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Soybeans: March 2016 soybeans will generate a short-term sell signal on December 28 provided the daily high remains below OIA’s key pivot point of 8.71 3/4. March soybeans remain on an intermediate term sell signal.

January soybeans lost 6.50 cents on volume of 124,588 contracts. Total open interest declined by a massive 10,292 contracts, which relative to volume is approximately 230% above average meaning liquidation was extremely heavy on Thursday’s decline. The January contract, which is approaching first notice day lost 12,979 of open interest.

As this report is being compiled on December 28, the March 2016 contract is trading 11.00 cents below Thursday’s close and has made a daily high of 8.71 1/2, which is below OIA’s key pivot point of 8.71 3/4 for December 28, which means a short term sell signal will be generated on December 28. This will reverse the short-term buy signal of December 1. We have no recommendation.

Soybean oil: The March soybean oil contract is getting close to generating a short-term sell signal and this will occur provided the daily high is below OIA’s key pivot point for December 28 of 29.78.

Sugar: March 2016 sugar is getting close to generating a short-term sell signal.

Live cattle:

February live cattle advanced by a strong 2.35 cents on volume of 43,974 contracts. Total open interest increased by a substantial 5,579 contracts, which relative to volume is approximately 325% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of 1.37,400. The December contract lost 405 of open interest.

As this report is being compiled on December 28, the February contract is trading 60 points lower on the day and has made a daily high of 1.37500, which is fractionally above Thursday’s high of 1.37,400. On December 23, OIA announced that February live cattle generated a short-term buy signal, however it continues to be on an intermediate term sell signal. An intermediate term buy signal will occur if the daily low is above OIA’s key pivot point for December 28 of 1.37055.

For the past three days beginning on December 22, February live cattle has advanced each day along with total open interest. From December 22 through December 24, the February contract gained 7.00 cents while total open interest has increased by 12,218 contracts. This is bullish price and open interest action.

The COT report will be released this afternoon, which will give us a better idea of the extent to which managed money has liquidated short positions. If managed money remains substantially net short and an intermediate term buy signal generated, live cattle market could see further gains. At this juncture, we have no recommendation.

WTI crude oil:

February WTI crude oil gained 60 cents on volume of 325,407 contracts. Total open interest increased by 4,466 contracts, which relative to volume is approximately 45% below average. The January contract accounted for a loss of 2,825 of open interest. As this report is being compiled on December 28, the February contract is trading lower, down $1.33, or -3.49% and has made a daily low of $36.66, which is the lowest print since 36.28 made on December 23. February WTI remains on short and intermediate term sell signals. We have no recommendation.

Natural gas: For the February contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for December 28 of $2.230. The February contract remains on an intermediate term sell signal.

February natural gas advanced 4.3 cents on volume of 173,575 contracts. Total open interest increased by a substantial 6,319 contracts, which relative to volume is approximately 20% above average. The January contract lost 5,665 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in January and increase total open interest above average.

As this report is being compiled on December 28, the February contract is rocketing higher, up 15.8 cents or + 7.55%. From December 18 when the February contract made a contract low of $1.802 through the high on December 28, the February contract has rallied by 45.4 cents.

During the past two days beginning on December 23, the February contract has gained 13.8 cents and open interest has increased on each day. This tells us that short sellers are not yet powering the market higher, rather it is new buying. This is potentially dangerous to short-sellers because of the huge short position held by managed money.We have no recommendation.

Dollar index: The March dollar index will generate a short-term sell signal on December 28 if the daily high remains below OIA’s key pivot point for December 28 of 98.006. This will reverse the short-term buy signal generated on December 17. The March contract remains on an intermediate term buy signal.

The March dollar index lost 35.1 points on volume of 9365 contracts. Total open interest declined just 62 contracts. As this report is being compiled on December 28, the March contract is trading fractionally lower, down 5.6 ticks, but as of this writing the high for the day is below OIA’s key pivot point for the generation of a short-term sell signal. We have no recommendation.

Euro: The March euro will generate a short term buy signal on December 28 provided that the daily low remains above OIA’s key pivot point for December 28 of 1.0977. This will reverse the short term sell signal of December 17. The March contract remains on an intermediate term sell signal.

The March euro advanced 40 pips on volume of 51,459 contracts. Total open interest declined by 722 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on December 28, the March contract is trading 26 pips higher and has made a daily high of 1.1016, which takes out the previous print of 1.1011 made on December 22.

It appears likely that the March euro is headed for a short-term buy signal on December 28, and the massive short position held by managed money will assist the euro in its advance. The narrative of quantitative easing, which has many people believing the euro is headed to parity with the dollar appears to be an event that is likely in the long-term, but not in the immediate future. We have no recommendation.

Yen:

The March yen advanced 38 pips on volume of 54,381 contracts. Total open interest declined by 1,329 contracts, which relative to volume is average, however an open interest decline on Thursday’s advance is negative, and indicates that short sellers were powering the market higher, not new buying. We know that managed money is heavily short the yen, and this class of speculator will provide support for the market as it continues its advance.

As this report is being compiled on December 28, the March contract is trading near unchanged on the day, but has made a new high of .8336, which takes out Thursdays print of .8331. We advise against initiating bullish positions at this juncture, however if the March contract were to pullback to its 50-100-and 200 day moving averages of approximately .8251, we would recommend the shorting out of the money puts in the March contract. We want to see the 50 day moving average cross above the 100 and 200 day moving averages. Additionally,  it is important for the yen generate a short term buy signal against the euro. At this juncture, we have no recommendation.

S&P 500 E-mini:

The March S&P 500 E-mini lost 1.75 points on light holiday volume of 325,915 contracts. Total open interest declined by a sizable 22,222 contracts, which relative to volume is approximately 165% above average meaning liquidation was substantial on the modest decline. Last Thursday, the S&P 500 E-mini made a new high for the move of 2059.75, 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 the pivot point for December 28 of 2059.85. On December 11, OIA announced the March contract generated a short-term sell signal, and currently remains on an intermediate term buy signal. It is apparent that the market is struggling in the pivot point area.

As this report is being compiled on December 28, the March contract is trading 6.00 points lower after making a daily low of 2035.25, which is the lowest print since 2030.75 made on December 23. We think it is likely the E-mini will continue to rally in this holiday shortened week, but at a slower pace seen during the past couple of days. We will be looking for a spot to recommend out of the money short call positions.