Corn closed higher by 5 1/2 cents on volume of 266,217 contracts. Open interest increased by 461 contracts. On January 12, the corn market closed down its daily $.40 limit. From January 13 through January 20, corn has had a net gain of $.12 or 2%. Open interest in this period has increased by 10,846 contracts. While this is not bearish open interest action, there are price barriers that corn has to move through in order to have a confirmed up move. The key pivot points, that corn has to close over are as follows: 620 1/2, 628 3/8, and 636 5/8. I will be watching how volume and open interest react if and when corn is able to close above those three pivot points. At some point, in the next couple of months, corn is going to be an excellent buy. There is a lot to like about this commodity, but longs who were buying in the 10 days previous to the crop report on January 12, have not liquidated. As of January 20, those longs are still showing losses on their positions. I suspect, as the market moves higher we will see those old longs closed out their positions. If the market does move higher, we will certainly see them liquidate at lower levels.
March crude oil $1.77 lower on volume of 715,756 contracts. Open interest declined by 3351 contracts. This is the fourth day in a row that we have seen open interest decline in a market that is moving sideways to lower. Although this is not bearish open interest action, my opinion is to stand aside based upon overall market risk that may be correlated to risk in the equity market and or tension with Iran.
March copper made a new high for the move at $3.834 and closed 5.55 cents lower on volume of 62,169 contracts. Open interest increased by 2079 contracts. As I’ve said before, the market is overbought and needs a correction to initiate new long positions. The market is nearly $.30 higher from where I suggested that long positions should be initiated. For those that are long from lower levels, protective sell stops should be put in place based upon your risk tolerance. Just as in the case of crude oil, copper is likely to have a major correction when the equity market rolls over. In the event of a major equities market downdraft, I believe most markets will be highly correlated to the action of equities.
February gold closed higher by $9.50 on volume of 143,719 contracts. Open interest declined by 2833 contracts. Starting with January 12, through January 20 open interest action has been positive in gold. During this period gold prices increased by $24.50, and open interest increased by an aggregate 24,198 contracts. Prior to January 12, when gold hit a low of 1,523 open interest action has been very negative. On Sunday, I listed the key pivot points to be watching in the event that gold continues to move higher. As in other markets, if the equity market rolls over, I believe gold will follow the markets to the downside.
March silver closed $1.16 higher on volume of 43,131 contracts. Open interest increased by a whopping 2351 contracts. This is very positive open interest action. It appears that the silver market is in the process of turning. On Sunday, I listed key pivot points to watch for and a stand aside posture should be taken until these are surpassed. If the equity market takes a tumble, I believe silver will follow to the downside.
March sugar closed up 28 points on volume of 131,187 contracts. Open interest increased by 3913 contracts. We are continuing to see bullish market action in sugar and in my Sunday wrap I outlined the key pivot points to watch for in sugar. Based upon my earlier opinion about the market, I suggested that longs could be initiated with the stop of 22.82. If long from lower levels stay with the trade. If not, wait for a setback.
The March Euro contract closed 12 points lower on volume of 241,693 contracts. Open interest increased by 8488 contracts. As I mentioned over week ago, everyone should be out of this market. On the move higher thus far, the shorts are not covering. This poses potential risks to anyone still short the market. Stand aside.
S&P 500 E Mini:
The March S&P 500 E mini closed essentially unchanged on lackluster volume of 1,425,896 contracts. Open interest increased by 7230 contracts. The volume was the lowest reading since January 4, 2012. The high to low range of 7 points is one of the lowest in many months. In the weekend wrap of January 22, I discussed how dramatically the range of the S&P 500 has narrowed during the rally, which started on December 20. As I have said before, in my opinion the rally is on borrowed time. Protective long puts should be in place by now. Otherwise, stand aside.
10 Year Treasury Notes:
March 10 year treasury notes closed 14 points lower on volume of 1,015, 397 contracts. Open interest increased by 20,180 contracts. In the weekend wrap of January 22, I discussed the key pivot points to watch for on the downside. Sell stop protection should be in place for anyone long at lower levels. If not long, stand aside.