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July soybeans closed 18 cents lower on fairly light volume of 227,427 contracts. Open interest declined by 262 contracts. Volume was light considering the magnitude of the decline, which outpaced the decline on April 16 of 16 1/2 cents when volume was 220,316 contracts. The market made a new low for the move at $14.09 1/2, which was the lowest low since March 30, 2012 when the market reached $13.60. The market appears to be going through a corrective phase, which is very positive, but the market remains massively overbought and is vulnerable to a further downside move in the event the broad markets move lower. Look for a correction down to at least the 50 day moving average of $13.50 1/2.
July corn closed 13 1/4 cents lower on very heavy volume of 527,767 contracts. Open interest increased on the decline by 1,035 contracts. The magnitude of the open interest increase is minuscule, and therefore not much is to be gleaned from that number. What is interesting is that open interest did not decline. The market reached a new low for the move of $5.91 3/4, which is the lowest price for July corn since December 15, 2011 when corn made a low of $5.91. There are a huge number of longs, who have good-sized losses on their positions, but have yet to liquidate. July corn generated in intermediate term sell signal on April 11. Due to the strength of the May contract, this contract did not generate a sell signal until a couple of days ago. The May-July bull spread narrowed to 7 3/4, which is to be expected considering the magnitude of the market’s decline. The fact that May corn continues to sell at a premium to July is positive. I will be monitoring the spread to see how it performs as we get closer to First Notice Day on April 30.
May crude oil closed $1.97 lower on volume of 632,816 contracts. Open interest declined by 13,811 contracts. During the past two days, open interest has declined by a total of 36,072 contracts.The market remains on the short term sell signal. Do not short the market. Stand aside.
May gasoline closed 3.13 cents lower on extremely heavy volume of 277,308 contracts. Open interest increased by 3018 contracts. Relative to volume, the open interest increase was minuscule. However, this is the fourth day in a row that open interest has increased when price declines. During the past four days gasoline has declined by 15.40 cents. The market made a new low for the move at $3.1411, which was the lowest price for May gasoline since February 15, 2012 when the low was $3.1371. Despite the sharp move to the downside, gasoline has not generated an intermediate term sell signal. Stand aside.
May copper closed 1.60 cents lower on volume of 75,666 contracts. Open interest declined by 4,471 contracts. The market remains on a short-term sell signal, however, an intermediate term sell signal has not been generated. Please see the April 15 Weekend Wrap about copper. Stand aside.
June gold closed $11.50 lower on extremely light volume of 112,600 contracts. Open interest increased by 788 contracts. Volume was the lowest since April 9 when June gold traded 97,189 contracts. It is positive to see volume declining when the market closes lower, and that volume increases when the market closes higher. One danger sign is that on the gold continuation chart, the 50 day moving average just crossed under the 200 day moving average. This is an important development that speculators need to keep in mind when accumulating long positions in either/and physical gold, gold ETF’s, gold futures/options. Please consult your investment advisor or broker.
May silver lost 18 cents on volume of 45,207 contracts. Open interest declined 1888 contracts. The market is on a short and intermediate term sell signal. Do not short the market. Stand aside.
The June Euro lost 13 points on volume of 243,373 contracts. Open interest increased by 1,640 contracts. From the bottom of the recent move that occurred on April 16 of 1.3000, the market has rallied approximately 1.78 cents. Open interest during this time has increased by 10,649 contracts. This is atypical behavior for the Euro, and due to the first round of French elections this weekend, these results could move the Euro one way or the other. Stand aside for now.
The June Australian dollar closed 52 points lower on very light volume of 104,224 contracts. Open interest declined by 1,095 contracts. The recent high for the Australian dollar was 1.0388, which was made on March 28. This level is a reasonable exit point for bearish positions. The market has been consolidating in a narrow range for the past two weeks. It seems that the market is more likely to break to the downside than take out the March 28 high. Much of this will depend upon developments in China.
One reason to be cautious about the Australian dollar is that the Shanghai Composite Index closed at 2380.85, which is above the 50 day moving average 2370.25. This is the first time the Shanghai Composite Index closed above its 50 day moving average since March 22, 2012. Additionally, the Shanghai Composite Index made its low on March 29, 2012 at 2242.34 and has rallied to a high of 2383.64 on April 18, or a bit more than 6%. During this time, the high for the Australian dollar was 1.0380. I will be monitoring the action of the Shanghai Composite Index and will analyze how this impacts on the Australian dollar.
S&P 500 E mini:
The June S&P 500 E mini closed 5.25 points lower on fairly heavy volume of 1,849,420 contracts. Open interest increased on the decline by 6,052 contracts. The market is in a corrective phase, and long put protection should be in place.