Corn and Wheat:
March corn closed 7 1/4 cents higher on volume of 388,361 contracts. Open interest increased 11,011 contracts. This is the fourth day in a row that open interest has increased. From the time that corn and wheat bottomed on January 18 through January 31, corn has increased in price by 45 1/2 cents or 7.67%. Wheat has increased by 73 3/4 cents or 12.45%. Although the rally has been much stronger in wheat, the fundamental situation in corn is far more bullish than in wheat. The rally in wheat is undoubtedly pulling corn up with it and this is the result some extremely cold temperatures in the Black Sea region. Additionally, there are a huge number of speculative shorts in wheat futures. Interestingly, since wheat made its bottom on January 18, open interest in wheat is up 20,600 contracts through January 31. With the huge net short position among speculators, it is surprising that there has not been more short covering. However, I expect much more of this before the wheat rally is over. For now, corn wants to go higher, and as I’ve said before, the daily low must be at a minimum 6.37 for the rally to continue. I see upside resistance in the 6.64 area. Stand aside.
March soybeans closed 13 3/4 cents higher on volume of 188,253 contracts. Open interest increased 6050 contracts. From the time that wheat and corn bottomed on January 18, through January 31 soybeans are up 15 1/2 cents or 1.31%. It is apparent that soybeans is significantly lagging wheat and corn. My bias in soybeans continues to be on the downside and I expect a test of the 50 day moving average at 11.73.
March sugar closed 21 points lower on volume of 100,654 contracts. Open interest increased by a spectacular 9897 contracts. Open interest has increased five days in a row for total of 29,970 contracts. The problem is from January 25 through January 31, when open interest increased by 29.970, March sugar declined 1.25 cents, or 5.02%. This is bearish open interest action and it appears that commercial selling is increasing. Longs should not fight this trend. My view is to liquidate any remaining sugar positions and stand aside.
March crude oil made a high of $101.29 and closed lower by $.30 on volume of 739,294 contracts. Open interest increased by a heavy 22,641 contracts. The market is unable to maintain any kind of the rally and it appears weak. The open interest action looks to be a battle between the longs and shorts and so far the shorts have been able stem any rally. Stand aside.
March gasoline closed 1.82 cents higher on volume of 130,149 contracts. Open interest decreased by 3146 contracts. Stand aside and wait for lower prices.
March copper closed 3.65 cents lower on volume of 68,067 contracts. Open interest increased by 1946 contracts. Copper has closed lower for three days in a row and open interest in this time has increased by 5954 contracts. I would have been far more bullish had open interest declined during price declines. Only a partial position should remain with stop protection based upon risk tolerance and sound money management principles.
April gold closed higher by $6.00 on volume of 162,437 contracts. Open interest declined by 1162 contracts. Although the market made a new high for the move at 1750.60, volume declined approximately 20,000 contracts from the day before. It is extremely difficult to watch the market continue to move higher, but not participate in it because the open interest action is extremely negative. Continue to stand aside.
March silver closed lower by a little over $.26 on heavier than normal volume of 50,975 contracts. Open interest declined 895 contracts. Continue to stand aside.
The March euro closed 41 points lower on volume of 317,889 contracts. Open interest increased by 2215 contracts, which is consistent with a bear market. I am looking to see if the market is going to retest the high for the move made on January 27 of 1.3237. The recent higher action of the euro has greatly impacted on the dollar index and the dollar’s decline has added fuel to the rally in precious metals and a variety of commodities and stock indices. Continue to stand aside.
S&P 500 E mini:
The March S&P 500 E mini closed lower by .75 point on volume of 1,904,676 contracts. There was a battle going on between the longs and shorts as open interest increased by 39,737 contracts. My view is is that anyone should have some long put protection in this market.
10 YEAR TREASURY NOTES:
March 10 year treasury notes closed seven points higher on volume of 1,181,021 contracts. Open interest increased by 10,650 contracts. The market made a new high at 132-11. As I’ve mentioned before, partial profits should have been taken already and any remaining positions should have sell stops based upon risk tolerance and sound money management principles.