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Soybeans:

January soybeans advanced 15.25 cents on volume of 339,415 contracts. Volume declined from December 17 when the January contract gained 14.50 cents on volume of 347,038 contracts and total open interest increased by 1,724. On December 18, total open interest declined by 7,136 contracts, which relative to volume is approximately 15% below average. The January contract accounted for loss of 19,825 of open interest and there were insufficient open interest increases in the forward months to offset the decline in January.

For the past two days, January soybeans advanced 29.75 cents while total open interest has declined by 5,412. This is bearish price and open interest action. As this report is being compiled on December 21, the January contract is trading 3.50 cents lower on the day. January soybeans remain on a short-term buy signal, but an intermediate term sell signal. We have no recommendation.

WTI crude oil:

February WTI crude oil lost 21 cents on volume of 696,858 contracts. Total open interest declined by 9,021, which relative to volume is approximately 45% below average. The January contract accounted for loss of 39,076 of open interest.

As this report is being compiled on December 21, the February contract is trading lower again, this time by 53 cents and has made a new contract low of 35.35. Additionally, the Brent contract is trading 71 cents below Friday’s close and has made a new contract low of 36.04, which takes out the major low print of $36.20 made by the January 2009 contract during the month of December 2008 at the height of the financial crisis.

In summary, the February Brent contract is trading at the lowest level since July 2004 ($34.18). It appears to be a certainty the February WTI contract also will break the 2008 low of $32.80 and the spread between Brent and WTI on December 21 has narrowed to just 61 cents premium to February Brent. We have no recommendation.

Dollar index:

The March dollar index lost 58.9 points on volume of 29,826 contracts. Total open interest declined by a massive 1,715 contracts, which relative to volume is approximately 130% above average meaning liquidation was extremely heavy on Friday’s decline. As this report is being compiled on December 21, the March contract is trading 32.1 points higher on the day. The March contract remains on short and intermediate term buy signals. We have no recommendation.

Euro:

The March euro advanced 61 pips on volume of 192,607 contracts. Total open interest increased by 2,108 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on December 21, the March contract is trading 59 pips higher and has made a daily high of 1.0965, which is below OIA’s key pivot point for the generation of a short-term buy signal. For the March contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for December 21 of 1.0974. The downtrend will resume once the March contract makes a daily high below OIA’s pivot point for December 21 of 1.0871. We have no recommendation.

Yen: The March yen will generate a short term buy signal on December 21, but will remain on an intermediate term sell signal.

The March yen advanced by a strong 111 pips on heavy volume of 208,496 contracts. Volume was the strongest since December 11 when the March contract gained 58 pips on volume of 247,677 contracts and total open interest declined by 5,838 contracts. On December 18, total open interest increased by 3,069 contracts, which relative to volume is approximately 40% below average, but a total open interest increase on Friday strong advance is positive.

According to the latest COT report, managed money remains short the yen by over 3 to 1, and they will provide support for the market as the yen firms up going forward. As this report is being compiled on December 21, the March contract is trading 8 pips above Friday’s close and has made a daily high of .8292, which takes out Friday’s print of .8278, and is the highest print since .8314 made on December 15. At this juncture, we have no bullish recommendation and suggest a stand aside posture until the yen pulls back, a correction that could last from 1-3 days.

From the December 17 report on the yen:

“OIA is one of the rare analysts who is more bullish on the yen than bearish. One important data point: The 50, 100 and 200 day moving averages are converging: 50 day, .8238, 100 day, .8251, 200 day, .8264. The current price for the March contract is .8256, within the band of the three moving average prices.”

S&P 500 E-mini:

The March S&P 500 E-mini lost 32.75 points on volume of 2,184,819 contracts. Total open interest increased by 19,024 contracts, which relative to volume is approximately 50% below average. However, the December contract lost 26,156 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in December and increase total open interest. This was bearish price and open interest action.

As this report is being compiled on December 21, the March contract is trading higher, up 12.00 points and has made a daily high of 2014.50, which is the highest print since 2029.75 made on December 18. On a seasonal basis, the broad indices tend to rally during the week of Christmas, but we think that tax selling will assert itself and rallies will be met by selling, which will limit gains. The path of least resistance is lower, and we think that the US equity indices have entered bear markets. At this juncture, we have no recommendation