July soybeans closed 13 1/4 cents higher on fairly light volume of 244,143 contracts. Open interest declined by 3,163 contracts. I examined the open interest for the July contract, which is the new front month and volume in the July contract was 134,331 contracts. Open Interest increased by a healthy 3,821 contracts. Please note the vast difference for volume and open interest increases in the July contract for soybeans and corn. Corn traded nearly 100,000 contracts more than soybeans, but open interest in the July contract increased by only 654 contracts. It is obvious where the greatest speculative interest lies. The market remains overbought. Stand aside.
July corn closed 18 cents higher on heavy volume of 440,733 contracts. Open interest declined by 31,945 contracts. This brings the six day total decline in open interest to 110,945 contracts. First notice day is April 30, and as of Friday there are 27,272 contracts outstanding in the May contract. In order to assess speculative interest, I looked at the open interest for the July contract, which is the new front month. Volume in the July contract on Friday was 233,041 contracts. Open interest increased by only 654 contracts, which indicates little speculative enthusiasm , despite the 18 cent move higher. The May-July bull spread widened dramatically adding 11 cents to close at a 27 1/2 cent premium to May. With the expiration of the May contract, there will be a significant reduction in potential selling pressure. The market remains on a short and intermediate term sell signal, but speculators should not short this market. The fundamentals underpinning the corn market are extremely positive.
June crude oil closed 38 cents higher on extremely light volume of 335,862 contracts. Open interest increased by 2,174 contracts. The open interest increase was minuscule and the volume abysmal. Volume on Friday was lower than on April 24 when 369,531 contracts were traded. This is the kind of volume you see on the day before a long holiday weekend. From April 24 through the 27th crude oil has advanced $1.75, and open interest has increased by 28,757 contracts. While this is a respectable increase in relation to the cumulative four days volume, the fact remains that volume is not increasing as the market is moving higher. Another negative factor is that the average trading range over the four-day period is just $1.27 versus the 21 day average true range of 2.00. Also, the 50 day moving average for June crude oil is $105.85, but the market has not been able to penetrate it, let alone trade above it Stand aside.
June gasoline closed 1.17 cents higher on volume of 192,410 contracts. Open interest declined by 11,947 contracts. The 7 day cumulative open interest decline totals 58,863 contracts. The market remains on a short-term sell signal, but an intermediate term sell signal has not yet been generated. Stand aside.
July copper closed 5.15 cents higher on heavy volume of 94,869 contracts. Open interest increased by a minuscule 810 contracts. The rally in copper began in earnest on April 24, and April 27 was the first day that open interest increased along with price. Since April 24 through April 27, copper has gone from a low of 3.6340 to a high of 3.8395, or rally of over 20 cents. During this time, open interest declined by a net 6643 contracts. Although July copper generated in intermediate term buy signal on April 27, the open interest action is a cautionary note. Copper remains on a short-term sell signal, and for it to move to a buy signal, the low for the day would have to be above the key pivot point of 3.8476. Stand aside.
June gold closed $4.30 higher on very light volume of 108,009 contracts. Open interest increased by a very heavy 5,653 contracts. This is the second day in a row when we have seen open interest increase with price. Volume on Friday was the lowest since April 20 when 96,776 contracts were traded. The heavy open interest increase in relation to price is indicating that both longs and shorts feel very strongly about the direction of gold. According to ZEROHEDGE, which is a a terrific online publication, the CFTC (Commodity Futures Trading Commission) reported that money managers have cut their holdings of gold to the lowest in three years. As I’ve been saying ever since gold generated a sell signal on March 15, speculators have been liquidating their positions, and the open interest statistics proved it.
July silver closed 13 1/2 cents higher on volume of 60,896 contracts. Open interest declined by 1,601 contracts. Open interest in silver has declined by a total of 10,600 contracts during the past four trading sessions. The problem with this is that the price of July silver has increased 36 cents, which is bearish price and open interest action. Stand aside.
The June Euro closed 21 points higher on light volume of 224,635 contracts. Open interest increased by 1,666 contracts. I did an analysis of the dollar index and I suggest Euro speculators read the April 29 Weekend Wrap for an update. Stand aside.
The June Australian dollar closed 73 points higher on volume of 132,828 contracts. Open interest increased by a hefty 4,540 contracts. All speculators should be out of bearish Australian Dollar positions due to the penetration of the March 28 high of 1.0388. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini closed 1.75 points higher on volume of 1,618,930 contracts. Open interest declined by 6556 contracts. Long puts should already be in place.