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August soybeans lost 19 cents on heavy volume of 361,033 contracts. Open interest increased by a massive 15,615 contracts. The market made a high of $16.25, which nearly matched the previous high of $16.25 1/2 made on July 9. However, the market was unable to hold the gains and reversed to make a low of $15.05 1/4. Yesterday, may have been a confirmation of a short term top in the soybean market. The reason is soybeans rallied to an old high and then reversed on heavy volume while open interest increased by a large amount indicating aggressive buying by longs and aggressive selling by shorts. As I have pointed out in previous posts, my belief is that the short sellers are commercial interests and that buyers are speculators. I believe that speculators have fallen in love with the weather story, and this is causing them to pile into the market prematurely and at or near the top. Investors should consult with their investment advisor or broker regarding taking profits.
August soybean meal lost $5.00 on fairly heavy volume of 109,856 contracts. Open interest increased by 2,000 contracts. Relative to volume, the open interest increase was far less in soybean meal than in soybeans. August soybean meal made a new contract high and new all-time high at $480.80 and then reversed to make a low at $455.00. My view on soybean meal is identical to soybeans in that I believe a short term top has been made. Investors should be consulting with their investment advisor or broker about taking profits.
September corn closed 14.50 cents lower on extremely heavy volume of 550,005 contracts. Relative to volume, open interest increased significantly above average, but less than the increase in soybeans. The market made a new contract high at $7.49, and then reversed to make a low of $6.85 1/2. Although I expect a retest of the high made on the 11th, I believe it will be difficult for corn to move significantly above that level. Open interest in corn has increased for seven consecutive days bringing the total to 78,809 contracts. Like other grains that have rocketed new highs, I believe the speculative community has been swept up by the weather story, and as a result are piling into the market in large numbers. The market has to find stasis before it would be safe to enter into long positions. Stand aside.
September wheat gained 5 cents on volume of 125,965 contracts. Open interest increased by 6,261 contracts. Of the four grains covered in this report, the open interest increase in wheat relative to volume, was the highest of the four. Wheat made a new high for the move at $8.481/2, and as I write this on July 12 wheat is up 28.25 cents and has made a new high at $8.58. The performance of wheat from the beginning of the move nearly 3 weeks ago has been nothing short of spectacular. From July 9 through July 11 wheat has advanced 2.51% while corn advanced 1.26%, beans +.57%, soybean meal +.24%. This market is on a tear and like other grains, do not short these markets. Although the 50 day moving average on the wheat continuation chart is $6.63, which means the market is massively overbought relative to the average, the market can stay overbought longer then an investor can stay solvent. Stand aside.
August crude oil gained $1.90 on volume of 540,884 contracts. Open interest increased by 7,496 contracts. The market remains on a short and intermediate term sell signal. Stand aside.
August gasoline gained 2.20 cents on volume of 147,617 contracts. Open interest increased by 355 contracts. Although gasoline is a couple of cents away from generating a short-term buy signal,, so far the open interest action relative to price has been poor. At this juncture, the summer driving season is half over, and gasoline’s performance has been atypical of the summer driving season. Stand aside.
September copper gained 4.95 cents on light volume of 49,446 contracts. Open interest declined by 105 contracts. The market continues to act poorly, and before implementing bearish positions I would like to see a retest of the high made at $3.55. Stand aside.
August gold lost $4.10 on relatively heavy volume of 176,560 contracts. Open interest increased by 4,203 contracts. This is the second day in a row when open interest increased as gold prices declined, and that volume expanded on the decline. This is bearish open interest and volume action relative to price. On July 9, August gold gained $10.20 but volume was only 120,146 contracts, an abysmal number for an upside move. On July 3, August gold gained $24.10, but again, volume was substandard at 128,020 contracts. The market is not acting well, and it looks like gold wants to go lower. Investors should be consulting with their investment advisor or broker regarding the accumulation of gold for the longer-term, but be aware if the market penetrates and closes below 1523.90, it is likely that gold is headed to $1470.
September silver gained 14.1 cents on volume of 39,458 contracts. Open interest declined by 982 contracts, which is about an average number relative to volume, and this is bearish. The silver market looks like it is poised to penetrate its previous low of $26.10. Stand aside.
The September Euro lost 31 points on volume of 229,705 contracts. Open interest declined by 309 contracts. The market made a new low for the move at 1.2222. Although the trajectory for the Euro is lower, who knows what the European Central Bank will do to stem the tide. Stand aside.
S&P 500 E mini:
The S&P 500 E mini closed fractionally higher at +.75 points on volume of 1,916,926 contracts. Open interest increased by 8,127 contracts. On the S&P 500 cash index, the 50 day moving average has crossed below the 150 day moving average. The market continues to act in a lackluster fashion, and it is possible that today July 12, the S&P cash index may generate an intermediate term sell signal. For this to occur, the S&P 500 cash index cannot move above the pivot point high of 1341.71. Even though the S&P 500 E mini and the S&P 500 cash index generated a short and intermediate term buy signal on July 2, I have not been impressed with the market’s performance since then. Please consult your investment advisor or broker regarding purchases of Apple, be it an out right stock purchase, or the buying of options. Additionally, investors should speak with their advisor or broker regarding the maintenance, or implementation of long put protection on the S&P 500.