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Corn:

March corn lost 1.75 cents on heavier than normal volume of 422,638 contracts. Volume was the strongest since January 12 when the March contract gained 5.00 cents on volume of 488,576 contracts and total open interest declined by 4,652. On January 21, total open interest declined by a substantial 12,577 contracts, which relative to volume is approximately 5% above average. The March contract accounted for loss of 11,739 of open interest and May 2016 lost 3,775.

As this report is being compiled on January 22, the March contract is trading 2.25 cents above yesterday’s close and has not taken out yesterday’s high of 3.72, which has been the high for the move. On January 19, March corn generated a short-term buy signal, and since then it has been trading in the sideways pattern.

We are a bit disappointed that March corn has been unable to rally more on January 22 due to the favorable risk environment with global equity markets rallying along with the petroleum complex. For the March contract to continue its advance, it must make a daily low above OIA’s pivot point of 3.68 5/8. We have no recommendation.

Soybeans:

March soybeans gained 4.50 cents on volume of 263,813 contracts. Volume increased from January 20 when the March contract lost 9.50 cents on volume of 243,473 contracts and total open interest increased by 1,317 contracts. On January 21, total open interest increased by a massive 13,826 contracts, which relative to volume is approximately 110% above average meaning aggressive new buyers were entering the market in very large numbers and driving prices higher (8.85 3/4), which is below the high for the move of 8.88 made on January 19. The action on January 21 from a price, volume and open interest standpoint was very positive.

On January 19, March soybeans generated a short-term buy signal and since then has been trading in a sideways pattern. As we have said before, soybeans needs one of the products to generate a short-term buy signal to support higher bean prices. At this juncture, it appears that soybean oil is the likely candidate for the buy signal.

For this to occur, the low of the day must be above OIA’s key pivot point for January 22 of 30.41.  Soybean oil currently is trading 55 points higher and has made a daily high of 30.60 and a low of 29.91. For the advance in soybeans to continue, the low of the day must be above OIA’s pivot point of 8.81 1/2. We have no recommendation.

WTI crude oil:

March WTI crude oil advanced $1.18 on heavy volume of 1,142,885 contracts. Although volume was strong compared to historical norms, it was the lowest since January 15 when the March contract lost $1.78 on volume of 961,527 contracts and total open interest increased by 3,270. On January 21, total open interest exploded higher, up 29,625 contracts, which relative to volume is average, and an open interest increase on yesterday’s advance is positive.

This tells us that short sellers were NOT moving the market higher-rather it was NEW buying. This is potentially dangerous to holders of short positions because the market is massively oversold and has been overdue for a substantial rally. The rally continues on January 22 with the March contract trading $2.10 higher and has made a daily high of 31.85, which is the highest print since 31.77 made on January 14. We continue with our recommendation of a sideline stance and want to see short-sellers shaken out of the market before contemplating bearish positions. 

Euro:

The March euro lost 15 pips on heavy volume of 307,957 contracts. Volume increased substantially from January 20 when the March contract lost 33 pips on volume of 202,217 contracts and total open interest declined by 742. On January 21, total open interest declined by 753 contracts, which is substantially below average relative to volume.

As this report is being compiled on January 22, the March contract is trading 66 pips lower and has made a daily high of 1.0890, which is above OIA’s pivot point. For the March contract to resume its downtrend in earnest, the high of the day must be below OIA’s pivot point for January 22 of 1.0859.

With market sentiment for weaker global economies and the determination by the European Central Bank to add stimulus to the system, surprisingly,the euro has not definitively broken down. As a matter of fact, today’s low of 1.0807 is above yesterday’s print of 1.0780. We have no recommendation.

Canadian dollar:

The March Canadian dollar advanced by a strong 1.07 cents on heavy volume of 124,040 contracts. Total open interest declined by 977 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on January 22, the Canadian dollar is trading 69 pips higher and has made a daily high of 70.85.

For the March Canadian dollar to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for January 22 of 70.87. According to the most recent COT report, leverage funds are massively short the Canadian dollar, which could send it higher and generate a short-term buy signal temporarily. We have no recommendation.

Australian dollar:

The March Australian dollar advanced 92 pips on heavy volume of 152,576 contracts. Total open interest declined by 3,393 contracts, which relative to volume is approximately 10% below average. As this report is being compiled on January 22, the March contract is trading 14 pips higher and has made a daily high of 70.30. For the March Australian dollar to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for January 22 of 70.87. We have no recommendation.

Yen:

The March yen lost 52 pips on heavy volume of 259,011 contracts. Total open interest declined by 5,809 contracts, which relative to volume is approximately 10% below average, and an open interest decline on yesterday’s loss is positive open interest action. The yen has displayed consistent bullish open interest action: it increases on price advances and declines when prices move lower.

As this report is being compiled on January 22, the March contract is trading sharply lower, down 79 pips or -0.93% and has made a daily low of .8435, which is the lowest print since .8422 made on January 8. We have been warning clients away from initiating new bullish positions due to the overbought status of the yen and that speculators have piled in on the long side. OIA needs to see large numbers of specs washed out before considering bullish positions.

S&P 500 E-mini:

The March S&P 500 E-mini gained 6.00 points on volume of 2,735,403 contracts. Total open interest declined by 15,904 contracts, which relative to volume is approximately 70% below average, but an open interest decline indicates that short sellers were powering the market higher, NOT new buying.

As this report is being compiled on January 22, the March contract is trading 32.75 points higher and has made a daily high of 1900.25, which is the highest print since 1907.50 made on January 19. Though this report is being compiled more than halfway through the session, volume is quite low considering the magnitude of the advance. We have ideas for options strategies and for those clients who subscribe to OIA-Direct, please call with any question.