Wow, just when you thought it was safe to sell the market, the rally that started just over a month ago pushed the Dec'07 to limit up.
After a weak electronic opening based on a larger than expected spec hedge position and favorable weather, the market slowly worked back to unchanged and eventually took out the previous high in Dec @ 59.80.
This proceeded to gain momentum looking for buy stops which were uncovered at 60.35 and this lead to short option covering by the trade in huge volumes that kept the specs and funds rolling right into limit up.
The grains bounced back as well which was another factor as wheat futures locked limit up due to very low yields coming in from the winter wheat which fueled soybeans as well.
The spec hedge report came in 10% above last week at 23.1% long and is obvious that the market is fully controled by specs as we set almost a 10 month high today and closed 10 cents from the lows just over 4 weeks ago.
We attached a chart in attached PDF which evaluates the last 18 months of spec hedge positions and it is very interesting to notice how we have doubled open interest over this period of time.
At the beginning of 2006, open interest was near its traditional levels over the last several years of 100k contracts. By October 2006, open interest had reached 180,000 contracts and by April 9th, 2007 we set a recent record over 230k contracts.
Even though it was very common to see moves of 30-40% by the specs when open interest was at 100K, it has been more common to see moves of only 10-15 % with open interest over 200k.
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.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
