May corn closed 14 1/2 cents higher on light volume of 295,611 contracts. Open interest increased by 6,058 contracts. Considering the magnitude of the move, the volume was the lowest since March 8 when 282,851 contracts were traded. My comment about corn in the weekend wrap of March 11 indicated that I was becoming increasingly bearish on corn. I made that statement based upon the bearish open interest data for March 7 and 8. March 9 data turned out to be bearish too. Obviously, it was a premature call. Although the market did not hit the old high of 665 1/4 made on March 5, May corn went into backwardation, which means that May corn is selling at a premium to July and so forth. March corn (which is going off the board shortly) closed at 671 1/2, a new high and a new closing high for the move. As I am writing this post on Tuesday, the corn market is about unchanged, and is above my key pivot point of 646 3/8. If the low for Tuesday is above that pivot point, a buy signal will be generated. The next area of resistance is going to be the January 3, 2012 high of 672 1/2. I do not feel strongly about long positions in corn at this juncture, but it appears the market wants to go higher.
May soybeans closed 3 1/4 cents lower on very light volume of 152,492 contracts. Open interest increased by 4,284 contracts. Although the market can certainly go higher, soybeans should either go through a consolidation phase at current levels, or correct approximately .$40 or $.50 lower. The issue I have with soybeans at these elevated levels is the same problem I have with numerous other commodities and stock indices. Without a correction, trading overbought commodities and indices can be hazardous to your financial health. This leads me to believe that when there is a correction, everything will move lower.
May sugar closed 11 points higher on volume of 101,503 contracts. Open interest declined by 3,618 contracts. Despite sugar’s poor performance since late February, a sell signal has not been generated.
April crude oil closed $1.06 lower on very light volume of 525,361 contracts. Open interest declined by 1,877 contracts. Considering that crude oil’s range was $2.18 for the day, the volume was extremely light and was the lowest since March 5 when 511,740 contracts changed hands. Continue to stand aside.
April gasoline closed $.94 lower on very light volume of 92,491 contracts. Open interest declined by 3,057 contracts. The range for the day was 3.83 cents, which was significantly lower than its 21 day average true range of 5.83 cents certainly explains the light volume. Continue to stand aside.
April gold closed $11.70 lower on volume of 204,187 contracts. Open interest declined by 1,222 contracts. I like gold, but my only concern in the short term is how will gold perform during a broad market decline in commodities and equities. If long, stops should be placed at the March 6 low of 1663.40. The key downside pivot point is 1679.10. If gold closes below the pivot point, speculators will have the first red flag. If the market’s daily high is below the pivot point, a sell signal will be generated.
May silver closed $.77 lower on extremely light volume of 37,699 contracts. Open interest increased by 1,383 contracts. Stand aside.
The March Euro closed 44 points higher on volume of 263,207 contracts. Consistent with its bearish action, open interest declined on the rally by 2,446 contracts. The Euro generated a sell signal on March 12 and therefore short calls, and/or long puts, and/or outright short positions can be implemented. I would recommend that an exit point for the trade be at 1.3299 (basis June), which was the March 8 high.
S&P 500 E mini:
The June S&P 500 E mini contract closed unchanged on heavy volume of 2,784,596 contracts. Open interest increased by 34,542 contracts. Volume on March 12 was the lowest for 2012 and the trading range of of 6.75 points was the lowest since January 20 when the range was 6.75 points. Long put protection should be in place.