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July soybeans closed 4.25 cents lower on volume of 148,901 contracts. Total open interest increased by 3,012 contracts and open interest in the July contract declined by 4,293 contracts on volume of 76,619. The market has been consolidating in the lower half of the mid-$13.00 range and should find support in the $13.07-$13.30 area. At this juncture, I see no reason why speculators should enter into long positions, especially considering the risks of outside markets and the strength of the dollar. The market remains on an intermediate term buy signal, and a short-term sell signal, which means speculators should stand aside for now.
July soybean meal gained $1.60 on light volume of 54,155 contracts. Open interest increased by 3,631 contracts and open interest in the July contract declined by declined by 1,644 on volume of 34,704 contracts. I am much friendlier to soybean meal than soybeans, but like soybeans, there is no reason to enter into long positions at this juncture. The market remains on an intermediate term buy signal and a short-term sell signal. Stand aside.
July corn closed 16.50 cents higher on very light volume of 191,934 contracts. Total open interest increased by 4,670 contracts and open interest in the July contract declined by 3,853 contracts on volume of 91,835. Buying in the back months offset the decline in July. The July-December spread widened a bit on Monday with July gaining 2.75 cents after gaining 8.75 cents on June 1. This is a positive short-term development that may indicate the market is posed to move higher. In yesterday’s post, I gave my reasons for thinking that corn had reached a temporary bottom. However, this could be tenuous considering outside market risk and dollar strength. The market remains on a short and intermediate term sell signal Do not enter long positions. Stand aside.
Wheat: On June 4, July wheat generated in intermediate term sell signal.
July wheat gained 15.50 cents on volume of 145,931 contracts. Total open interest increased by 1,477 contracts while open interest in the July contract declined by 4,731 contracts on volume of 68,065 contracts. The buying in new crop back months offset the decline in July. As I mentioned in the June 3 Weekend Wrap, I thought that wheat would generate an immediate term sell signal, and it occurred on June 4. Harvesting of the crop is in full swing and this will pressure the market. However, speculators should not enter into bearish positions as wheat nears its lows. Stand aside.
July crude oil gained 29 cents on volume of 580,789 contracts. Open interest increased by 2,125 contracts. This was the second day in a row that open interest increased. The market made a new low at $81.21, which was the lowest price for crude oil since early October 2011. Despite that crude is on a short and intermediate term sell signal, speculators should not allow themselves to get get overly bearish at current levels. The reason for this is that on a longer-term basis, crude is at historically low levels. For example the 104 week moving average is $92.21, the 156 week moving average is $86.40 and the 208 week moving average is $83.10. Considering that July crude closed at $83.98, it is priced at nearly the average price over a period of 208 weeks. The market is massively oversold. Stand aside.
July gasoline closed 1.39 cents higher on very light volume of 121,446 contracts. The market made a new low for the move at $2.5971, which was the lowest price for gasoline since December 19, 2011 when it reached $2.5960. Open interest increased by 5,964 contracts, which was the largest increase since April 16, 2012 when open interest increased by 9,932 contracts and gasoline closed at $3.1324. In relation to volume, the open interest increase was massive, and the volume itself was very light, especially considering that the range on Monday was 9.01 cents versus the 21 day average true range of 5.52 cents. The massive increase in open interest when gasoline made a new low for the move and then reversed, indicates to me that the market may have found a bottom, at least temporarily. As I pointed out in yesterday’s post, the 104 week moving average for gasoline is $2.67 and the 156 week moving average is $2.44. Therefore, from a historical perspective gasoline is clearly in a value zone. The market remains on a short and intermediate term sell signal. However, the market is massively oversold and I expect gasoline to have a good-sized rally, perhaps to its 200 day moving average of approximately $2.87. Stand aside.
July copper lost .65 cents on relatively heavy volume of 87,543 contracts. Open interest increased by 4,203 contracts. The market is massively oversold and has been for the past two weeks. Copper is certainly overdue for a rally, but that is going to depend to a great extent on economic news coming out of China and the direction of the outside markets. A rally to the $3.64 area would be a target for the implementation of bearish positions. During the past four trading sessions open interest has increased by 10,460 contracts as copper prices have declined by 15.50 cents. Stand aside.
August gold closed $8.20 lower on light volume of 146,038 contracts. Open interest declined by 1,162 contracts. The market is flirting with the 50 day moving average of $1625.00, and a close above it would be one of the first solid signals confirming the bottom in gold. In the Weekend Wrap of June 3, I outlined my analysis of the gold market, and in the May 27 post, I wrote about the ETF, GDXJ. I encourage readers to review each of these posts. The market remains on a short and intermediate term sell signal. Despite this, I have cautioned readers on numerous occasions that they should not short the market. Rather, they should be looking to acquire gold at lower prices, but should consult their investment advisor or broker before implementing such a program.
July silver lost 50.5 cents on very light volume of 35,824 contracts. Open interest increased by 590 contracts. Stand aside.
The June Euro closed 80 points higher on volume of 244,189 contracts. Volume fell approximately 120,000 contracts from the day before. Open interest increased by 1,279 contracts. The direction of the Euro will be determined by the endless meetings of European finance ministers. The market is over loaded with speculative shorts, and therefore is wise to stand aside.
S&P 500 E mini:
The June S&P 500 E mini closed 1.00 points lower on volume of 2,414,747 contracts. Open interest declined by 9,867 contracts. The market made a new low for the move at 1262.00, which was the lowest price for the E mini since January 5, 2012 when the E mini made its low at 1255.25. The market is overdue for a rally and the extent of it will be determined by domestic economic news and developments affecting the economies of Europe. Maintain long put protection.