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Corn: On October 15, December corn generated a short-term sell signal, which reversed the September 14 short-term buy signal. December corn remains on an intermediate term sell signal.

December corn lost 3.50 cents on volume of 181,121 contracts. Volume was the lightest since October 5 when the December contract gained 4.25 cents on volume of 163,530 contracts and total open interest declined by 4,399 contracts. On October 15, total open interest increased by a substantial 6,060 contracts, which relative to volume is approximately 20% above average meaning aggressive new short-sellers were initiating new positions as prices moved to a new low for the move of 3.75, which is the lowest print since 3.75 made on September 21. The December contract lost 3,062 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.

For the past two days, total open interest has increased as prices moved to new lows for the move and we think that short sellers were from the commercial trade rather than speculators. The COT report will be released this afternoon, and in the weekend report we will have a better idea of the amount of potential selling pressure based upon the current set up of manage money longs. We have no recommendation.

Chicago wheat: December Chicago wheat will generate a short-term sell signal, if the daily high is below OIA’s key pivot point for October 16 of 4.93 3/8.

Soybeans:

November soybeans lost 5.25 cents on volume of 270,885 contracts. Volume was the lowest since October 12 when the November contract gained 1.75 on volume of 219,514 contracts and total open interest increased by 4,466. On October 15, total open interest increased by 6,424 contracts, which relative to volume is approximately 10% below average. However, this is the second total open interest increase on a price decline that we have seen during the past two days, which is of concern. The November contract lost 8,010 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in November and increase total open interest.

It would have been preferable to see total open interest decline, which would give us more confidence that the recent upward thrust in the soybean market was more than a temporary affair. Also of note: soybean meal has declined for the past two days and total open interest has increased in this contract as well.

As this report is being compiled on October 16, November soybeans are trading 4.00 cents lower and have made a new low for the move of 8.98 1/4, which is the lowest print since 8.86 made on October 13. As we said in previous reports, for soybeans to continue their advance the November contract had to make a daily low above our pivot point, which would trigger an intermediate term buy signal. The key pivot point for October 16 is 9.22 5/8, and it appears unlikely that soybeans have the strength to move substantially beyond the pivot point. We have no recommendation.

Soybean oil:

December soybean oil lost 25 points on volume of 77,800 contracts. Total open interest increased by 2,975 contracts, which relative to volume is approximately 25% above average meaning aggressive new short-sellers were entering the market and driving prices lower (28.31), which is the lowest print since 28.12 made on October 13. The July contract lost 401 of open interest.

As this report is being compiled on October 16, the December contract is trading 7 points higher and has made a daily high of 28.82 which is below yesterday’s print of 28.95 and a daily low of 28.40. December soybean oil remains on a short-term buy signal but an intermediate term sell signal. The fact that soybean oil has been unable to generate an intermediate term buy signal confirms the weakness of the soybean complex.

Coffee:

December coffee lost 95 points on volume of 32,859 contracts. Total open interest declined by a massive 2,674 contracts, which relative to volume is approximately 230% above average meaning liquidation was extremely heavy on the modest decline. The December contract accounted for loss of 2,851 of open interest. As this report is being compiled on October 16, the December contract has collapsed, trading down 6.90 cents, or -5.16% and has made a new low for the move of 1.2505, which is the lowest print since 1.2520 made on October 8. We have been warning clients that the rally in coffee was not sustainable due to the massive decline of open interest on rallies.

 For the past six days beginning on October 8, coffee has advanced for 4 days and declined on October 13 and 15 for a cumulative increase of 7.65 cents while total open interest has declined each day for cumulative total decline of 12,346 contracts. December coffee will generate a short-term sell signal if the daily high is below OIA’s key pivot point for October 16 of 1.2380.

WTI crude oil:

December WTI crude oil advanced 23 cents on heavy volume of 893,410 contracts. Volume was below that of October 13 when the December contract lost 46 cents 1,048,608 contracts and total open interest increased by 7,314 contracts. On October 15, total open interest declined by 21,833 contracts, which relative to volume is average. The November contract accounted for loss of 37,135 of open interest.

In yesterday’s trading, the December contract had a sharp selloff to a low of 45.79 and then proceeded to rally by over a $1.50 to make a daily high of 47.53, which was slightly above the October 14 high of 47.45, but below the October 13 high of 48.90. The total open interest decline cannot be attributed to the sharp decline or the sharp rally with any certainty, but in order for the December contract to resume its advance, it must make a daily low above OIA’s pivot point for October 16 of $47.84. A short-term sell signal will be generated if the daily high is below OIA’s key pivot point for October 16 of 45.90. Unless heating oil and gasoline generate short-term buy signals, we do not see how a rally in WTI will be sustained.

Heating oil: On October 15, November and December heating oil generated short-term sell signals, and remain on intermediate term sell signals.

Gold:

December gold advanced $7.70 on heavy volume of 199,703 contracts. Total open interest increased by 6,698 contracts, which relative to volume is approximately 20% above average meaning that new buyers were entering the market in substantial numbers and driving prices to a new high for the move of 1191.70, which is the highest print since $1202.20 made on June 22. While we are becoming more favorably disposed towards gold and silver, we think both markets have more work to do on the downside before convincing us that a sustainable advance is in the cards. December gold remains on short and intermediate term buy signals.

Silver:

December silver advanced 4.7 cents on volume of 53,469 contracts. Total open interest increased by a sizable 2,325 contracts, which relative to volume is approximately 70% above average meaning aggressive new buyers were entering the market in large numbers and driving prices higher ($16.195), which is the highest print since $16.240 made on June 23. Like gold, we want to see more downside work before being convinced that silver is on a sustainable course higher. December silver remains on short and intermediate term buy signals.

Dollar index:

The December dollar index advanced 47.3 points on volume of 33,943 contracts. Total open interest declined by 83 contracts, a minimal number, but confirms the bearish set up for the dollar index. The December contract lost 235 of open interest. As this report is being compiled on October 16, the December contract is trading 15.5 points higher. The December dollar index remains on short and intermediate term sell signals. We have no recommendation.

Euro:

The December euro lost 95 pips on volume of 236,004 contracts. Total open interest declined by 2.982, which relative to volume is approximately 45% below average. Yesterday’s total open interest decline is positive market action, and in our view the euro is headed higher and will continue to advance until a sizable portion of manage money short-sellers are blown out of the market.

Yesterday, the euro made a high of 1.1505, which is the highest print since 1.1580 made on August 26. As this report is being compiled on October 16, the euro is trading unchanged on the day after making a daily low of 1.1344, which is below yesterday’s print of 1.1372 and is the lowest print since October 13 (1.1355). We have no recommendation. The December euro remains on short and intermediate term buy signals.

British pound: On October 15, the December British pound generated a short-term buy signal, but remains on an intermediate term sell signal.

The December British pound advanced 10 pips on volume of 91,313 contracts. Total open interest increased by a massive 4,459 contracts, which relative to volume is approximately 75% above average meaning a battle ensued between buyers and sellers and buyers were able to edge the market slightly higher. The December contract made a new high for the move of 1.5504, which is the highest print since 1.5522 made on September 22.

It should be noted that on October 14 when the December contract advanced by a very strong 2.30 cents on volume of 122,759 contracts, total open interest increased only 768 contracts, which is 70% below average. In summary, there does not appear to be much buyer enthusiasm when the pound makes substantial moves to the upside. As this report is being compiled on October 16, the December contract is trading 37 pips lower and has made a daily high of 1.5482, which is below yesterday’s print .We have no recommendation.

Yen:

The December yen advanced 25 pips on volume of 164,171 contracts. Total open interest increased by 2,, 357 contracts, which relative to volume is approximately 45% below average, however the total open interest increase on October 15 follows the increase on October 14 when the yen advanced 72 pips on volume of 167,962 contracts and total open interest increased by a massive 16,946.

Yesterday, the December contract made a high of .8475, which is the highest print since .8470 made on August 25. As this report is being compiled on October 16, the December contract is pulling back, down 40 pips, or -0.48%. It will be interesting to see whether the large spec short position has been whittled down in the COT report to be released this afternoon. The December contract remains on short and intermediate term buy signals. We have no recommendation.

Canadian dollar:

The December Canadian dollar advanced 53 pips on volume of 68,433 contracts. Total open interest increased by 611 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on October 16, the December contract is trading 43 pips lower after making a daily high of 77.79, which is below yesterday’s print of 77.91.

For the December contract to generate an intermediate term buy signal, the low of the day must be above OIA’s key pivot point for October 16 of 77.27. The December contract generated a short-term buy signal on October 5.

For the past eleven days beginning on October 1, the December Canadian dollar has rallied by a total 2.01 cents and total open interest has declined each day except for October 7 (+530) and October 14 (+539) October 15 (+611) bringing the cumulative total open interest decline for the eleven day period to 18,601 contracts.We have no recommendation.

Australian dollar:

The December Australian dollar advanced 52 pips on strong volume of 104,704 contracts. Total open interest declined by 2,098 contracts, which relative to volume is approximately 20% below average. Yesterday’s open interest decline on the price advance follows the October 14 total open interest decline of 1,216 contracts when the December contract advanced by 16 pips.

As this report is being compiled on October 16, the December contract is trading 62 pips lower after making a daily high of 73.16, which is below yesterday’s print of 73.41 and has made a daily low of 72.26, which takes out yesterday’s print of 72.43. On October 7, the December Australian dollar generated a short-term buy signal and for an intermediate term buy signal to be generated, the low of the day must be above OIA’s key pivot point for October 16 of 73.00. We have no recommendation.