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May Chicago corn closed 8 3/4 cents lower on volume of 314,874 contracts. Open interest increased by 2,394 contracts. The market made a high of $6.56 per bushel and reversed to make a low of $6.37 1/4 and corn closed at $6.37 3/4. Despite the move lower, the May-July bull spread continued to work with May selling at a 1 3/4 cent premium over July. I did an analysis of the May July spread going back 40 years, and you can read about it in my March 18 Weekend Wrap. The key pivot point on the downside is $6.33 5/8. A sell signal will not be generated until the daily high is below the pivot point. The USDA will release its prospective plantings and stocks report on March 30. Stand aside, and do not enter either long or short positions prior to the report.
May soybeans continued its rise by closing 12 1/2 cents higher on volume of 215,383 contracts. Open interest rose by 17,206 contracts. The market made a new high at $13.88 1/2. During the past four trading sessions open interest has increased by 38,970 contracts. Stand aside, and do not enter either long or short positions prior to the March 30 USDA report.
May sugar closed sharply lower by declining 85 points on volume of 127,008 contracts. Open interest declined 6,053 contracts. The decline of open interest on the price decline was positive, and volume was relatively low considering the size of the decline and the range for the day, which was 96 points versus a 21 day average true range of 68 points. Previously, I recommended that stops be placed at 25.21 cents per pound or at 25.04 cents per pound. The market made a low of 24.70, which means speculators should have been stopped out of the market. Despite this, the market is still on a buy signal. The first downside pivot point is 24.33. I will apprise speculators when and if it is time to re-enter the market. Stand aside.
May New York crude oil closed $.16 higher on extremely low volume of 284,980 contracts. Open interest declined by 1,757 contracts. Volume on March 26 was the lowest since December 29, 2011 when 277,291 contracts were traded. Also, the range for Monday was $1.13, which is considerably less than its 21 day average true range of $2.18. The market continues to look tired. Stand aside.
May New York gasoline closed 2.98 cents higher on volume of 143,061 contracts. Open interest declined by 5,614 contracts. The market made a new high close at $3.3987 per gallon, which was the highest close for gasoline since April 29, 2011 when the June gasoline closed at $3.3984 per gallon. A move beyond this level will put gasoline prices at levels last seen in the summer of 2008. In the Weekend Wrap of February 26, February 20, and February 12, I did an in-depth analysis of the gasoline and crude oil markets. Continue to stand aside.
April New York gold closed $23.20 higher on heavy volume of 281,511 contracts. Open interest increased by 5,699. The rise in open interest relative to its volume was average. If open interest for March 25 and March 26 are added together, the net open interest increase is 5,173, which is unspectacular considering this number encompasses a $43.10 increase in the price of gold. As mentioned in previous posts, the market has to over come the barrier related to the 50 and 150 day moving averages, as well as the pivot point of 1707.50. Gold remains on a sell signal, but this is not a market that speculators should short. Gold speculators should be looking to acquire long positions at the lower end of gold’s trading range.
May New York silver closed $.47 higher on very light volume of 37,047 contracts. Open interest declined on the price advance by 844 contracts. During the past two days, silver has advanced $1.39 and open interest has declined by a total of 973 contracts. The pattern of price and open interest action during the past several days has been bearish. Remember, declines of open interest signal that both longs and shorts agree it is time to liquidate. Please see previous posts on silver for the past several days. Stand aside.
The June Euro closed 79 points higher on volume of 261,300 contracts. Open interest declined for the second day in a row by 12,579 contracts. During the past two trading sessions the Euro has advanced by 1.61 cents, but open interest has declined by 25,501 contracts. While admittedly this is bearish price and open interest action, my daily observation of Euro trading, indicates the market does not want to go lower at this juncture. The market penetrated the key upside pivot point of 1.3371 on Monday. For a buy signal to be generated, the daily low has to be above that pivot point. All speculators should be out of bearish positions based upon the penetration of the June Euro at 1.3299. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini closed 21.00 points higher on light volume of 1,458,221 contracts. Open interest increased by 6,142 contracts. The market made a new high at 1415.50. Please see the March 25 post to get an update on my view of the continued upside move of the indices. In my opinion, the longer the rally continues without a correction, the more dangerous the market becomes. If you look at a chart of the S&P 500 from 2000 to the present, you see two giant tops at the 1560 level separated by seven years. This is formidable resistance, which could only be overcome by massive buying by the retail public. My belief is the public has left the securities market enmasse, and will not be back anytime soon. As I said yesterday, markets begin declining not because there are smart sellers at the top, but because there is a dearth of buyers at the top. Long put protection should be in place. With the volatility index (VIX) at major lows, put protection is inexpensive.
June 10 year treasury notes closed essentially unchanged on light volume of 894,885 contracts. Open interest declined by 16,166 contracts. The market has given everyone a chance to implement bearish positions. As mentioned yesterday, an exit point is difficult to determine. Therefore, speculators should use money stops, based upon the dollar amount of risk the speculator is willing to assume. If the market indices were to have a precipitous decline, I have no doubt that notes would rally. Therefore, it is imperative that stops be in place.