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August soybeans closed 23.75 cents higher on volume of 317,256 contracts. Open interest increased by a minuscule 225 contracts. For the past two trading sessions, open interest has shown a net decline of 1,724 contracts while soybeans have advanced 74 cents. I attribute this to profit-taking by longs and liquidation by panicked shorts. The market reached an all-time high of 17.77 3/4 on July 20. In the Weekend Wrap of July 22, I did an analysis of the drought years of 1983 and 1988 and the time frame for a top with a projected target price based upon market behavior in 1983 and 1988. I suggest readers review this in order to get a larger picture of the market from a historical perspective. As I write this on July 23, August soybeans are trading 41.75 cents lower.
August soybean meal gained $11.00 on volume of 120,829 contracts. August soybean meal made a new all-time high at $552.00. Open interest increased by only 11 contracts. During the past two trading sessions, soybean meal has advanced 29.00 and open interest has declined by 8,400 contracts. Again, I attribute this to longs taking profits and shorts being chased out of the market. Please see the Weekend Wrap of July 22 for a historical perspective on the drought years 1983 and 1988. As I write this on July 23 August soybean meal is trading $14.90 lower.
September corn closed 16.75 cents higher on volume of 371,385 contracts. September corn made a new all-time high at $8.28 3/4 on July 20. Open interest increased by 8,421 contracts. Friday was the 14th consecutive session that open interest increased in corn and the total for this period is 159,611 contracts. Readers should review the July 22 Weekend Wrap for some historical perspective on the corn market. In that analysis, I have concluded that corn will top out prior to beans, and the projected target price for corn based upon my analysis of 1983 and 1988 is in the neighborhood of $9.50 by August 7. As I write this on July 23, September corn is down 10.50 cents.
September wheat gained 8.25 cents on heavy volume of 162,848 contracts. September wheat made a new high for the move at $9.44 3/4. Open interest increased by 2,735 contracts and relative to volume, the open interest increase was below average. As I write this on July 23, September wheat is trading 21 cents lower.
September crude oil closed $1.14 lower on lighter than normal volume of 469,631 contracts. Open interest declined by 5,218 contracts and relative to volume, the decline was significantly below average. As I write this on July 23, September crude oil is trading $2.24 lower. Stand aside.
September gasoline lost 0.31 cents on light volume of 126,630 contracts. Open interest declined by 2,068 contracts. As I write this on July 23, September gasoline is trading down 5.55 cents and has pulled back to its 50 day moving average of 2.74 Please review the July 22 Weekend Wrap for my analysis of the gasoline market.
September copper lost 8.65 cents on very heavy volume of 80,729 contracts. Volume was the highest since June 29 when copper rallied 16.50 cents and traded 84,131 contracts. On that rally, open interest declined by 1,358 contracts, which was extremely bearish. On Friday, open interest declined by 3,632 contracts, which in relation to volume was a heavy decline and significantly above average. Perhaps old copper longs have gotten the message: copper is in a bear market. As I write this on July 23, copper is trading 7.10 cents lower.
August gold gained $2.40 on fairly light volume of 144,714 contracts. The open interest decline of 9,771 contracts was a huge decline in relation to volume. In the July 22 Weekend Wrap, I wrote about gold and that it is entering a period of seasonal strength. The market continues to act poorly, but just possibly seasonal strength will turn this market around, if only temporarily. In previous reports, I have said that if the equity and commodity markets were sharply lower, gold would likely follow. However, on July 23, all markets are sharply lower, and yet gold is trading down $6.30 or less than a half percent. In other words, gold is showing relative strength when I would have expected additional weakness. In the July 22 Weekend Wrap, I suggested the possibility of putting on an ATM straddle trade.
September silver gained 8.5 cents on volume of 42,683 contracts. Open interest declined by 479 contracts. Stand aside.
The September Euro lost 1.19 cents on volume of 245,877 contracts. Open interest increased by 11,634 contracts and relative to volume, the open interest increase was heavy and significantly above average. As I write this on July 23, the September Euro is down 32 points, but it has made a new low for the move at 1.2076. Stand aside.
S&P 500 E mini:
The S&P 500 E mini lost 13.75 points on volume of 1,801,757 contracts. Open interest increased by 5,708 contracts, which in relation to volume was very light and significantly below average. In previous reports, I expressed my trepidation about being long the S&P 500 because on the advance, open interest action was terrible. As I write this on July 23, the S&P 500 E mini is trading 15.75 points lower, but still remains on a short and intermediate term buy signal. Apple computer will be announcing its earnings after the close on July 24 and this is the preferable trade. However, it can be dangerous to enter positions prior to an earnings report. Investors should speak with their investment advisor or broker before entering new positions and if already long, should discuss the placement of sell stops.