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Corn:

March corn lost 0.75  cents on volume of 215,664 contracts. Total open interest declined by 5,027 contracts, which relative to volume is approximately 10% below average. The March contract accounted for loss of 15,214 of open interest, but the sizable liquidation did not impact prices to any great degree.

As this report is being compiled on February 2, the March contract is trading 1.50 cents higher and has made a new high for the move of 3.73 3/4, which is the highest print since 3.77 made on December 21. The low for the day has been 3.69, which is slightly below OIA’s pivot point for the resumption of the uptrend of 3.69 1/4.

Ever since generating a short-term buy signal on January 19, the corn market has been trading sideways to slightly higher. As we have said before, the market needs a catalyst to send prices substantially higher from here. In the recent COT report, managed money liquidated over 69,000 contracts, and it is likely that this short covering will continue if prices continue to inch their way higher. However, the report also showed that commercial interests were aggressive about initiating short positions. We have no recommendation.

Soybeans:

March soybeans lost 1.50 cents on volume of 171,790 contracts. Total open interest increased by 1,193 contracts, which relative to volume is approximately 65% below average. The March contract accounted for loss of 4,438 of open interest. The open interest action yesterday was not determinative of any particular direction.

As this report is being compiled on February 2, the March contract is trading 7.50 cents higher and has made a new high for the move of 8.89 1/2, which takes out the previous high print of 8.88 made on January 19, the day that March soybeans generated a short-term buy signal.

Today’s high is below that of 8.95 1/2 made on December 22. Similar to corn, soybeans are unable to make a daily low above our pivot point, which for February 2 is 8.81 7/8. It needs to accomplish this in order for the rally to continue.We have no recommendation.

WTI crude oil:

March WTI crude oil lost $2.00 on volume of 1,078,984 contracts. Total open interest increased by 17,735 contracts, which relative to volume is approximately 35% below average, but an open interest increase on yesterday’s price decline is bearish. The March contract accounted for loss of 3,491 of open interest. Surprisingly, liquidation did not occur on yesterday’s sharp decline after we witnessed a series of open interest increases on price advances.

In other words, the bottom pickers who were buying as the market moved higher have not liquidated and ultimately this will add selling pressure as the market drifts lower. We are looking for a test of the January 20 low of $27.56, which was the contract low for March. Despite the recent rally, the March contract was unable to generate a short-term buy signal. We have no recommendation.

Dollar index:

The March dollar index lost 62.4 points on volume of 28,177 contracts. Total open interest increased by 939 contracts, which relative to volume is approximately 15% above average meaning that new short-sellers were entering the market in above average numbers and driving prices lower (98.950).

As this report is being compiled on February 2 the March contract is trading close to unchanged. For the past two days, we have seen either bearish or barely positive open interest action. For example, on January 29 when the March contract skyrocketed by 1.113 points on volume of 55,192, total open interest increased only 169 contracts, which is dramatically below average.

And yet when the dollar index declined, total open interest increased indicating that short sellers were piling in. We are unimpressed with the dollar’s performance and with all the talk about the bullish dollar fundamentals, the fact remains the March contract is quite a distance from the December 3 high of 100.70 and the contract high of 102.38 made on March 18, 2015.

For the March contract to resume its advance, it must make a daily low above the following two pivot points: 99.082 and 99.44. If it is unable to do this it will trade sideways to lower. The March dollar index remains on short and intermediate term buy signals. We have no recommendation.

Euro:

The March euro advanced 65 pips on volume of 164,654 contracts. Total open interest declined by 663 contracts, which relative to volume is approximately 80% below average. As this report is being compiled on February 2, the March contract is trading 14 pips higher and has made a daily high of 1.0951, which takes out yesterday’s print of 1.0924 and is the highest since 1.0960 made on January 29.

We continue to be impressed by the robust performance of the euro, and although many currency strategists are calling for euro parity, we are a bit skeptical of this, and would not be surprised to see the euro generate a short-term buy signal in the near future. We think it is much more likely that a short-term buy signal will be generated than euro parity.

If the March contract can continue making a daily low above OIA’s pivot point of 1.0880, we think there is an excellent chance that a short-term buy signal will be generated. The daily low on February 2 has been 1.0896. A short term buy signal will be generated if the daily low is above OIA’s key pivot point for February 2 of 1.0941.The March euro remains on short and intermediate term sell signals.

Yen: On February 1, the March yen generated short and intermediate term sell signals.

The March yen lost 30 pips on volume of 131,541 contracts. Total open interest declined by a massive 11,020 contracts, which relative to volume is approximately 230% above average meaning liquidation was massive on the modest decline. We have written in the past about the massive build up of speculative long interest in the yen, and yesterday was the first indication that distressed longs are abandoning ship.

As this report is being compiled on February 2, the March yen is experiencing its usual counter trend rally, which occurs after the generation of sell signals and trading up 67 pips or + 0.82%. We could see another day or two of rally before the market resumes its downtrend. We will be examining the yen for possible bear market strategies. Stand aside for now.

Canadian dollar: On February 1, the March Canadian dollar generated a short-term buy signal, but remains on an intermediate term sell signal.

The March Canadian dollar advanced 40 pips on volume of 86,124 contracts. Total open interest declined by 1,428 contracts, which relative to volume is approximately 35% below average. The open interest decline is not surprising considering that leverage funds are short the Canadian dollar by almost a 7 to 1 ratio.

Yesterday, the March contract made a high of 71.90, which is the highest print since 72.25 made on January 4. As this report is being compiled on February 2, the March contract is trading 39 pips lower, which is typical after the generation of a buy signal. Usually, after the generation of a buy signal, the market tends to pullback from 1-3 days.

We expect the Canadian dollar to resume its advance after possibly one more day of corrective activity and this will serve to blowout the massive number of short-sellers who are nursing some very substantial losses. Once a sufficient number have liquidated, we think the Canadian dollar will be a terrific trade on the bearish side. For now, stand aside.

S&P 500 E-mini:

The March S&P 500 E-mini advanced 1.30 points on volume of 1,752,991 contracts. Total open interest increased by 10,491 contracts, which relative to volume is approximately 60% below average. On January 29, the March contract gained 49.25 points on volume of 2,413,889 and total open interest increased by 10,618.

In summary, the S&P has experienced two consecutive days of tepid open interest increases on price advances. Yesterday, the March contract made a high of 1940.00 and then sold off sharply into the close. This was the highest print since 1946.50 made on January 13.

As this report is being compiled on February 2, the March contract is trading sharply lower, down 33.75 points or -1.76% and trading on the lows of the day. We are awaiting some additional signals before recommending bearish positions.