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July soybeans closed 4 1/4 cents higher on volume of 239,169 contracts. Total open interest declined by 7,186 contracts and open interest in the July contract declined by 10,087 contracts on volume of 122,529. The market made a new low at $13.17 1/2, which was the lowest price for soybeans since February 29, 2012 when beans made a low of $13.15 1/2. The market should find support at the $13.06-$13.07 area. If the market closes below this support, an intermediate term sell signal would likely be generated. The market is already on a short-term sell signal, which was generated on May 23. Stand aside.
July soybean meal closed unchanged on volume of 83,024 contracts. Total open interest declined by 5,735 contracts and open interest in the July contract declined by 4,786 contracts on volume of 56,419. Volume has clearly picked up in the past two trading sessions, and is above the average daily volume for May and the average daily volume on a year-to-date basis. During the two-day session, the market has moved from a high of $410.50 on May 31 to a low of $387.80 on June 1. The low made on Friday was the lowest price for soybean meal since April 10, 2011 when the market made a low of 386.90. I am extremely friendly to meal, but it is too early to enter into long positions. Stand aside.
July corn closed 3 3/4 cents lower on fairly heavy volume of 344,214 contracts. Total open interest declined by 11,445 contracts and open interest in the July contract declined by 7,947 contracts on volume of 177,025. The market had a trading range of 28 1/2, which is 10 cents above its 21 day average true range of 18 1/4. For the past couple of posts, I have mentioned that it appears that corn is making a bottom, at least temporarily. During the past three trading sessions the lows have been as follows: $5.53 1/2, $5.53 3/4, $5.51. During this time, the entire commodity sector, as well as equities have been taken to the slaughterhouse. The fact that corn has been able hold its low in the $5.50 area during the carnage that has engulfed other markets further signifies a temporary bottom, especially since the mass of speculative liquidation is over for now.
July wheat closed 31 1/2 cents lower on heavy volume of 227,764 contracts. Total open interest increased by 1,991 contracts and open interest in the July contract declined by 12,413 contracts on volume of 117,506. The open interest increase occurred in the back months, which offset the large decline in the July contract. The range on Friday was 35 1/2 cents which is 75% higher than its 21 day average true range of 20 1/2 cents. As I write this on June 4, it appears almost a certainty that wheat will generate in intermediate term sell signal. Stand aside.
July crude oil lost $3.30 on very heavy volume of 734,370 contracts. Open interest increased by 6,502 contracts. In relation to volume, the open interest increase was rather modest. However, this was the largest increase since May 3 when open interest increased by 8,409 contracts on a decline of $2.68. I suggest that readers review the June 3 Weekend Wrap where I discuss the ratio of longs to shorts in the crude oil market. The market is massively oversold and is overdue for a good-sized bounce. Currently, the 50 day moving average of $99.43 is under the 150 day moving average of $100.10, and will shortly be under the 200 day moving average of $$96.46. Stand aside.
July gasoline lost 6.59 cents on volume of 159,178 contracts. Open interest declined by 4,228 contracts. Since May 17, open interest has been down every single session with the exception of May 31. The liquidation has been nothing short of astounding. The June 3 Weekend Wrap discusses the large number of longs to shorts, which means that more speculative liquidation is likely to occur, but the market is massively oversold and due for a rally. As I pointed out in the June 3 Weekend Wrap, the front months of gasoline are gaining on the back months, which is bullish spread action, and potentially bullish for gasoline itself. The slowing of the US and global economy is taking its toll on the petroleum complex, but it is unwise to become bearish at these levels. Another reason to temper bearish enthusiasm is that the 104 week (two year) moving average for gasoline is $2.67 and the 156 week (three years) moving average is $2.44. Stand aside.
July copper lost 5.20 cents on very heavy volume of 108,983 contracts. Open interest increased by 2,238 contracts. Like many in the commodities complex, copper is massively oversold and is due for a very good-sized rally. Stand aside.
August gold closed $57.90 higher on extremely heavy volume of 328,150 contracts. Open interest went up by a healthy 12,179 contracts. Much of what needs to be said about gold was discussed in detail in the June 3 Weekend Wrap. Speculators and investors alike should examine the benefits of owning the junior gold-mining ETF, GDXJ, which yields over 5%. I discussed this in detail in the Weekend Wrap of May 27.
July silver closed 75.5 cents higher on heavy volume of 73,772 contracts. Open interest declined by a fairly heavy 2111 contracts. Silver is the Rodney Dangerfield of precious metals in that it’s getting no respect from market participants. The market action has been abysmal for quite some time and even when it rallies from lower levels, speculators continue to liquidate. Stand aside.
The June Euro closed 45 points higher on extremely heavy volume of 467,537 contracts. Volume for the past seven sessions has averaged 378,441 contracts. This compares to the average daily volume for the month of May of 295,909 contracts and the year to date average daily volume of 276,428 contracts. As I pointed out in my posts of last week, the market looks severely stretched on the downside, and with the heavy number of speculative shorts in the market the Euro is due for a rally. As I write this on June 4, the Euro is 84 points higher and trading near 1.2500. Stand aside.
S&P 500 E mini:
The S&P 500 E mini closed 35.25 points lower on extremely heavy volume of 3,330,852 contracts. Open interest increased by 79,773 contracts. As the June contract goes off the board the open interest numbers are notoriously unreliable as a gauge of investor sentiment. Like virtually every market, the S&P 500 E mini is massively oversold and is overdue for a good-sized rally. Despite this, maintain put protection because of the possibility of further bad news in Europe.