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July soybeans lost 19 cents on volume of 255,648 contracts. Open interest increased by a minute 363 contracts. The open interest action total is disappointing because it indicates that more longs are not liquidating on the decline. However, in the July contract open interest declined by 2412 contracts on volume of 148,835 contracts. During the past three trading sessions, open interest in the July contract has declined by a total of 13,032 contracts. While this would be considered positive normally, the huge number of speculative longs in the market makes it dicey to enter new positions at current levels. As I see it, the current market presents us with one of two possibilities. First, the market is in the process of making an interim low and will attempt to retest the high of $15.12, or the current action is a lull with more downside action to come. Keep in mind that the outside markets will have a disproportionately large influence on the direction of soybeans prices. One positive aspect of yesterday’s trading was the July contract for soybeans and soybean meal outperformed the back months. Stand aside.
July corn closed 2 cents higher on light volume of 200,483 contracts. Open interest declined by a massive 10,849 contracts. I’m somewhat surprised at the heavy liquidation, but it does indicate the market may not be ready for a sustainable move higher at the moment. As I have said before, I think we are at the lower end of the trading range, at least for the next month or so. Corn had an inside day, and the trading range was 10 1/2 cents versus the 21 day average true range of 15 1/8. Stand aside.
June crude oil lost $1.35 on volume of 501,848 contracts. Open interest declined by a hefty 16,336 contracts. This is the sixth day in a row that open interest has declined, and the six day total is 78,737 contracts. The outside markets and the fact that the dollar index is strong will have a major influence on the direction of petroleum prices. One positive aspect is that open interest has not increased on the decline during the last several days. Crude oil generated an intermediate term sell signal on May 7. Stand aside.
June gasoline lost 4.18 cents on volume of 143,820 contracts. Open interest increased by 541 contracts. During the past two trading sessions gasoline has declined by a total of 5.12 cents, and open interest has increased by 2,527 contracts. The 200 day moving average on the gasoline continuation chart is $2.89, and the market should find support at this level, if only temporarily. Although, the two-day open interest increase is minor, it is negative, and market action in the days prior prior has not been much better. For example, on the May 8 and 9 gasoline moved 5.00 cents higher, but open interest declined by 390 contracts. In other words, the pattern of price and open interest action during the past several days has been decidedly bearish. Stand aside.
July copper collapsed on May 14 by declining 9.40 cents on volume of 78,559 contracts. Open interest increased on the decline by a hefty 3,042 contracts. I wrote about my bearish views on copper in the Weekend Wrap of May 13 and April 15. Today, May 15 copper will generate an intermediate term sell signal, but speculators should not be looking to enter bearish positions at these levels. Inevitably, the market will have a rally, which will provide ample opportunity to implement bearish positions. As suggested in the May 13 Weekend Wrap, the ETN ticker symbol JJC can be used as a proxy for copper. The futures are too volatile and the options on futures are illiquid.
June gold lost $23.00 on relatively heavy volume of 195,698 contracts. Open interest increased by 4,054 contracts. Since May 7, June gold has lost $84.20, and open interest has increased by 14,137 contracts. The Commitment of Traders Report, which is tabulated on Tuesday and released Friday (May 11) showed in the managed money category, speculators liquidated 6,558 contracts of their long positions, and added 13,126 contracts of their short positions. On the other hand, commercial interests added 3,499 contracts to their long positions and liquidated 12,251 contracts of their short positions. Apparently, managed money speculators are getting increasingly bearish as prices decline, but commercial interests are acting in the opposite fashion. The danger of speculators being short gold these levels is that the market is approaching major support on the continuation chart. The support rests at the 1523.00, which was the low made on December 29, 2011, and a higher low of 1535.00 made on September 26, 2011.
July silver lost 53.7 cents on light volume of 40,054 contracts. Open interest declined by 1,153 contracts. Stand aside.
The June Euro lost 79 points on volume of 269,637 contracts. Open interest increased by 4,932 contracts. As I write this, the June Euro is down 1.04 cents and has made a new low for the move. It is important to note that the Dollar Index generated both a short and intermediate term buy signal on May 9, which gives additional credence for Euro weakness. The key area to watch is 1.26, which has provided support going back to July 2010. If the market gets that level, I would expect to see a rally, perhaps a massive one that would squeeze out a large number of shorts. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini lost 16.00 points on relatively heavy volume of 1,914,418 contracts. Open interest increased by 11,371 contracts. During the past seven sessions (May 4-May 14) open interest action has been very bearish, and the S&P 500 E mini has lost 52 points. Long put protection should already be in place.