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On April 29 in the Weekend Wrap, I wrote about my reasons for thinking that Apple had made a temporary top. I encourage those of you who trade stocks to read my analysis.
July soybeans closed 26 cents higher on light volume of 238,566 contracts. Total open interest increased by 1,988 contracts. Open interest in the July contract declined by 2,879 contracts on volume of 138,598 contracts, which indicates that liquidation is continuing in the lead month. Since the market topped out on May 2, open interest in the July contract has declined by a total of 42,210 contracts. Since May 3, there has been only one day in which open interest increased in the July contract (May 7). The liquidation in the July contract during the price decline is very positive. Another factor that reinforces the firm tone of the market is that the July contract outperformed the back months. For example, the August contract increased by 21 cents, September increased by 13 1/4 cents, November increased by 10 1/4 cents. The one area of disappointment was the lackluster volume on the advance. On the previous day, soybeans closed down 19 cents and volume was 255,648 contracts, which is 17,082 contracts greater than May 15 when the market advanced 26 cents. One final thought regarding the volume in soybeans is the trading range on May 15 was 35 3/4 cents versus the 21 day average true range of 26 7/8 cents. Certainly soybeans should have exhibited a greater volume on an extended range day. Stand aside.
July corn closed 14 1/4 cents higher on light volume of 212,802 contracts. Total open interest declined on the advance by 6,784 contracts. The July contract lost 5688 contracts of open interest. The volume was lackluster, which indicates a lack of enthusiasm on the part of speculators. A couple of days ago, I said that corn was at the low end of the trading range. Although I haven’t changed my mind about that, corn must begin to exhibit increasing volume and open interest on advances. One positive factor on Tuesday was the widening of the spread between July and the back months. Stand aside
June crude oil lost 80 cents on volume of 596,463 contracts. Open interest increased by 4,075 contracts. This was the first increase in open interest on a decline since May 4 when crude oil declined $4.05 and open interest increased by 5102 contracts. In all likelihood, this indicates that participants in the oil market are getting increasingly bearish. The market generated an intermediate term sell signal on May 7. Stand aside.
June gasoline lost 1.49 cents on volume of 150,988 contracts. Open interest increased by 1,102 contracts. During the past three trading sessions, gasoline has declined 6.61 cents and open interest has increased by 3,629 contracts. Although gasoline is exhibiting bearish price and open interest action, speculators should not get carried away, because gasoline is nearing its 200 day moving average, where it should find support. Despite this, gasoline generated an intermediate term sell signal on May 15. Stand aside.
July copper lost 3.65 cents on volume of 69,590 contracts. Open interest declined by 658 contracts. During the past three days copper has collapsed losing a total of 17.30 cents. In my May 13 Weekend Wrap, I wrote of my concern about copper, but unfortunately the rapid collapse of the market starting on Monday did not generate a sell signal. The market generated in intermediate term sell signal on May 15, but by then the market had fallen to such an extent that implementing bearish positions would have been unwise. For more detail on copper, readers should review the April 15 Weekend Wrap which discussed in detail the burdensome supply situation in China. At this juncture, speculators should wait for a rally before taking on bearish positions. As I write this on May 16, copper is down 5.00 cents.
June gold lost $3.90 on volume of 176,944 contracts. Open interest declined by 1,435 contracts. As I write this on May 16, June gold is trading $22.00 lower. Before embarking on a buying program for gold, investors should consult their investment advisors and brokers.
July silver closed 27.3 cents lower on volume of 43,524 contracts. Open interest increased by 662 contracts. Stand aside.
The June Euro closed 1.21 cents lower on heavy volume of 359,939 contracts. Open interest increased by 8,216 contracts. Open interest has increased every day since May 2, and the total increase amounts to 77,069 contracts. I will again suggest that speculators should be very careful about being short at this level. As I pointed out in yesterday’s post, there is major long-term support going back to July 2010 at the 1.26 level. The short side of this trade has become very crowded. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini closed 5.75 points lower on heavy volume of 2,406,174 contracts. Open interest increased by 59,775 contracts. Long put protection should be in place.