May corn closed 15 1/4 cents lower on volume of 323,599 contracts. Open interest increased by 5,124 contracts. Considering the size of the decline, volume was rather tepid. The increase in open interest is a negative, but the market has not closed below my key pivot point of 632 1/4. For the downtrend to be confirmed, and a sell signal generated, the daily high can not exceed the pivot point number. I have advocated the use of tight stops because of the potential for a major slide in wheat and a rally in the dollar.
May soybeans closed 8 1/2 cents lower on very light volume of 166,838 contracts. Open interest declined by 1,657 contracts. The light volume combined with the price and open interest decline is very positive for the market. Yesterday, I advocated liquidating all long positions. This is not to say that the market cannot move higher. However, the market is massively overbought in relation to its 50 day moving average (1245) and as a consequence, could have a quick, sharp correction. Based upon my suggestion to get long soybeans in early February (please see previous posts), speculators should have made a profit of approximately $1.00 on the move.
May sugar closed 13 points lower on volume of 121,885 contracts. Open interest increased by 513 contracts. The key pivot points to watch on the downside are 23.85 and 23.59. If the market closes below 23.85, we will have the first major sign that the market may be heading lower. If the market closes below 23.59, we will have the second major signal, and if the daily high is below 23.59, we will have a definitive sell signal.
April crude oil closed $1.46 higher on relatively heavy volume of 810,896 contracts. Despite the move higher on heavier than normal volume, the open interest increase was abysmal. Stand aside.
April gasoline closed 5.75 cents higher on volume of 154,029 contracts. Open interest increased by 5,534 contracts, which is bullish. The massive build up in open interest on both rallies and declines indicates that there is a major disagreement between the longs and shorts on the direction of gasoline. Continue to stand aside and wait for lower prices.
April gold closed $7.00 higher on volume of 187,581 contracts. Open interest declined on the rally by 3,612 contracts. Since the decline of $77.10 on February 29 when open interest declined by 17,303 contracts, open interest has declined an additional 22,104 contracts through March 7. It is healthy for a long term bull market to experience periodic declines in open interest. As far as futures are concerned, speculators are closing out positions, which makes the market somewhat fragile. I will continue to monitor the situation and look for an opportune time to recommend long positions.
May silver closed $.80 higher on light volume of 51,087 contracts. Open interest declined by
1,374 contracts. Is interesting to note that there was 21,895 fewer contracts traded on the rally of March 7 than the day before, when the market declined $.91. Stand aside.
The March Euro closed 43 points higher on volume of 262,590 contracts. Open interest increased by 950 contracts. The increase of open interest on the rally is rather anomalous.For example, the last time that open interest increased on a rally was on February 9, 2012, when the market closed at 1.3290. Yesterday I suggested that stops be placed 1.3254. As of today March 8, the euro is rallying and would have triggered the stop. Although I believe the market is going lower, the direction of the Greek bailout fiasco will be the primary influence on the Euro. The increase of open interest on March 7 may be a short-term indicator that the market may possibly retest the old highs of late February. If the Greek situation completely falls apart, I would expect the euro to move sharply lower. This is a market that takes its cue from headlines.
S&P 500 E mini:
The March S&P 500 E mini closed 10.75 points higher on volume of 2,103,372 contracts. Open interest increased by 27,530 contracts. The market is in a topping process. Long put protection should be in place.
10 Year Treasury Notes:
Until there is something of significance to report, I will temporarily suspend commentary on the note market. The market is consolidating, and I will inform you of any major change in trend.