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Corn:

December corn lost 5.75 cents on volume of 300,857 contracts. Volume increased from October 30 when the December contract gained 2.25 cents on volume of 266,396 contracts and total open interest increased by 9,671. Additionally, volume was the strongest since October 27 when the December contract lost 4.50 cents on volume of 374,747 contracts and total open interest declined by 415.

On November 2, total open interest increased by a sizable 9,080 contracts, which relative to volume is approximately 10% above average meaning new short-sellers were entering the market and driving prices lower (3.76), which is the lowest print since 3.75 1/2 made on October 29. The December contract lost 3,310 of open interest, July 2016 -701, which means there were sufficient open interest increases in the forward months to offset the decline in the two delivery months and increase total open interest by above average.

As this report is being compiled on November 3, the December contract is trading 1.75 cents higher and has made a daily high 3.82 1/4, which is above yesterday’s print of 3.81 3/4. It should be noted that the 20 day moving average of 3.80 3/4 is above the 50 day moving average of 3.80 1/2, which is positive. Also, the year-to-date the moving average is 3.95.

It is likely that December corn will encounter resistance at the 20 and 50 day moving averages.  If the December contract can make a daily low above these moving averages, this may be the first indication that corn is in a position to generate a short-term buy signal. The contract low was made on August 12, and it does not appear that the market has the momentum at this juncture to break the contract low. December corn remains on short and intermediate term sell signals. We have no recommendation.

Chicago wheat:

December Chicago wheat lost 14.00 cents on relatively light volume of 117,758 contracts. Volume was the weakest since October 28 when the December contract lost 3.25 cents on volume of 118,696 contracts. On November 2, total open interest declined 433 contracts, which relative to volume is approximately 80% below average. Considering the magnitude of yesterday’s decline on light volume and declining open interest, the December contract performed admirably.

We see a pattern of increasing volume on advances and declining volumes when prices when prices pullback. This is positive. As this report is being compiled on November 3, the December contract is trading 5.50 cents higher and has made a daily high of 5.14 1/2, which is below yesterday’s print of 5.22 3/4.

On October 30, December Chicago wheat generated a short-term buy signal and the problem for the December contract has been to generate an intermediate term buy signal. OIA’s pivot point has proven to be a major barrier for wheat. In order for December Chicago wheat to resume its advance into new high territory, the low of the day must be above OIA’s key pivot point for November 3 of 5.22 1/2, and this would generate an intermediate term buy signal. We have no recommendation.

Cocoa:

December cocoa advanced $32.00 on heavy volume of 50,632 contracts. Volume exceeded that of October 28 when the December contract gained 22.00 on volume of 49,296 contracts and total open interest declined by 1,299. On November 2, total open interest increased by a massive 3,395 contracts, which relative to volume is approximately 160% above average meaning aggressive new buyers were entering the market in very large numbers and driving prices to a new high for the move ($3,299). The December contract lost 606 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 by a substantial number.

Unfortunately, the massive increase of open interest occurred at the very high end of the trading range, and this combined with increased volume on November 2 makes us more cautious. Our concern is that Johnny-come-lately’s, i.e., the computerized black box trend following crowd is jumping on the bandwagon, which in our view sets the market up for a sharp setback.

As this report is being compiled on November 3, the December contract is trading $5.00 lower and has made a new high for the move of 3,300, $1.00 above yesterday’s print. On October 30, December and March cocoa generated short and intermediate term buy signals, and we continue to advise a stand aside posture until the market has corrected for at least 1-3 days.

Sugar #11:

March sugar advanced 59 points on surprisingly light volume of 118,177 contracts. However, total open interest exploded higher with a gain of 18,600 contracts, which relative to volume is approximately 395% above average, meaning that huge numbers of new buyers were entering the sugar market and driving prices to a new high for the move (15.15).

As this report is being compiled on November 3, the March contract is trading sharply higher again, up by 31 points or +2.05% and has made a new high for the move of 15.53, which is the highest print since 15.52 made on March 4, 2015. The move from the contract low of 11.28 on August 24 through today has been nothing short of spectacular and represents a gain of 36.35%.

On September 28, March sugar generated an a short-term buy signal and an intermediate term buy signal on October 1. The strength of the move has taken us by surprise, and we advise against trying to pick a top in the market. At this juncture, it is massively overbought, but sugar has a tendency to make large moves and then reverse on a dime. We have no recommendation.

WTI crude oil:

December WTI crude oil lost 45 cents on very light volume of 480,906 contracts. Volume was the weakest since September 29 when 462,622 contracts were traded and the December contract closed at $45.64. On November 2, total open interest declined by 5,755 contracts, which relative to volume is approximately 45% below average. The December contract accounted for a loss of 11,909 of open interest.

As this report is being compiled on November 3, the December contract is trading $2.10 higher and has made a daily high of  48.28, which takes out the print of 47.91 made on October 19. WTI may get a boost going forward because the December gasoline contract is going to generate a short-term buy signal on November 3. Additionally, December heating oil is getting close to generating a short-term buy signal.

For the December gasoline contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for November 3 of 1.3595 and a short-term buy signal in heating oil will occur if the daily low is above OIA’s key pivot point for November 3 of 1.5477. For December WTI to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for November 3 of $47.20. We have no recommendation.

Gold:

December gold lost $5.50 on volume of 117,469 contracts. Total open interest declined by 533 contracts, which relative to volume is approximately 70% below average. As this report is being compiled on November 3, the December contract is trading sharply lower, down $17.80, or -1.57%. On October 30, December gold generated a short-term sell signal, and is getting close to generating an intermediate term sell signal. We have no recommendation.

Silver: On November 2, December silver generated a short-term sell signal, but remains on an intermediate term buy signal

December silver lost 15.9 cents on volume of 45,621 contracts. Total open interest declined by 1202, which relative to volume is average. As this report is being compiled on November 3, the December contract is trading 18.3 cents lower or -1.19% versus gold trading -1.73%. We have no recommendation.

Copper: On November 2, December copper generated a short-term sell signal and remains on an intermediate term sell signal.

December copper gained 15 ticks on volume of 57,225 contracts. Total open interest declined by 361 contracts, which relative to volume is approximately 65% below average. As this report is being compiled on November 3, the December contract is trading 1.35 cents higher and trading at the high of the day. We have no recommendation.

S&P 500 E-mini:

The December S&P 500 E-mini gained 21.75 points on volume of 1,288,312 contracts. Total open interest increased by 27,803 contracts, which relative to volume is approximately 15% below average, but an open interest increase on yesterday’s strong price advance is positive. As this report is being compiled on November 3, the December contract is making a new high for the move of 2103.25, which takes out the August 5 high of 2099.00.

It appears likely the December contract is headed for a test of the high made in May of 2134.00. As the market nears the all time high, we will be monitoring it for the possibility of a potential top forming. However, the months of November, December and January tend to be very strong seasonally for equities and if the market breaks substantially above the 2015 high, we may see another leg higher.

On October 6, OIA announced that the December S&P 500 E-mini generated a short-term buy signal and an intermediate term buy signal on October 23. We have no recommendation.

10 Year Treasury Note: Although, the December 10 year note will not generate a an intermediate term sell signal on November 3, it looks increasingly likely this will occur tomorrow and at the very least sometime this week. On October 29, the December 10 year note generated a short-term sell signal.