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Corn:

March corn lost 2.50 cents on volume of 307,954 contracts. Total open interest declined by 2,850 contracts, which relative to volume is approximately 50% below average. The March contract accounted for loss of 12,305 of open interest. As this report is being compiled on February 5, the March contract is trading 2.50 cents lower and has made a daily low of 3.66, which is the lowest print since 3.65 made on January 29. We think March corn is headed for a short-term sell signal, and this will occur if the daily high is below OIA’s key pivot point for February 5 of 3.63 1/4. We have no recommendation.

Soybeans:

March soybeans lost 2.25 cents on volume of 308,387 contracts. Total open interest increased by a substantial 12,640 contracts, which relative to volume is approximately 40% above average meaning that aggressive new short-sellers were entering the market in substantial numbers and driving prices lower (8.72 3/4). The March contract accounted for loss of 725 of open interest.

As this report is being compiled on February 5, the March contract is trading 5.25 cents lower and has made a daily low of 8.69, which is the lowest print since 8.67 made on January 29. Like corn, we think soybeans are headed for a short-term sell signal, and this will occur if the daily high is below OIA’s key pivot point for February 5 of 8.69 1/8. We have no recommendation.

Live cattle: On February 4, April live cattle generated a short-term buy signal, but remains on an intermediate term sell signal.

April live cattle lost 10 ticks on volume of 47,917 contracts. Total open interest increased by 908, which relative to volume is approximately 25% below average. The February contract accounted for loss of 1,561 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in February and increase total open interest. As this report is being compiled on February 5, the April contract is undergoing its usual pullback after the generation of a buy signal. We have no recommendation. We think prices will slowly work their way higher, but this is not the beginning of the new bull market.

Coffee: On February 4, March coffee generated a short-term buy signal, but remains on an intermediate term sell signal.

March coffee advanced 1.65 cents on volume of 47,114 contracts. Total open interest declined by 1,552 contracts, which relative to volume is approximately 10% above average. The March contract lost 3,203 of open interest. As this report is being compiled on February 5, the March contract is having its usual pullback after the generation of a buy signal. The fundamentals don’t support a substantial move higher, and we recommend a stand aside posture.

WTI crude oil:

March WTI crude oil lost 56 cents on volume of 1,390,461 contracts. Surprisingly, total open interest increased just 1,181 contracts. The March contract accounted for loss of 18,389. As this report is being compiled on February 5, the March contract is trading 36 cents lower and has made a daily low of $30.92, which is the lowest print since 29.40 made on February 3. The March contract remains on short and intermediate term sell signals. We have no recommendation.

Silver: On February 4, March and May silver generated an intermediate term buy signals after generating a short-term buy signals on January 26.

March silver advanced 11.6 cents on volume of 62,343 contracts. Total open interest increased by 2,788 contracts, which relative to volume is approximately 75% above average meaning aggressive new buyers were entering the market in substantial numbers and driving prices to a new high for the move of $14.930, which is the highest print since 15.085 made on November 6, 2015. As this report is being compiled on February 5, the March contract is trading close to unchanged, but has made another new high for the move of 14.985. We believe setbacks should be bought.

Copper: On February 4, March copper generated a short-term buy signal, but remains on an intermediate term sell signal.

March copper advanced 3.65 cents on heavy volume of 89,481 contracts. Total open interest declined by a massive 4,855 contracts, which relative to volume is approximately 120% above average meaning liquidation was heavy on the advance. This indicates that short sellers were pushing prices higher, NOT new buying. This follows the 4.00 cent advance on February 3 when total open interest declined by 1,560 contracts on volume of 88,271. The fundamentals are copper are abysmal, and we view this as a garden-variety short covering rally. Stand aside.

Dollar index: On February 4, the March and June dollar index generated short and intermediate term sell signals.

March dollar index lost 81.4 points on volume of 49,203 contracts. Total open interest declined by 673 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on February 5, the March contract is having its counter trend rally, which usually occurs after the generation of sell signals. We have no recommendation.

Euro: On February 4, the March and June euro generated short and intermediate term buy signals.

The March euro advanced 1.19 cents on volume of 310,667 contracts. Total open interest increased again, this time by a substantial 11,654 contracts, which relative to volume is approximately 25% above average. This is the second day in a row in which the euro advanced strongly accompanied by strong increases of open interest, which indicates new buyers are rushing in and bidding prices higher. As this report is being compiled on February 5, the euro is having its usual pullback after the generation of buy signals. We have no recommendation.

Yen: On February 4, the March and June yen generated short and intermediate term buy signals.

The March yen advanced 70 pips on volume of 230,789 contracts. Total open interest declined by 2,286 contracts, which relative to volume is approximately 50% below average. Yesterday’s open interest decline is the fourth one in a row. Market participants are heading for the exits as yen volatility increases. As this report is being compiled on February 5, the March contract is trading 12 pips lower and has made a new high for the move of .8608, which is the highest print since .8631 made on January 20. We continue to recommend a sideline stance in the yen regardless of your bullish or bearish views.

Swiss franc: March Swiss franc will generate a short-term buy signal on February 5, but remains on an intermediate sell.

The March Swiss franc advanced by a strong 1.23 cents on volume of 42,166 contracts. Total open interest declined by a massive 2,292 contracts, which relative to volume is approximately 110% above average meaning liquidation was extremely heavy on the strong advance. As this report is being compiled on February 5, the March contract is trading 7 pips higher on the day. We have no recommendation.

Australian dollar: On February 4, the March Australian dollar generated a short-term buy signal, but remains on an intermediate term sell signal.

The March Australian dollar advanced 26 pips on volume of 92,985 contracts. Total open interest declined by 1,066 contracts, which relative to volume is approximately 45% below average, but the open interest decline indicates that short sellers were powering the Australian dollar higher, NOT new buying. As this report is being compiled on February 5, the March Australian dollar is having its pullback after the generation of a buy signal and is trading sharply lower, down 1.24 cents. It appears the recent move was a garden-variety short covering rally designed to blow-out entrenched short-sellers. We have no recommendation.

S&P 500 E-mini:

The March S&P 500 E-mini lost 0.75 points on volume of 2,263,579 contracts. Total open interest declined just 1,745 contracts. As this report is being compiled on February 5, the March contract is trading 24.50 points lower and has made a daily low of 1874.00, which is below yesterday’s print of 1890.25, but above the February 3 print of 1865.00.

Although our inclination is bearish, the fact is the market has not broken lower to test the January 20 low of 1804.25. Conceivably, a sharp rally could occur based upon some extraneous event and the market is massively oversold. The mindset of market participants is extremely bearish, which when major rallies tend to take place. At this juncture, the E-mini looks to make a sharp move in either direction. In this environment, the best strategy is a long straddle or strangle. For those who subscribe to OIA-Direct, please call with any question.