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Corn:

December corn advanced 4.00 cents on heavy volume of 444,763 contracts. Volume was the strongest since September 11 when 446,760 contracts were traded and the December contract closed at $3.87. On November 3, total open interest declined by 7,441, which relative to volume is approximately 35% below average, but a total open interest decline on yesterday’s price advance is bearish. The December contract lost 23,270 of open interest, and due to the open interest increases in the back months, this number was whittled down, but there was insufficient new buying in the back months to increase total open interest.

As this report is being compiled on November 4, the December contract is trading 2.75 cents higher and has made a daily high of 3.83 1/4, which is the highest print since 3.83 3/4 made on October 30. The wheat market is rallying sharply and is making new highs, which is likely helping to support corn. As we pointed out in yesterday’s report, December corn must make daily lows above the 20 and 50 day moving averages of 3.80 3/4 and 3.80 1/2 respectively before the December contract is in a position to generate a short-term buy signal. December corn remains on short and intermediate term sell signals. We have no recommendation.

Chicago wheat:

December Chicago wheat advanced 8.50 cents on relatively light volume of 112,968 contracts. Volume declined from November 2 when the December contract lost 14.00 cents on volume of 117,758 contracts and total open interest declined by 433. On November 3, total open interest increased by 3,119 contracts, which relative to volume is average. The December contract lost 1,606 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 an average amount.

Yesterday’s performance was bullish and as this report is being compiled on November 4, the December contract is trading 9.50 cents higher and has made a new high for the move of 5.30 3/4, which is the highest print since 5.31 1/2 made on October 7. For Chicago wheat to continue its advance, it must generate an intermediate term buy signal, which means it must make a daily low above OIA’s key pivot point for November 4 of  5.22 3/4. Additionally, it must break decisively above the October 7 high and make a daily low above it. On October 30, OIA announced that December Chicago wheat generated a short-term buy signal. We have no recommendation.

Live cattle:

December live cattle lost 1.45 cents on volume of 50,639 contracts. Total open interest increased by a massive 4,302 contracts, which relative to volume is approximately 230% above average meaning huge numbers of new short-sellers were entering the market and driving prices lower (1.39875). The December contract accounted for a loss of 672 of open interest, which means there was more than enough open interest increases in the forward months to offset the decline in December and increase total open interest substantially.

As we pointed out in numerous previous reports, the open interest action relative to price advances and declines has been consistently bearish, and we are seeing the effect of this on November 4 as the December contract is trading down the 3.00 cent limit and has made a new low for the move of 1.37225. Although a short-term sell signal, which would reverse the October 19 short-term buy signal will not occur today, it is likely tomorrow. We have no recommendation

Cocoa:

December cocoa advanced $2.00 on heavy volume of 51,497 contracts. Volume exceeded that of November 2 when the December contract gained $32.00 on volume of 50,632 contracts and total open interest increased by 3,395. On November 3, total open interest increased again, this time by 1,143 contracts, which relative to volume is approximately 10% below average, but the December contract lost 5,167 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.

As we pointed out in yesterday’s report, we have been concerned about Johnny-come-lately’s entering the market at the top of the trading range. Our caution was warranted because on November 4, the December contract gapped lower and has closed down $62.00.

On October 30, the December and March contract generated short and intermediate term buy signals and since then the market hasn’t had a correction to merit considering bullish positions. Today, is the first day of the correction, and we will be monitoring cocoa to determine whether bullish positions are warranted. It would be positive for total open interest to decline substantially in today’s trade. We have no recommendation.

From the November 2 report on cocoa:

“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.”

“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 38 points on heavy volume of 168,402 contracts.Volume was the strongest since October 22 when 173,190 contracts were traded and the March 2016 contract closed at 14.60. On November 3, total open interest declined by 4,754 contracts, which relative to volume is average, but a total open interest decline on yesterday’s strong advance to the highest level since March 4, 2015 is most definitely negative. The March contract accounted for loss of 7,782 of open interest, which means there was very little in the way of new buying in the back months to offset the decline in March.

In yesterday’s report, we said that sugar had a tendency to reverse on a dime and cautioned for a stand aside posture. As this report is being compiled on November 4, the March contract is trading sharply lower, down 69 points, or -5.25% and has made a low of 14.57, which is the lowest print since 14.52 made on November 2. We have no recommendation.

From the November 2 report on sugar:

“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.”

WTI crude oil:

December WTI crude oil rose sharply yesterday by $1.76 on volume of 712,774 contracts. Volume was the strongest since October 29 when the December contract gained 12 cents on volume of 739,895 contracts and total open interest declined by 16,951. On November 3, total open interest increased just 3,869 contracts, a major disappointment considering the magnitude of yesterday’s advance and is 70% below average. The December contract lost 7,869 of open interest, which means there was sufficient open interest increases to offset the decline in December, but not enough to increase total open interest substantially.

Yesterday’s open interest and volume stats confirms a reluctance on the part of potential market participants to become involved in WTI. As this report is being compiled on November 4, the December contract is trading $1.61 lower after the release of the EIA storage report. We have been pointing out in previous reports that the December contract had to make a low above our pivot point in order to generate a short-term buy signal and the market has been unable to do this. Additionally, the December contract made a daily high of 48.36 on November 3 and there has been no follow-through in today’s trading with the December contract making a daily high of 48.28, 10 cents below yesterday’s print. We continue to recommend a sideline stance.

The Energy Information Administration announced on November 4 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.8 million barrels from the previous week. At 482.8 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 3.3 million barrels last week, but are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.3 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 0.8 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 2.3 million barrels last week.

Gasoline: On November 3 December and January gasoline generated short term buy signals, but remain on intermediate term sell signals.

December gasoline advanced sharply by 7.02 cents on volume of 188,726 contracts. Total open interest increased by a massive 7,550, which relative to volume is approximately 55% above average meaning aggressive new buyers were entering the gasoline market and driving prices higher (1.4607). The November contract accounted for loss of 208 of open interest. As this report is being compiled after the release of the EIA report, the December contract is trading sharply lower, down 4.52 cents, but a correction is overdue, especially since December and January gasoline generated short-term buy signals on November 3. We have no recommendation.

Gold: On November 4, December gold will generate an intermediate term sell signal after generating a short-term sell signal on October 30.

December gold lost $21.80 on volume of 170,074 contracts. Total open interest declined by 6,684 contracts, which relative to volume is approximately 40% above average meaning liquidation was heavy on the large decline. As this report is being compiled on November 4, the December contract is trading lower again, this time by $7.50 has made a new low for the move of 1105.60, which is the lowest print since $1103.80 made on October 2. We have no recommendation.

Dollar index:

The December dollar index advanced 24 points on light volume of 19,722 contracts. However, total open interest exploded higher, increasing by 1,119 contracts, which relative to volume is approximately 120% above average meaning that overall participation was tepid as evidenced by the low-volume, but those that were participating were willing to make strong commitments.

As this report is being compiled on November 4, the December dollar index is trading sharply higher, up by 85.2 points and has made a new high for the move of 98.150, which is the highest print since 98.295 made on August 10. On October 23, the December dollar index generated a short-term buy signal and an intermediate term buy signal on October 26. We have no recommendation.

Euro:

The December euro lost 47 pips on volume of 170,464 contracts. Total open interest increased by 2,278, which relative to volume is approximately 45% below average. As this report is being compiled on November 4, the December contract is trading sharply lower, down 114 pips or -1.04% on heavy volume. The December contract has made a new low for the move of 1.0849, which is the lowest print since 1.0837 made on July 21. On October 23, the December euro generated short and intermediate term sell signals. We have no recommendation.

10 Year Treasury Note: The December 10 year treasury note will generate an intermediate term sell signal on November 4.

The December 10 year note lost 8-5 points on volume of 927,545 contracts. Total open interest declined by a sizable 30,254 contracts, which relative to volume is approximately 15% above average. Yesterday, the December contract made a new low for the move of 127-015 and as this report is being compiled on November 4, the December contract has made another new low of 126-255, which is the lowest print since 126-170 made on September 17. On October 29, OIA announced that the December 10 year treasury note generated a short-term sell signal. We have no recommendation.