Soybeans:

March soybeans advanced 23.50 on volume of 273,669 contracts. Volume was disappointing considering that on February 14, March soybeans declined by 6.75 cents and volume traded was 251,027 while open interest declined by 3,390 contracts. On February 13, March soybeans advanced 21.25 on volume of 336,824 contracts while open interest increased by 13,127. In short, as the market was moving into new high territory on a strong advance, volume did not expand. On February 18, total open interest increased by 5,435 contracts, which relative to volume is approximately 20% below average. The March contract lost 19,016 of open interest, which makes the total open interest increase more impressive (bullish). The fact remains total open interest was far lower than the open interest increase on February 13 and volume disappointed. As this report is being compiled on February 19, March soybeans are trading 9.25 lower after making a new high for the move at 13.71 3/4. March soybeans generated a short and intermediate term buy signal on February 5. We have no recommended position.

Soybean meal:

March soybean meal advanced $6.90 on volume of 89,996 contracts. Total open interest increased by 5,613 contracts, which relative to volume is approximately 140% above average AIt is apparent that market participants have been far more aggressive about initiating new positions in soybean meal than soybeans. The March contract lost 6,203 of open interest, which makes the total open interest increase more impressive (bullish). March meal made a new high of $458.50 and as this report is being compiled on February 19 has made another new high at 462.00 and currently is trading $4.00 lower. Soybean meal remains on a short and intermediate term buy signal. We have no recommended position.

Soybean oil:

March soybean oil advanced 1.21 cents on volume of 159,353 contracts. Volume traded was below that of February 13 when March soybean oil advanced 55 points on volume of 190,825 contracts and total open interest increased by 4,967 contracts. On February 18, total open interest declined by 3,253 contracts, which relative to volume is approximately 20% below average. The March contract lost 16,207 of open interest and there was sufficient open interest increases in the forward months to bring the total number below average. As this report is being compiled on February 19, March soybean oil is trading 28 points lower. We have been recommending using the February 7 low of 38.46 to exit bullish positions, however we think sell stops should be moved up to at least break even. On February 7, March soybean oil generated a short-term buy signal, but remains on an intermediate term sell signal.

Corn:

March corn advanced 4.25 cents on volume of 318,760 contracts. Total open interest increased by 4706 contracts, which relative to volume is approximately 40% less than average. The March contract lost 24,910 of open interest. As this report is being compiled, March corn has made another new high at$4.54 1/2. March corn remains on a short and intermediate term buy signal. 

Chicago wheat:

March Chicago wheat advanced 13.50 cents on volume of 150,902 contracts. Volume was the highest since February 12 when 181,730 contracts were traded and March wheat declined by 3.25 cents and open interest declined by 2453 contracts. On February 18, total open interest declined by a massive 9014 contracts, which relative to volume is approximately 140% above average meaning that liquidation was extremely heavy on the advance. For the past 2 days, March wheat has advanced 16.50 and total open interest has declined by 12,944 contracts. There is no question that the shorts are getting blown out of the market, however, for wheat to continue moving higher, new buyers have to step up. On February 18 , March wheat made a new high for the move at 6.13 1/4, and as this report is being compiled on February 19, March wheat has made another new high at 6.18  3/4. Stay with bullish positions recommended in the February 6 report and continue to move stops higher to protect capital and profits.

Kansas City wheat: On February 18, March Kansas City wheat generated an intermediate term buy signal after generating a short-term buy signal on February 5. 

March Kansas City wheat advanced 11.50 cents on low volume of 24,441 contracts. Volume was the lowest since February 3 when 21,754 contracts were traded and March KC wheat advanced 8.75 cents. On February 18, total open interest declined by 1,541 contracts, which relative to volume is approximately 145% above average meaning that liquidation was extremely heavy on the advance. The action on February 18 was bearish, and reflects a great deal of skepticism of KC wheat’s ability to move higher. However,  on february 19, KC wheat continues its rally and has made another new high for the move at 6.92 1/4. Stay with bullish positions recommended in the February 6 report and move up sell stops to protect profit.

Sugar: May 2014 sugar will generate a short-term buy signal on February 19.

Live cattle:

April live cattle advanced 1.025 on light volume of 33,662 contracts. Remarkably, volume was the lowest since December 31 when 33,777 contracts were traded. On February 18, total open interest declined by 502 contracts, which relative to volume is approximately 40% below average. The February contract lost 1,118 of open interest. The action on February 18 is disappointing from a volume and open interest point of view. The market should have had an increase of open interest and volume should have expanded, not below the level last seen on December 31. As this report is being compiled on February 19, April cattle is trading 62.5 points higher after making a new high for the move at 1.42900. Continue to hold bullish positions established in the late December and the short call position recommended on January 30.

WTI crude oil:

April WTI crude oil advanced $1.97 on volume of 631,599 contracts. Total open interest increased by only 3,769 contracts, which relative to volume is approximately 70% below average. The March contract lost 28,371 of open interest. As this report is being compiled on February 19, April WTI is trading 56 cents higher and has made a new high for the move at 103.29. We have no explanation for the strength of the move other than the psychology gripping the petroleum complex with respect to natural gas and heating oil consumption, and the general level of commodity price inflation along with a weaker dollar. Due to the Presidents’ Day holiday, the EIA report will not be released until tomorrow. April WTI remains on a short and intermediate term buy signal. We have no recommended position.

Natural gas:

March natural gas advanced 33.7 cents on volume of 452,000 265 contracts. Total open interest declined by a massive 21,123 contracts, which relative to volume is approximately 75% above average meaning that liquidation was heavy on the advance. The March contract lost 30,889 of open interest. As this report is being compiled on February 19, March natural gas is trading 63.7 cents higher and has made a new high for the move at $6.275. This is a market to be a spectator, not a speculator. Stand aside.

Euro:

The March euro gained 57 pips on heavier than normal volume of 240,935 contracts. Total open interest increased by 4,577 contracts, which relative to volume is average. On February 18, the March euro made a new high for the move at 1.3771, and as this report is being compiled on February 19, the euro made another new high just 2 pips above yesterday’s print. The euro remains on a short and intermediate term buy signal. We have no recommended position in the euro.

British pound:

The March British pound lost 59 pips on huge volume of 194,878 contracts. Volume was the highest since December 12 when 226,583 contracts were traded and the March pound closed at 1.6336. On February 18, total open interest increased by 7,878 contracts, which relative to volume is approximately 55% above average. As this report is being compiled on February 19, the March pound is trading 26 pips higher, but has not taken out yesterday’s high of 1.6739. The pound remains on a short and intermediate term buy signal. We have no recommended position.

Yen:

The March yen lost 12 pips on fairly heavy volume of 204,725 contracts. Volume was the highest since February 5 when 210,096 contracts were traded and the March yen advanced 30 pips while total open interest increased by 766 contracts. On February 18, total open interest increased by 624 contracts, which relative to volume is approximately 80% less than average. As this report is being compiled on February 19, the March yen is trading 4 pips lower on low volume. We continue to think the yen will test its recent high of .9927. We have no recommended position in the yen.

Gold:

April gold advanced $5.80 on fairly heavy volume of 195,176 contracts. Volume was the highest since January 30 when 221,410 contracts were traded and April gold closed at $1242.50. On February 18, total open interest increased by healthy 5,765 contracts, which relative to volume is approximately 20% above average. As this report is being compiled on February 19, April gold is trading $3.40 lower on low volume. As we’ve said in the past couple of reports, we think pullbacks will be shallow, which will make it difficult for new speculators to get on board. However, the market is massively overbought relative to its 20 day moving average of 1271.70. Do not add new positions at current levels. Maintain positions recommended in the February 6 report. 

Silver: On February 18, March silver generated an intermediate term buy signal, after generating a short-term buy signal on February 12.

March silver advanced 47.7 cents on huge volume of 123,185 contracts. Volume was the highest since August 28, 2013 when 153,666 contracts were traded and March silver closed at 24.485. On February 18, total open interest declined by 2,333 contracts, which relative to volume is approximately 20% below average. The March contract lost 5,811 of open interest. During the past 2 days, March silver has advanced $1.503 and open interest has declined by 3,081 contracts. This is bearish open interest action relative to a very large price advance. Our view on silver reflects that of both Chicago and Kansas City wheat. Market participants do not believe in the rally and open interest stats are confirming it. However, we think both are headed higher, and the first sign that a correction is imminent will be when open interest increases substantially on a price advance into new high territory. This will likely confirm a change in psychology on the part of managed money.

S&P 500 E mini:

The S&P 500 E mini gained 2.50 on light volume of 1,216,045 contracts. Total open interest increased by 30,294 contracts, which relative to volume is average. Maintain long put protection if holding long equity positions.