November soybeans gained 11.75 cents on volume of 213,004 contracts. Volume was the highest since August 21 when 224,338 contracts were traded and soybeans closed 49.75 higher while open interest increased 12,271 contracts. November beans made a new all-time high of $17.89 and sold off to close at 17.68 1/4. Although volume picked up on September 4, open interest declined by 2,195 contracts, which indicates that both longs and shorts were liquidating positions. In the past two reports, we have written about our concern about being long soybeans at current levels. As this report is being compiled on September 5, November soybeans are trading 21.00 cents lower. Longs must be cautious at least until next Monday.
October soybean meal lost $2.30 on heavier than normal volume of 89,284 contracts. Volume increased by approximately 30,000 contracts from August 31 when soybean meal declined $2.20 and open interest declined by 2,643 contracts. Additionally, volume was higher than on August 30 when 87,686 contracts were traded and soybean meal advanced $4.80 while open interest increased by 1,679 contracts. On September 4, there was massive liquidation of open interest and the decline was a staggering 5,083 contracts, which in relation to volume is nearly 100% above average. When comparing volume and open interest stats for August 31, it is apparent that liquidation has increased despite the relatively narrow $12.00 range on September 4. As this report is being written on September 5, October soybean meal is trading $8.50 lower. Longs should be cautious until at least next Monday.
December corn gained 5.25 cents on volume of 213,722 contracts. Volume picked up from August 31 when 190,362 contracts were traded and corn declined by 8.75 while open interest declined 11,312 contracts. On September 4, open interest increased by 4,405 contracts, which in relation to volume is slightly less than average. As this report is being compiled on September 5, corn is trading 11.25 cents lower and has made a new low for the move at $7.911/2, which is the lowest price for December corn since August 15 when the low reached 7.87. If one looks at a the daily chart, it appears that corn has a giant top at the 8.00 dollar area. From July 30 through September 4 the simple moving average is $8.07 3/4. In other words, the market’s moving average is closer to the lows than it is to the highs. Stand aside for now.
December wheat lost 0.75 cent on light volume of 64,260 contracts. Open interest increased by 3,789 contracts, which in relation to volume is approximately 100% above average. Harvest pressures of been taking their toll on wheat and after the market completes its shake out, it is going to be a terrific buy. Stand aside for now.
October crude oil lost $1.17 on relatively heavy volume of 513,607 contracts. Volume increased approximately 2,000 contracts from August 31 when crude oil advanced $1.85 and open interest increased by 23,438 contracts. On September 4, open interest increased by 729 contracts. As indicated in prior reports, there is no compelling reason to be long crude oil at current levels. The only exception to this would be if there was a strike on Iran.
October heating oil lost 3.34 cents on volume of 120,944 contracts. Open interest increased by 2,340 contracts, which is approximately 30% less than average. Stand aside.
October gasoline lost 2.00 cents on volume of 122,667 contracts. Open interest increased by 1,737 contracts. Stand aside.
December copper advanced 1.20 cents on volume of 60,836 contracts. Open interest declined by 223 contracts. As this report is being compiled on September 5, December copper is trading 5.85 higher. We are changing our views on copper. For quite a while we have been bearish on the metal, and the open interest action during the recent rally has been bearish as well. However, the inventories held by the London Metal Exchange, the Commodity Exchange of New York and the Shanghai Metals Exchange are at, or approaching three-year lows. Additionally copper is getting very close to generating an intermediate term buy signal. Until further notice, our view is to trade copper from the long side. This is not to suggest that longs be implemented at this juncture, rather it is a signal to our readers that their orientation should change toward a long bias.
December gold gained $8.40 on volume of 191,827 contracts. Open interest increased by 6,456 contracts, which in relation to volume is slightly above average. Although the market has had a large move, it continues to act in a very firm manner with apparent underlying support on any pullback. During the course of the next week, there is going to be a series of major news events that could very possibly power gold higher. Keep in mind, gold is overbought relative to its 50 day moving average, and if news is unfavorable, a sharp pullback could occur.
December silver gained 96.9 cents on volume of 64,271 contracts. The silver market has had a phenomenal move in a very short period of time. We are pleased to say that our buy signals were spot on. On August 20, we stated in our report that a short-term buy signal had been generated. On August 22, readers got a confirmation of the short term signal when an intermediate term buy signal was generated. As stated before in previous reports, silver is massively overbought, and a healthy correction is in order.
The September Euro declined by .0080 on volume of 271,242 contracts. Open interest increased by 561 contracts. We continue to believe the Euro is headed higher.
10 year Treasury Notes:
The December 10 year treasury note closed 10 points lower on volume of 1,278,159 contracts. Open interest declined by a staggering 57,917 contracts, which in relation to volume is approximately 75% above average. It didn’t take much of a setback to see a huge decline in open interest. On September 4, 10 year notes generated a short and intermediate term buy signal. Despite this, we advise against entering long positions at these stratospheric levels.
S&P 500 E mini:
The S&P 500 E mini closed 1.00 points higher on volume of 1,708,980 contracts. Volume declined approximately 300,000 contracts from August 31, when the S&P 500 E mini gained 8.00 points and open interest increased by 2,878 contracts. On September 4, open interest increased by 5,793 contracts, which in relation to volume is essentially an unchanged number. Since making its high of 1424.75 on August 21, the E mini has been trading sideways to lower while open interest has been increasing. From August 22 through September 4, open interest has increased by 101,536 contracts, however, the E mini has lost 8.25 points or 0.58%. This is bearish open interest action relative to price. In other words, there have been many new buyers and sellers since August 22 and it is the sellers who are in control. This is a major sign of caution for longs. Long put protection is strongly advised at this juncture. Also, if long Apple Computer protective sell stops with limits should be placed to protect profits.