July soybeans closed 8 1/2 cents lower on fairly light volume of 259,964 contracts. Open interest declined by 4,604 contracts. Volume on Monday was 83,782 contracts less than the volume on April 20 when the market closed up 28 1/2 cents. As I write this on April 24, soybeans are up 24 cents and has taken out the old high of $14.58 3/4. The market remains overbought. Stand aside.
July corn closed 9 1/2 cents higher on volume of 282,614 contracts. Open interest declined by 9,366 contracts. The May-July spread increased by 1/2 cent to close at 10 a cent premium to May. Volume was the lightest since March 27 when 276,432 contracts were traded. The market action in corn has been bearish ever since July corn generated an intermediate term sell signal on April 11. Do not short the market. Stand aside.
June crude oil closed 77 cents lower on extremely light volume of 374,493 contracts. Open interest increased on the decline by 8,773 contracts. Volume shrank by 75,358 contracts from April 20 when 449,851 contracts were traded and the market closed higher by $1.16. The range on April 23 was $2.08, and this is only fractionally lower than the 21 day average true range of $2.11. Although volume contraction on the decline is positive, especially when the range for the day was about equal to the 21 day range, the open interest increase on the decline is a negative. The market has been trading in the sideways pattern ever since April 4. Stand aside.
June gasoline closed 3.76 cents higher after making a new low for the move at 3.0744 on volume of 197,278 contracts. This was the lowest price for June gasoline since February 10, 2012 when the market reached a low of $3.0603. From the low, the market rallied to $3.1475, which was the high for the day. Additionally, the trading range was 7.52 cents, which is significantly above its 21 day average true range of 6.19 cents. Open interest declined by 6,483 contracts, and Monday was the third day in a row when open interest decreased, bringing the total to 19,214 contracts in three days. Remember, open interest declines when both longs and shorts agree that it’s time to liquidate. As I pointed out in yesterday’s post, the Commitment of Traders Report show in the managed money category, speculators are long by nearly 58 to 1. This means there could be a significant amount of liquidation to go. Gasoline generated a sell signal on April 17, and the $2.90 area may provide support, and be at a safe level to implement long positions. Stand aside.
May copper lost 7.20 cents on heavy volume of 91,662 contracts. Open interest increased on the decline by 2,666 contracts. Copper generated a short-term sell signal on April 9 and since that time has been trading in a sideways pattern. Shortly, the 50 day moving average ($3.80) will cross beneath the 200 day moving average ($3.74). See the April 15 Weekend Wrap for the special report on copper. Stand aside.
June gold closed $10.20 lower on volume of 138,120 contracts. Open interest declined by 2,876 contracts. From February 28 when June gold reached its high of $1794.10 through April 23 when gold reached a low of 1623.60, open interest has declined a total of 79,753 contracts. In other words, there has been massive liquidation on the part of longs and shorts. The low level of total open interest, combined with low daily volume is clearly indicating that speculative interest in gold is waning for now. Because I believe gold is in a long term bull market, speculators should approach the market on a tactical basis by selective buying in order to accumulate a gold position for the longer-term. Please consult your investment advisor or broker.
May silver got hammered on Monday by losing $1.12 on very heavy volume of 90,793 contracts. Open interest increased by 1,025 contracts. Relative to volume the open interest increase was minuscule. The low of $30.45 was the lowest price for silver since January 19, 2012. In the April 22 Weekend Wrap, I wrote about the possibility that silver was in a bottoming process. Additionally, I said that I wanted to watch silver on a day when the broad markets were sharply lower. On April 23 I saw what happened to silver when the broad markets were sharply lower and it wasn’t pretty. In the Weekend Wrap, I wrote that a buy signal would not be generated until the daily low in silver was above the pivot point of $32.80. As it stands now, silver remains on a short and intermediate term sell signal, and at this juncture it is best to stand aside and wait for the market to find a bottom.
The June Euro lost 71 points on light volume of 226,619 contracts. Open interest increased on the decline by 8,090 contracts. Volume declined by 17,573 contracts from the day before when the market rallied 83 points. The open interest action for the past two days has been negative. On April 20, the market rallied, but open interest declined 11,525 contracts. Despite the recent open interest action, I believe speculators should stand aside due to talk of repatriation of asset sales into the Euro by Euro zone banks. Also, speculators are heavily short the market. Any positive news could send the Euro sharply higher, if for no other reason than short covering.
The June Australian dollar lost 62 points on volume of 133,650 contracts. Open interest declined by 1362 contracts. According the Commitment of Traders Report, speculators in the managed money category are net long 32,057 contracts. This provides additional selling pressure should the Australian Dollar fall below 1.0150. The market continues to act weak, and the Australian Dollar has been on a short-term sell signal since March 28. Speculators should use the March 28 high of 1.0388 to exit any bearish positions.
S&P 500 E mini:
The June S&P 500 E mini lost 12.50 points on heavy volume of 1,851,250 contracts. Open interest increased on the decline by 30,694 contracts. Although I wrote in the April 22 and Weekend Wrap that the bias for the market in the second half of April was to the upside, the market is looking a bit shaky. Open interest increasing on the decline is a negative, but the open interest increase was somewhat light. The market generated a short-term sell signal on April 23. Long put protection should be in place.