For the week, March corn closed up 30 1/4 cents and new crop December corn closed up 19 1/4 cents. The commitment of traders report released on Friday, but tabulated as of Tuesday, showed that in the managed money category they sold 2,555 contracts of their long positions and added 16, 714 contracts to their short positions. Commercial interests added 5,789 contracts to their long positions and liquidated 13,661 of their short positions. As I’ve indicated before, there is a considerable amount of resistance at the 6.64 level basis March. This price level represents the convergence of the 150 day moving average, 200 day moving average and the high price for corn made just prior to the January 12 USDA crop report.
For the week March soybeans closed $.32 higher and new crop November beans closed 38 1/2 cents higher. The commitment of traders report showed that in the category of managed money, they added 7,115 to their long positions and liquidated 1,552 of their short positions. The high for the week was 12.31 and that nearly matched the high made on January 11 at 12.32. The market’ s 50 day moving average is 11.73. I expect a correction down to this level.
For the week, March sugar closed lower by 68 points. The high for the week was 25.21, which was the highest price for sugar since November 14, 2011. The commitment of traders report showed that in the managed money category, 9,227 longs were added and a whopping 21, 884 short positions were liquidated. Commercials sold 6,003 of their long positions and added 29, 012 contracts to their short positions. Since the rally in sugar began on January 9, through January 26, open interest has increased by 74,219 contracts. This is a monumental 13% increase in open interest in just 14 trading sessions. It’s apparent that the commercial interests are predominately on the short side of the trade, and that speculators are on the long side. As I’ve said before, the upcoming period is one of seasonal weakness. Also, if the outside markets head lower, the path of least resistance for sugar will be on the downside. Sell stops at 22.82 should be in place for those that are long at lower levels. If not long at lower levels, stand aside.
For the week, March crude oil closed $1.23 higher. The contango widened somewhat, as the back months increased more than the front months. The commitment of traders report showed that in the managed money category, 6,539 longs were added and 4,668 shorts were liquidated. Commercial interests sold 20,397 longs and liquidated 20,679 shorts. The highest price for crude in over four months occurred on January 4 when crude reached a high of $103.88. From January 4 through January 26, open interest declined 20,174 contracts. This is very constructive and indicates that although prices have fallen, liquidation has been light and new shorts are not willing to step in and aggressively sell the market at these levels. What is somewhat surprising, is that the 1.67% decline in the dollar index did little to send crude oil higher.
For the week, March gasoline closed $.13 higher and reached a new high for the move at $2.97. This was the highest price for gasoline since the week of September 2, 2011. The backwardation continued to widen, which is a further indication of the bullish set up. From Monday January 23 through Thursday, January 26, the market was up 6 1/2 cents or 2.32%. However, open interest declined 796 contracts in this period. This may be indicative of a market that has become overstretched and needs to consolidate, or at the very least pullback to its 50 day moving average of 2.67. The latest commitment of traders report shows that in the managed money category, they added 4,899 longs and liquidated 1,037 shorts. Commercial interests, added 17,345 longs and added 24,268 shorts It is too early to enter this market and in my view, and speculators should stand aside for now.
For the week, March copper climbed $.15 and made a new high at $3.93. The rise of copper in the last two weeks has been nothing short of phenomenal. Since my suggestion of being long in copper, the market has climbed an astounding $.40. The latest commitment of traders report showed that in the managed money category, they added 2432 longs and liquidated 54 contracts of their short positions. Commercial interests added 991 to their long position and added 2173 to their short position. One very interesting aspect of the copper market that is highlighted in the commitment of traders report, is that despite the huge move in copper, the combined speculative short position is 31,500 contracts and the combined speculative long position is 36,031. From January 9, when the rally began through January 26, open interest has increased by 19, 818 contracts or 16%. There is a major battle going on between buyers and sellers and the buyers are winning this round. One area of concern is the fact that the market is still in the contango formation. As a matter of fact, the March December spread has been weakening as the market has moved higher. For example, on January 10 the March-December spread reached a 2.95 premium to December. On January 26 the March December spread again reached a 2.95 premium December even though the market had rallied significantly. On January 27, the premium for December increased to 3.15 despite the rally on Friday. The spread action is not bullish and may be indicative of possible topping action. The first quarter of the year is a strong seasonal period for copper, however the market may have gotten ahead of itself. Any significant decline in the outside markets will most certainly affect copper. Therefore, as suggested earlier, partial profits should be taken on copper positions with sell stops on the remaining position based upon your risk tolerance and sound money management principles. At the very least, the market could correct at least half of its move thereby giving speculators an opportunity to reenter the market with much less risk.
For the week, February gold closed $71.50 higher, or 4.29%. From January 23 through January 26 gold was higher by $54.50 or 3.27%. However, as gold was rising, open interest fell by 4,777 contracts during this four day period. In Monday’s report, I will provide an open interest analysis from the time that gold made its low at 1523.9 on December 29 through January 27. The latest commitment of traders report showed that in the money manager category, they added 6930 long positions and liquidated 1571 short positions. Commercial interests sold 4698 longs and added 1041 contracts to their short position. Gold’s move has accelerated since the downtrend in the dollar index began after it topped out on January 13. My view is to continue to stand aside because the dollar index can turn again to the upside. This will very much depend upon the direction of the euro, which certainly can continue to move higher. Also, the direction of the outside markets will have a major influence on the precious metals.
For the week, March silver closed higher by $1.82 or 5.66%. From January 23 through January 26, silver increased by $1.35, or 4.21%. However, open interest in silver declined by 2400 contracts during the same period. The open interest action in both gold and silver continue to be negative. The latest commitment of traders report showed that in the managed money category 430 longs were added and 2323 shorts were liquidated. Commercial interests sold 296 of their long positions and added 1382 to their short positions. Based upon the open interest action in silver, I cannot justify a long position at this juncture.
For for the week, the March euro climbed 3 cents higher or 2.28%. From January 23 two January 26 the euro climbed 1.7 cents. During this period, open interest declined 9219 contracts. Open interest action in the euro continues to be bearish. In the latest commitment of traders report, the largest category is leveraged funds. They added 2,944 longs and added 16, 254 to their short positions. This makes the largest category of traders net short 103,520 contracts. The market can continue to move higher and with the large amount of buying power provided by the shorts, the market could overshoot to the upside. Stand aside and wait for higher prices.
S&P 500 E mini:
For the week, the March S&P 500 E mini closed up 1.75 or.13% higher. from January 23 through January 26 the S&P was 4.50 points higher or.34%. Open interest in this period increased 39,105 contracts. The latest commitment of traders report showed that leveraged funds added 13,332 longs to their positions and added 39,699 short positions. Leveraged funds are net short 325,276 contracts. The interesting aspect of this week’s trading was the poor performance of S&P 500 and Dow Jones industrial average advances and declines. Though the market was up for the week, there was only one day where the number of advancing issues exceeded declining issues. This was on Thursday, when the S&P 500 E mini closed up 8.75 points and added 39,826 contracts to the open interest total. The same pattern was evident in the Dow Jones industrial average, which was about 60 points lower for the week. On Friday, there were only 2 advancing issues and 27 declining issues with 1 issue unchanged. This contrasted with the Russell 2000 on Friday, which had 1331 issues advancing and 532 declining. The NYSE had positive numbers as well with 1942 advancing issues and 1069 declining. The NASDAQ 100 also had favorable breadth with 57 issues advancing and 43 declining. I will keep a close eye on the major indices to see whether this pattern continues.
10 Year Treasury Notes:
For the week, March 10 year treasury notes advanced 1.45 points. The market made a new high at 131-265. Open interest from January 23 through January 26 increased by 51,324 contracts, which is positive. The commitment of traders report showed that leveraged funds added 43 355 contracts to their long positions and liquidated 28,078 of their short positions. This leaves leveraged funds net long 185,598 contracts. As I’ve said before, the market is trading at significant highs. Some negative news such as a bad employment report or some other major factor impacting the economy could send the market higher. My view is to take partial profits if long from lower levels, with sell stop placement on the remaining position based upon your risk tolerance and sound money management principles. Do not try to pick a top in this market by atempting to short it.