Corn: 

May Chicago corn closed 10 1/4 cents higher on volume of 311,342 contracts. Open interest increased by by a heavy 13,566 contracts. The market made a new high for the move at $6.73 per bushel. As I have said before, corn is on a buy signal, but the question remains, how much more upside is on the table for corn. Also, the open interest stats show that speculators have been piling into the market. Supplies are tight for this crop year, which ends September 30, 2012, but planting season is right around the corner, and it looks like a record crop could be planted. The next report affecting corn will be released on March 30 from the USDA. The next area of resistance is at 6.83 1/4.

Soybeans: 

May Chicago soybeans closed $.21 higher per bushel on volume of 183,642 contracts. Open interest increased by a massive 13,281 contracts. There is a great deal of enthusiasm for soybeans on the upside and the massive increase in open interest of 61,822 contracts since March 8 substantiates this. The market continues to be massively overbought, and when the correction comes, it could be a major event. Stand aside. It is important to note that interest rates are rising rapidly, and this is not a factor that is supportive of commodities in general. For speculators not familiar with the 10 year yield symbol, it is: TNX. 

Sugar #11  New Buy Signal: 

May New York sugar closed 1.06 cents higher per pound on heavy volume of 174,465 contracts. Open interest increased by a massive 16,882 contracts. I mentioned in previous posts that if sugar’s low was above 24.06 cents per pound, sugar would be on a buy signal. The low on March 15 of 24.41 cents per pound triggered the buy signal. The market has rocketed higher in the past four days, and the best course of action is to buy pullbacks. Stop protection should be based upon risk tolerance and sound money management principles.

Crude oil: 

April New York crude oil closed $.32 lower on heavy volume of 842,057 contracts. Open interest declined by 10,862 contracts. The market made a new low for the move at $103.78 on rumors that President Obama would release oil from the Strategic Petroleum Reserve. While the rumor was unconfirmed, the market was able to bounce back to close almost unchanged. The day’s low was the lowest price since February 17, when the low reached 102.55. The market filled an 11 cent gap that occurred from the high made on February 17 and the low of February 21. The decline of open interest on the move is a very positive development when combined with the fact that the market was able to bounce back. My view is that the market wants to go higher. However, my only reservation is that tensions could ease with respect to the Iranian situation, which would alter the current bullish set up.

Gasoline:

April New York gasoline closed 5.85 cents lower on very heavy volume of 184,013 contracts. Open interest increased by 5,040 contracts. My concern about the action of March 15 was that volume broke previous volume high of 176,612 contracts made on March 1 when gasoline reached its high of 3.3868 and closed 9.45 cents higher. A series of days can paint a portrait of the underlying direction of the market. Rarely, does one day give major insight. However, the record-breaking volume on the decline, and the increase in open interest, combined with a weak close may portend lower prices. Stand aside.

Gold: Sell Signal

April New York gold closed $16.60 per ounce higher on volume of 220,302 contracts. Open interest increased by 4,057 contracts. The market’s high for the day was 1667.40 per ounce, which is below the key pivot point of 1681.30. The sell signal does not mean that speculators should short the market, rather it provides a frame of reference that allows speculators the luxury of acquiring new long positions at lower prices. The continuing rise in interest rates and rising dollar are negative for gold, as well as the possibility of a decline in the equities market.

 Silver: 

May silver closed $.54 higher on volume of 61,836 contracts. Open interest declined by 2,873 contracts. Although the decline of open interest  on a price rise is negative for silver, the market is showing greater strength than gold by the fact that gold is already on a sell signal and silver is not. 

Euro: 

The June euro closed 73 points higher on healthy volume of 353,949 contracts. Open interest increased by a very substantial 15,357 contracts. The significant increase in open interest was unexpected. As a matter of fact, it’s a major deviation from the pattern of open interest declines on market rallies. My concern isn’t that open interest increased, but that it increased substantially on a fairly minor rally. The Euro is on a sell signal and I have previously suggested that speculators use the March 8 high of 1.3299 as an exit point for all  positions employing  bearish strategies.

S&P 500 E mini:

The June S&P 500 E mini closed 7.25 points higher on volume of 2,308,797 contracts. Open interest increased by 25,042 contracts. Put protection should be in place.

Interest Rates: Sell Signal

The June 10 year note closed 2 1/2 points higher on volume of 1,548,276 contracts. Open interest increased by 25,882 contracts. The market made a new low at 128-07, which was the lowest price for notes since November 2011. The market’s high was 129-02, which is below my key pivot point of 129-13 and this has created a sell signal June notes. The market has moved sharply lower very quickly and is liable to have a sharp reaction to the upside. These should be used to implement short calls, and/or long puts, and/or outright short positions.