Bloomberg access:{OIAR<GO>}

Corn:

March corn closed unchanged on the day on volume of 281,895 contracts. Total open interest increased by a massive 11,442 contracts, which relative to volume is approximately 55% above average meaning aggressive buyers and sellers were entering the corn market in large numbers and neither side was able to move the market by the close. The July contract accounted for loss of 287 of open interest.

As this report is being compiled on January 28, the March contract is trading 3.75 lower and has made a daily low of 3.65, which takes out yesterday’s print of 3.67 1/2. The March contract has been unable to make a daily low above OIA’s pivot point, which for January 28 is 3.69 and has encountered with formidable resistance at the 3.72 area.

Though it appears likely that corn has discounted much of the bad news, it is getting closer to generating a short-term sell signal, which would reverse the short-term buy signal of January 19. For this to occur the daily high must be below OIA’s key pivot point for January 28 of 3.62 7/8. We have no recommendation.

Soybeans:

March soybeans advanced 6.50 cents on volume of 202,051 contracts. Like corn, total open interest increased substantially, and for beans 11,592 contracts were added, which relative to volume is approximately 120% above average. Usually on a price advance, the March contract will lose some open interest, but in yesterday’s trading it gained 6,316 of open interest.

As this report is being compiled on January 28, the March contract is trading sharply lower, down 15.00 cents or -1.7% and has made a daily low of 8.68 which takes out the January 25 print of 8.70 3/4. Similar to corn, soybeans has been unable to make a low above OIA’s pivot point, which for soybeans is 8.81 3/4. The March contract is getting close to generating a short-term sell signal and this will occur if the daily high is below OIA’s key pivot point for January 28 of 8.69 1/8. We have no recommendation.

Soybean oil: On January 27, March soybean oil generated a short-term buy signal, but remains on an intermediate term sell signal.

March soybean oil gained 13 points on volume of 126,712 contracts. Total open interest increased by 1,791 contracts, which relative to volume is approximately 40% below average, but an open interest increase on yesterday’s modest gain is positive. The March contract lost 844 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in March and increase total open interest.

As this report is being compiled on January 28 the March contract is trading modestly lower down 23 points or -0.75%. Soybeans and soybean meal are the weak members of the complex on January 28. Usually, after the generation of a short-term buy signal, markets have a tendency to pullback from 1-3 days. We are a bit surprised at the weakness in soybeans considering the on-going strength in soybean oil. We have no recommendation.

WTI crude oil:

March WTI crude oil advanced 85 cents on heavy volume of 1,263,135 contracts. Volume was the strongest since January 19 when the March contract lost 82 cents on volume of 1,345,570 contracts and total open interest declined by 18,048. On January 27, total open interest increased by a substantial 34,239 contracts, which relative to volume is average. The March contract, which usually loses open interest gained 5,158.

As we pointed out in previous reports, the amazing part of the rally in crude oil is that it has been driven by new buying, NOT by short-sellers covering positions and driving prices higher. January 27 was the third session in a row when total open interest increased on a price advance.

As this report is being compiled on January 28, the March contract is trading $1.15 higher or+3.53% and has made a daily high of $34.82, which is the highest print since 35.54 made on January 8. Despite the current rally which has powered crude oil over 20% from the low of 27.56 made on January 20, the March contract is a considerable distance from generating a short-term buy signal. For this to occur, the low of the day must be above OIA’s key pivot point for January 28 of $35.84. We have no recommendation.

Dollar index:

The March dollar index lost 17.9 points on volume of 30,450 contracts. Total open interest declined by 755 contracts, which relative to volume is average. As this report is being compiled on January 28, the March contract is trading lower, down 35.4 points and has made a daily low of 98.515. Surprisingly, the dollar index is getting close to generating a short-term sell signal, and this will occur if the daily high is below OIA’s key pivot point for January 28 of 98.512. The rally will resume if the daily low is above OIA’s pivot point for January 28 of 99.146. We have no recommendation.

Euro:

The March euro advanced 52 pips on volume of 193,160 contracts. Volume exceeded that of January 22 when the March contract lost 87 pips on volume of 180,899 contracts and total open interest increased by 219. On January 28, total open interest increased substantially, up 3,238 contracts, which relative to volume is approximately 35% below average, but an open interest increase on yesterday’s advance is positive.

During the past two days, when the euro advanced and total open interest increased. This indicates that short sellers who are substantially short the euro are NOT driving prices higher, rather it is new buying. Additionally, the euro is rallying regardless of whether equities are trading higher or lower. 

We have been telling clients it is likely the euro will generate a short-term buy signal, and as this report is being compiled on January 28, the March contract is trading 41 pips higher and has made a daily high of 1.0969, the highest print since 1.0991 made on January 20.

For a short-term buy signal to occur, the low of the day must be above OIA’s key pivot point for January 28 of 1.0941. We have no recommendation except to say do NOT short this market.

Canadian dollar: The March Canadian dollar will not generate a short-term buy signal on January 28.

Australian dollar: The March Australian dollar will generate a short-term buy signal if the daily low is above OIA’s key pivot point for January 28 of 70.80. The low on the 28th has been 69.94

Platinum: On January 27, April platinum generated a short-term buy signal, but remains on an intermediate term sell signal.

S&P 500 E-mini:

S&P 500 E-mini lost 21.00 points on volume of 2,118,259 contracts. Volume was the strongest since January 21 when the March contract gained 6.00 points on volume of 2,735,403 contracts and total open interest declined by 15,904. On January 27, total open interest increased by 29,364 contracts, which relative to volume is approximately 40% below average, but an open interest increase on yesterday’s decline is bearish.

As this report is being compiled on January 28, the March contract is trading 8.75 points above yesterday’s close and has made a daily high of 1902.50 when crude oil spiked higher between 9:00 am-9:30 am EST. This is below yesterday’s print of 1910.00. Despite the rally on January 28, the market looks weak and if it were not for the rally in crude oil and a positive earnings report for Facebook, we think the market would be trading lower.

Year to date, the moving average for the March contract is 1909.35 and yesterday the high for the day touched this average. We think clients should begin thinking about bearish positions and though the rally may carry a bit further, we envision a re-test of the low of January 20 (1804.25) and think it will be taken out.

The earnings season is over for the most part and there won’t be any other major news except for tomorrow’s GDP report (which could be the catalyst for lower prices) and the employment report next Friday. We have no specific recommendation.