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Corn:

December corn lost 3.75 cents on volume of 345,789 contracts. Total open interest declined by 3,243 contracts, which relative to volume is approximately 50% below average. The December contract lost 21,526 of open interest, which means there were sufficient open interest increases in the forward months to offset a good portion of the decline in December. The action on November 13 confirms the bearish set up for the market. As this report is being compiled on November 16, the December contract is trading nearly unchanged on the day and is approximately 1.75 cents from its contract low of $3.56 made on November 10. December corn remains on short and intermediate term sell signals. We have no recommendation.

Soybeans:

January soybeans lost 7.75 cents on light volume of 125,664 contracts. Volume was the weakest since September 17 when 116,371 contracts were traded and the January contract closed at 8.88 3/4. On November 13, total open interest increased by 3,159 contracts, which relative to volume is average and this confirms the down trend. The November 2015 contract lost 61 of open interest, November 2016 -150. As this report is being compiled on November 16, the January contract is trading 0.50 cents higher, but has not taken out the contract low of 8.50 made on November 10. January soybeans remain on short and intermediate term sell signals.

Cocoa:

March cocoa advanced $35.00 on healthy volume of 46,252 contracts. Total open interest exploded higher, this time by 2,816 contracts, which relative to volume is approximately 140% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of $3,365. The December contract accounted for loss of 4,481 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 substantially.The action on November 13 was bullish.

As this report is being compiled on November 16, the December contract has made a new contract high of $3,390. As we have said before, cocoa is the only commodity in a major bull market. On October 30, March cocoa generated short and intermediate term buy signals. The market is overdue for a pullback and this could be an opportunity to initiate bullish positions, but caution is warranted because often markets make a number of attempts before they clearly break out of previous contract highs.

WTI crude oil:

December WTI crude oil lost $1.01 on heavy volume of 1,014,227 contracts. Volume fell slightly from November 12 when the December contract lost 1.18 on volume of 1,042,873 contracts and total open interest increased by 24,118. On November 13, total open interest increased by 4,429 contracts, which relative to volume is approximately 80% below average. However, the December contract lost 18,444 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.

As this report is being compiled on November 16, the December contract is trading 47 cents lower and has made a new low for the move of 40.06, which is above the contract low of 39.22. On November 16, the January Brent crude oil contract has made a contract low of 43.15, but this is above the continuation contract low of $42.23 made on the weekly chart on August 24. The print of August 24 was the lowest recorded during the course of the bear market in Brent crude. Both WTI and Brent crude oil remain on short and intermediate term sell signals. We have no recommendation.

Dollar index:

The December dollar index advanced 38.5 points on volume of 36,815 contracts. Total open interest increased by a sizable 1,260 contracts, which relative to volume is approximately 20% above average meaning aggressive new buyers were entering the market and driving prices higher (99.300). As this report is being compiled on November 16, the December contract is trading 26.3 points higher, but has not taken out the November 10 high for the move of 99.600. The December dollar index remains on short and intermediate term sell signals.

Euro:

The December euro lost 57 pips on volume of 231,924 contracts. Total open interest increased by 7,442, which relative to volume is approximately 50% above average meaning aggressive new short-sellers were entering the market in substantial numbers and driving prices lower (1.0718). As this report is being compiled on November 16, the December contract is trading 36 pips lower and is made a daily low of 1.0689, which is above the low for the move of 1.0679 made on November 10. The December euro remains on short and intermediate term sell signals. We have no recommendation.

S&P 500 E-mini: On November 13, the December and March S&P 500 E-mini contracts generated short-term sell signals, but remain on intermediate term buy signals. 

The December S&P 500 E-mini lost 22.00 points on heavy volume of 2,133,899 contracts. Volume increased from November 12 when the December contract lost 28.50 points on volume of 1,814,989 contracts and total open interest declined just 2,377. On November 13, total open interest increased by 14,992 contracts, which relative to volume is approximately 60% below average, but a total open interest increase on Friday’s decline is bearish.

As this report is being compiled on November 16, the December contract is in rally mode trading 13.50 points higher after making a new low for the move of 1998.50 during the early evening session, which is the lowest print since 1985.00 made on October 15.  A rally is to be expected after the generation of a short-term sell signal. Conceivably, the advance could carry to OIA’s pivot point of 2067.30, and a daily low above the pivot point would reverse the sell signal.

The equity markets are entering a period of seasonal strength and therefore, a reversal of the sell signal cannot be ruled out. However, OIA thinks the equity markets have entered a bear market and this will become apparent to investors in the weeks and months ahead. At this juncture, we have no recommendation.