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July soybeans closed 7 1/2 cents higher on extremely light volume of 137,035 contracts. Open interest declined by 2,518 contracts. At one point soybeans were 18 cents higher on the day, but closed at $14.12 1/2. Open interest in the July contract declined by 4,470 contracts, which indicates that market participants continue to liquidate. There was buying in the back months that offset the selling in the front month. The price, volume and open interest action was disappointing to say the least. Not only was volume extremely low, but the number of trading hours had been expanded by 3 hours and 45 minutes, yet volume on May 21 was one of the lowest of the year. The last time volume was this low was on January 27, 2012 when 101,330 contracts were traded. Also, volume over the past three trading sessions has averaged only 167,000 contracts. This clearly shows that the level of participation in the market is extremely low. To put the recent volume in perspective consider that the year to date average daily volume is 209,834 contracts. Although the fundamentals for soybeans are bullish, the market does not want to move higher at this juncture. Stand aside.
July corn lost 2 1/2 cents on light volume of 245,534 contracts. Total open interest declined by 2,422 contracts. Open interest in the July contract declined by 9,200, which was offset to some extent by buying in the back months. The market made a new high for the move at $6.44 1/2, but couldn’t hold it and closed 11 1/2 cents down from the high. The old crop fundamentals are fairly bullish, but considering the magnitude of the move in wheat during the past couple of days, corn’s performance has been disappointing. Corn generated a short-term sell signal on April 11, 2012 and an intermediate term sell signal on April 16, 2012. Since then, the market has not generated even a short-term buy signal despite favorable old crop fundamentals. Stand aside.
July wheat closed 8 3/4 cents higher on extremely heavy volume of 246,134 contracts. Open interest declined by 7,423 contracts. Open interest declined in the July contract (- 8,699) and September contract (- 2,545), but this was offset with buying in the back months. To put the surge of volume in perspective, the average daily volume for wheat on a year-to-date basis is 109,631 contracts, which is less than half of the volume traded on May 21. Do not enter long or short positions. This is a market dominated by the weather and as everyone knows, this can change at a moment’s notice. Stand aside.
July crude oil gained $1.06 on light volume of 448,119 contracts. Open interest declined by a massive amount for the third day in a row. The decline of 25,070 contracts on May 21 brings the three day total decline of open interest to 77,070 contracts. The market generated a short-term sell signal on March 29, 2012 and an intermediate term sell signal on May 7, 2012. Stand aside.
July gasoline rallied by 4.44 cents on very light volume of 113,075 contracts. Open interest declined by a large 3,362 contracts. The market continues to act poorly and gasoline generated a short-term sell signal on April 17, 2012 and an intermediate term sell signal on May 15. Stand aside.
July copper gained 3.35 cents on volume of 64,458 contracts. Open interest declined by 2,593 contracts. Continue to wait for a further rally before implementing bearish positions. Please review the post of May 18 regarding the article in Reuters on the copper market.
June gold lost $3.20 on volume of 174,629 contracts. Open interest increased by 5,638 contracts. Please consult with your investment advisor or broker about accumulating positions in gold for the longer-term.
July silver lost 39.4 cents on very light volume of 37,268 contracts. Open interest increased on the decline by 979 contracts. Stand aside.
The June Euro gained 51 points on volume of 228,161 contracts. For a change, open interest increased by 5,395 contracts as the Euro closed higher. Stand aside
S&P 500 E mini:
The June S&P 500 E mini closed 25.00 points higher on volume of 2,056,340 contracts. Open interest declined by 25,916 contracts. Although the market rallied, volume was the lowest since May 14 when 1,914,418 contracts were traded. In the previous session the E mini closed 10.50 points lower, but volume was approximately 767,000 contracts higher than on May 21. The pattern is obvious: volume increases on lower closes and decreases on higher closes. Volume increases in the direction of the underlying trend and the market clearly does not have the volume to move it significantly higher. The decline in open interest on the advance is further evidence of this. Maintain long put protection.