2 1/2 points shy of the previous days high of 1292. The range for the day was 10.25 points, which was the lowest range since December 30 when it was 9.75 points. What we have seen since the beginning of the year starting January 3 has been a series of narrow range days. The 21 day average true range for the S&P 500 E mini is approximately 21 to 22 points per day. The only day that the average true range for the last 21 days was exceeded was on January 3 when the market gapped sharply higher. The contrast between market action of January 10 and January 11 is readily apparent when examining the volume and open interest stats. On January 11, volume was approximately 17% higher than on January 10 when the market closed 10.50 points higher, and the market made a new high for the move at 1292. On January 11 even though the market closed higher by 2.25 points, open interest increased substantially over the prior day when the market was significantly higher. The abysmal open interest action since the Santa Claus rally began on December 20, combined with ever narrowing ranges is cause for concern. Extended periods of narrow range days is generally followed by large range days. Unless we see an explosion in volume, this rally is going to run out of steam.
10 Year Treasury Notes:
March treasury notes closed 15.5 points higher on volume of 919, 081 contracts. Open interest increased by a whopping 46, 479 contracts. The Bulls are completely in control and the market wants to go higher. This market should be traded from the long side.