Corn open interest increased by 6,188 contracts. The three day gain in open interest has been 38,871 contracts. As I stated in a previous post, we will soon be approaching seasonal downturn in the grains and this should act mute any further increases in price.
Crude oil open interest increased again by 13,517 contracts on volume of 604,724 contracts. The market closed up $.29 on the day. The market is overbought relative to its 50 day moving average, which is $97.45. The market could easily correct back down to that number.
February Gold closed up $12.50 on volume of 170,786 contracts. The volume was the largest since December 15. Open interest declined by 2,054 contracts. In essence, half the open interest that was gained on January 3 was given back on a further rally on January 4. Even though the range on January 4 was significantly less than the range on January 3 and that volume was 50% greater on the fourth that it was on the third, we saw a decline in open interest. This indicates previous longs and previous shorts are closing their positions as the market moved higher.
March Silver declined $.47 an open interest declined 1,413 contracts. Volume was light at 37,450 contracts. The fact that open interest declined when prices declined is a positive for the silver market.
The euro declined $1.19 on volume of 216,177 contracts and open interest increased by 10,445 contracts.This shows that the bears are still clearly in control.
The big surprise for January 4, was the massive decline in open interest in the S&P 500. The market closed up 1.25 points. The range was 11 points for the day, which is very narrow considering that the 21 day average true range for the S&P 500 E mini is 21.44 points. The open interest decline of 97,684 contracts was huge relative to its volume of 1,420,909 contracts. In essence, nearly 80% of the open interest increase has been lost since the beginning of the Santa Claus rally which started on December 20. This open interest decline is troubling and very negative for the market. TThe longs and shorts that were strongly committed on January 3 threw in the towel on January 4 when the market didn’t show any follow-through from the rally of the previous day.
Tomorrow January 6 is the employment report, which will be closely watched by everyone. If the report provides a surprisingly good number, we could see a further market rally. The key area to look for is the 1283 high on the S&P 500 E mini, which was made on October 27, 2012. Another stock to watch in conjunction with the S&P 500 is Apple Computer, which is nearing its 52-week high of 426.70. Apple is a good proxy for the market, and if Apple is unable to break significantly above 426.70, the broad market could be in trouble.