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Corn:

March corn advanced 0.25 cents on volume of 260,546 contracts. Total open interest increased by 3,495 contracts, which relative to volume is approximately 45% below average. The December contract accounted for loss of 1,967 of open interest, March 2016 -350. As this report is being compiled on December 10, the March contract is trading 5.50 cents higher and has made a daily high of 3.79 3/4, which is slightly above yesterday’s print of 3.79 1/4 and is the highest price since 3.82 made on December 7.

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 10 of 3.79. The downtrend will resume the March contract makes a daily high below OIA’s pivot point for December 10 of 3.73  3/8. We have no recommendation.

Soybeans:

January soybeans closed unchanged on volume of 229,825 contracts. Total open interest increased by 2,500 contracts, which relative to volume is approximately 50% below average. The January contract accounted for loss of 6,186 of open interest. As this report is being compiled on December 10, the January contract is trading 3.00 cents above yesterday’s close and has made a daily low of 8.72 3/4. For January soybeans to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 10 of 8.69 3/4. January soybeans remain on a short-term buy signal, but an intermediate term sell signal.

Coffee: On December 9, March New York coffee generated a short-term buy signal, but remains on an intermediate term sell signal.

March coffee advanced 1.60 cents on light volume of 15,915 contracts. Total open interest declined by 1,139 contracts, which relative to volume is approximately 185% above average meaning liquidation was extremely heavy on the modest advance. The March contract accounted for loss of 1,081 of open interest.

Managed money is substantially net short coffee, and though fundamentals are reasonably positive, the sinking Brazilian real against the dollar has been a negative influence. Although, it appears likely that an advance can be sustained, we are leery about recommending bullish positions due to the overall deflationary wave in the commodity sector. However, coffee is in its period of seasonal strength and this tends to continue through February. If considering bullish positions, we recommend they be kept on the light side and options should be used instead of futures.

WTI crude oil:

January WTI crude oil lost 35 cents on heavy volume of 1,320,644 contracts. Volume declined from the record setting pace of 1,595,710 contracts traded on December 8 when the January contract lost 14 cents and total open interest declined by 10,197. On December 9, total open interest declined by 14,093 contracts, which relative to volume is approximately 50% below average. The January contract accounted for loss of 60,015 of open interest.

As this report is being compiled on December 10, the January contract is trading 34 cents lower and has made another new contract low of $36.52. As we mentioned in yesterday’s report, there are rumors that a major hedge fund with heavy positions in crude oil is in trouble, and the forced liquidation could be substantial. We think the path of least resistance is lower, however we recommend against initiating bearish positions at current levels due to the very real possibility of a major short covering rally. Stand aside.

Dollar index:

The December dollar index lost 1.134 points on heavy volume of 80,134 contracts. Surprisingly, total open interest declined only 742 contracts, which relative to volume is approximately 50% below average. The December contract accounted for loss of 14,581 of open interest, which means there were sufficient open interest increases in the forward months to offset most of the decline in December.

Yesterday’s action was bearish in our view. As this report is being compiled on December 10, the December dollar index is trading 54.1 points higher and will not generate a short-term sell signal on December 10. The December dollar index remains on short and intermediate term buy signals. We have no recommendation.

Euro:

The December euro advanced by a strong 1.38 cents on extremely heavy volume of 678,494 contracts. Volume was the strongest since December 3 when the December contract gained 3.55 cents on extraordinarily heavy volume of 799,551 contracts and total open interest declined only 1,479.

On December 9, total open interest increased by a massive 58,456 contracts, which relative to volume is approximately 235% above average meaning huge numbers of new buyers were entering the market and driving prices to a new high for the move of 1.1044, which is the highest print since 1.1036 made on November 3.

Making the total open interest increase more remarkable was that December lost 77,760 of open interest, which means there were more than enough open interest increases in the forward months to offset the decline in December and yet total open interest increased substantially. This is very bullish action.

From the contract low of 1.0490 made on December 3 through the high in yesterday’s trading (1,1044), the euro has rallied +5.54 cents, or a dollar move of $6,925. The remarkable aspect of the move on December 8 and 9 is that total open interest increased massively on both days and the cumulative increase is 80,864 contracts. This is a massive number, and we continue to discourage clients from attempting to pick a top in this market. The massive increases of open interest clearly indicate that short sellers are not capitulating, and undoubtedly most of them have lost considerable profits or have incurred major losses.

As this report is being compiled on December 10, the December contract is trading 78 pips lower and has made a daily low of 1.0925, which is below OIA’s key pivot point for the generation of a short-term buy signal.  For a buy signal to occur, the low of the day must be above the pivot point. The December contract remains on short and intermediate term sell signals. Stand aside.

S&P 500 E-mini:

The December S&P 500 E-mini lost 16.75 points on huge volume of 3,072,892 contracts. Total open interest increased just 9,908 contracts, which is minuscule and dramatically below average. However, the December contract accounted for a massive loss of 172,218 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 slightly. We consider yesterday’s action as bearish.

As this report is being compiled on December 10, the December contract is trading 13.50 points higher and has made a daily high of 2062.50, which is above OIA’s key pivot point for the generation of a sell signal on December 10 of 2060.90. For the sell signal to occur, the high of the day must be below the pivot point.

In the November 30 report written on December 1, we recommended initiating out of the money short call positions in the December 2015 S&P 500 E-mini contract. On December 1, the December contract closed at 2100.00, which is approximately 44 points above current prices. Unless we notify you otherwise, continue to hold the position into December 18 expiration. The December S&P 500 E-mini remains on short and intermediate term buy signals.