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Corn:

December corn advanced 2.25 cents on volume of 266,396 contracts. Total open interest increased by 9,671 contracts, which relative to volume is approximately 25% above average meaning aggressive new buyers were entering the market and driving prices fractionally higher. However, this was met by aggressive selling, which limited gains. The December contract lost 1,947 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.

As this report is being compiled on November 2, the December contract is trading 5.50 cents lower after making a daily high of 3.81 3/4, which is below Friday’s print of 3.83 3/4. December corn remains on short and intermediate term sell signals. The COT report revealed that managed money has little appetite for the long side of corn. We expect the market to drift irregularly lower. We have no recommendation.

Chicago wheat: On October 30, December Chicago wheat generated a short-term buy signal, but remains on an intermediate term sell signal.

December Chicago wheat advanced 7.00 cents on volume of 156,201 contracts. Volume declined from October 29 when the December contract gained 9.00 cents on volume of 164,621 contracts and total open interest increased by 1,974. On October 30, total open interest declined by 4,539 contracts, which relative to volume is approximately 5% above average. The December contract accounted for a loss of 4,391 of open interest, March -1,658, which means there was little new buying in the forward months that could offset the declines in December and March.

As this report is being compiled on November 2, the December contract is trading 12.75 cents lower after making a daily high of 5.22 3/4 which is below Friday’s print 5.23 1/2. Typically, after the generation of a short-term buy signal, the market has a tendency to pullback from 1-3 days and this is the first day of the pullback. For the December contract to reverse the short-term buy signal, the high of the day must be below OIA’s key pivot point for November 2 of 4.99 7/8. We have no recommendation.

Soybeans: We will resume reporting on soybeans when we announce a signal change, see a trading opportunity or spot unusual activity.

Live cattle:

December live cattle lost 1.075 cents on light volume of 41,989 contracts. However, total open interest increased by a massive 2,000 contracts, which relative to volume is approximately 75% above average meaning large numbers of new aggressive short-sellers were entering the market and driving prices lower (1.41300). This was the lowest print since 1.40050 made on October 27. The October and December contracts lost a total of 569 of open interest 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 substantially.

We hate to sound like a broken record, but open interest action has been definitively bearish and this has been the pattern for the most part since the December contract generated a short-term buy signal on October 19. As this report is being compiled on November 2, the December contract is trading lower again, this time by 1.10 cents and has made a daily low of 1.40500. For the December contract to reverse the buy signal and generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for November 2 of 1.37185. We have no recommendation.

Lean hogs: We will resume reporting on lean hogs when we announce a signal change, see a trading opportunity or spot unusual activity. On October 26, December lean hogs generated a short-term sell signal and an intermediate term sell signal on October 28.

Cocoa: On October 30, December and March cocoa generated short and intermediate term buy signals.

December cocoa advanced $44.00 on volume of 41,163 contracts. Surprisingly, total open interest increased just 22 contracts. The December and March contract lost 989 and 203 of open interest respectively, which means there was barely enough open interest increases in the forward months to offset the decline in the two delivery months and fractionally increase total open interest. Friday’s performance was a disappointment, especially since the December contract made a new high for the move of $3,262, which is the highest print since $3308 made on September 25.

As this report is being compiled on November 2, the December contract has made another new high of $3,298 and the contract high for December is $3,375 made on July 15, 2015. Now that cocoa is on short and intermediate term buy signals, we expect the market to pullback, especially since open interest on Friday’s strong advance was unimpressive and confirms a reluctance on the part of potential market participants to make major commitments at ever higher prices.

For the past three sessions beginning on October 28, December cocoa has advanced $62.00 while total open interest has declined by 747 contracts. We strongly encourage clients to remain on the sidelines and wait for a sizable pullback.

WTI crude oil:

December WTI crude oil advanced 53 cents on light volume of 589,583 contracts. Volume was the lightest since October 26 when the December contract lost 62 cents on volume of 524,957 contracts and total open interest increased by 5,090. On October 30, total open interest increased by 8,285 contracts, which relative to volume is approximately 40% below average, but an open interest increase on Fridays advance is positive. The December contract lost 6,486 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.

On October 21, December and January WTI crude oil generated short-term sell signals, and since then the market has been trading sideways to lower and has displayed little conviction from a directional standpoint. As this report is being compiled on November 2, the December contract is trading 54 cents lower and has made a daily low of 45.56 which is the exact pivot point of OIA for November 2. For the December contact to resume its downtrend, it must make a daily high below this pivot point. For the December contract to generate a short-term buy signal, it must make a daily low above OIA’s key pivot point for November 2 of $47.19. We have no recommendation.

Gold: On October 30, December gold generated a short-term sell signal, but remains on an intermediate term buy signal.

December gold lost $5.90 on light volume of 134,413 contracts. Total open interest declined by 7,683 contracts, which relative to volume is approximately 125% above average meaning liquidation was heavy on the modest decline. As this report is being compiled on November 2, the December contract is trading $7.10 lower and has made a new low for the move of $1132.50, which is the lowest print since 1129.16 made on October 5.

We were skeptical of the move higher in gold, and managed money climbed heavily on the bullish bandwagon and while OIA advised clients to maintain a stand aside posture. With managed money still heavily long, there remains a substantial amount of selling pressure in the market, and we expect lower prices ahead after the usual counter trend rally.

Silver: December silver will generate a short term sell signal on November 2, but will remain on an intermediate term buy signal.

December silver advanced 1.7 cents on volume of 45,603 contracts. Total open interest declined by a massive 3,440, which relative to volume is approximately 185% above average meaning liquidation was extremely heavy on the modest advance. However, the December contract made a new low for the move of $15.475 on Friday, and as this report is being compiled on November 2, the December contract has made another new low of 15.250, which is the lowest print since $15.100 made on October 5.  Managed money is very heavily net long and we expect this to substantially increase the amount of selling pressure. We have no recommendation.

Copper: December copper will generate a short-term sell signal on November 2 and remains on an intermediate term sell signal.

Euro:

The December euro advanced 28 pips on volume of 279,586 contracts. Total open interest increased by 3,021 contracts, which relative to volume is approximately 45% below average. Despite being on short and intermediate term sell signals, the euro continues to display bullish open interest action on price advances and declines. As this report is being compiled on November 2, the December contract is trading 17 pips higher and has made a daily high of $1.1059, which is below Friday’s print of 1.1079. We have no recommendation.

British pound:

The December British pound advanced 1.10 cents on volume of 108,392 contracts. Total open interest increased by 2,336 contracts, which relative to volume is approximately 15% below average, but a total open interest increase on Friday’s advance is positive.

As this report is being compiled on November 2, the December contract is trading near to unchanged after making a daily high of 1.5494, which takes out Friday’s print of 1.5465. Of the G-7 currencies we follow, we are most bullish on the pound. For the past 60 days, it has outperformed the US dollar, Swiss franc, euro and yen. We are evaluating the pound to determine when it is most opportune to initiate bullish positions.