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Corn:

December corn advanced 4.75  cents on relatively heavy volume of 313,460 contracts. Volume was the strongest since September 30 when the December contract lost 1.25 cents on volume of 420,609 contracts and total open interest increased by 11,121. On October 6, total open interest increased by 7,338 contracts, which relative to volume is approximately 10% below average, but the March contract lost 6,205 of open interest, May 2016 -172, 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. The action on October 6 was very positive.

As this report is being compiled on October 7, the December contract is trading 4.25 lower after making a daily high of 3.99 3/4, which is slightly above yesterday’s print of 3.99. Although corn has moved irregularly higher, it has been a struggle, and for the move to continue, it must make a daily low above OIA’s key pivot point for October 7 of 3.96 3/8, which would generate an intermediate term buy signal. We have no recommendation.

Soybeans:

November soybeans advanced 3.75 on volume of 220,568 contracts. Total open interest increased by 5,601 contracts, which relative to volume is approximately average. The November contract lost 7,525 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. This is positive action.

As this report is being compiled on October 7, the November contract is trading 3.75 higher and has made a daily high of 8.96, which slightly takes out yesterday’s print of 8.95 1/2. For November soybeans to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for October 7 of 8.85 3/4 and the low thus far on October 7 has been 8.85 3/4. We have no recommendation.

Chicago wheat:

December Chicago wheat advanced 10.75 cents on light volume of 93,470 contracts. Total open interest increased by a substantial 4,384 contracts, which relative to volume is approximately 75% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move (5.27). The December 2015 through March 2017 contracts all gained open interest.

As this report is being compiled on October 7, the December contract has reversed sharply, trading 9.25 lower after making a new high for the move of 5.31 1/2. Though wheat has been trading positively, it has been unable to generate an intermediate term buy signal and for this to occur the daily low must be above OIA’s key pivot point for October 7 of 5.25 5/8. We have no recommendation.

Coffee:

December coffee gained 55 points on volume of 25,490 contracts. Total open interest declined by a substantial 966 contracts, which relative to volume is approximately 25% above average meaning liquidation with substantial on the minor advance. The December contract lost 2,311 of open interest.

For the past three days beginning on October 2, total open interest has declined each day for cumulative total of 4,087 contracts while December coffee has advanced 7.35 cents. This is very negative, and reflects the fact that managed money has been heavily net short coffee and are covering positions, which is powering the market higher.

On October 5, December coffee generated a short-term buy signal, and after the generation of a buy signal, the market has a tendency to pullback from 1-3 days. As this report is being compiled on October 7, we are seeing the first day of the pullback with December coffee trading 3.15 cents lower. Continue to stand aside.

Sugar:

March sugar lost 1 point on light volume of 127,423 contracts. Total open interest increased by 2,787 contracts, which relative to volume is approximately 20% below average, but it appears that buyers and sellers engaged in the battle for dominance and sellers were able to edge the market fractionally lower. The March contract lost 3,476 of open interest.

As this report is being compiled on October 7, the March contract is trading sharply higher, up 32 points, or +2.35% and the March contract has made a new high for the move of 13.99, which is the highest print since 13.98 made on July 14. Remarkably, ever since generating a short-term buy signal on September 28 and an intermediate term buy signal on October 1, the sugar market has not had a pullback. As a result, we continue to advise a stand aside posture. The market is very vulnerable to a sharp setback. Once sugar has blown out the majority of short-sellers, it needs new buyers to continue the rally.

WTI crude oil:

November WTI crude oil advanced by a strong $2.27 on volume of 866,944 contracts Although the rally was of substantial magnitude, volume only slightly exceeded that of October 2 when the November contract gained 80 cents and total open interest increased by 24,237 contracts on volume of 834,803.

On October 6, total open interest increased by 21,911 contracts, which relative to volume is approximately average.The November contract lost 13,334 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 by an average number. The performance from a price and open interest standpoint was very positive and it continued the very positive price and open interest action that we have seen for over a week.

As this report is being compiled on October 7, the November contract is trading 12 cents lower after making a new high for the move of 49.71, which takes out yesterday’s print of 49.08 and is the highest print since 49.50 made on September 1. November WTI will trade above OIA’s pivot point for October 7 of $46.42, which increases the chances the rally will continue.

Also, Brent crude oil will generate a short-term buy signal on October 7, which is a turning point for this contract. November WTI generated a short-term buy signal on September 3 and remains on an intermediate term sell signal. The EIA report showed another crude oil stock increase, and the market has been able to shrug this off. The performance on October 7 is impressive. We have no recommendation.

The Energy Information Administration announced on October 7 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.1 million barrels from the previous week. At 461.0 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 increased by 1.9 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 2.5 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.6 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.3 million barrels last week.

Brent crude oil:

November Brent crude oil advanced $2.67 on heavy volume of 960,271 contracts. Total open interest increased by 12,793, which relative to volume is approximately 45% below average. The November contract lost 12,075 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.

Compared to the stats in WTI, the open interest action in Brent is disappointing, but as this report is being compiled on October 7, the November contract has made a daily low of 51.21, which is above OIA’s key pivot point for October 7 of 50.05, This means that November and December Brent crude oil will generate a short-term buy signal on October 7. We have no recommendation.

Gold: December gold will generate a short-term buy signal on October 7 provided the daily low is above OIA’s key pivot point for October 7 of $1136.30. December gold remains on an intermediate term sell signal.

December gold advanced $8.80 on fairly light volume of 141,663 contracts. However, total open interest increased by a massive 8,526 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 (1151.00), which is the highest print since $1151.10 made on September 25.

Although December gold will generate a short-term buy signal on October 7, it has had numerous short-term signals that are quickly reversed. At this juncture, it is difficult to ascertain whether the market in fact has truly turned. We recommend a stand aside posture.

Dollar index:

The December dollar index fell sharply, closing 67.7 points lower on light volume of 19,433 contracts. Total open interest increased by 355 contracts, which relative to volume is approximately 25% below average, but an open interest increase on yesterday’s decline is negative. The dollar index has been performing abysmally, and the price and open interest action has been bearish.

In our view, the weak dollar index indicates that the much ballyhooed rise in interest rates by the Federal Reserve is off the table, probably for the rest of 2015. If the Federal Reserve raised interest rates, it would be very bullish for the dollar index. As this report is being compiled on October 7, the December contract is trading nearly unchanged on low volume. The December contract will generate a short-term sell signal if the daily high is below OIA’s key pivot point for October 7 of 95.516. We have no recommendation.

Euro:

The December euro advanced 92 pips on surprisingly light volume of 160,191 contracts. However, total open interest increased by a massive 9,460 contracts, which relative to volume is approximately 130% above average meaning aggressive new buyers were entering the market in large numbers and driving prices higher (1.1292), which is below the October 5 print of 1.1301.

As this report is being compiled on October 7, the December contract is trading 29 pips lower and has made a daily high of 1.1296, which is only 4 pips above yesterday’s high. Although open interest action relative to price advances and declines continues to be bullish, the fact remains the euro has been unable to make substantial new highs.

For example, on October 2 the December contract rallied 45 pips and made a high of 1.1331 and total open interest increased by 3,042, but the massive increase of open interest on October 6 did not push the euro into new high territory, let alone take out the October 2 print. On October 7 there has been no follow through on yesterday’s strong advance. The euro looks tired, but conceivably an exogenous global event could send it sharply higher.

At this juncture, we recommend a stand aside posture because the December contract has been unable to make a daily high below OIA’s pivot point of 1.1210, which would indicate the euro has resumed its downtrend. Also, the dollar index looks vulnerable to a possible short term sell signal.

Australian Dollar: The December Australian dollar will generate a short-term buy signal on October 7.

Canadian dollar:

The December Canadian dollar advanced 19 pips on volume of 51,508 contracts. Total open interest declined by a huge 3,702 contracts, which relative to volume is approximately 185% above average meaning liquidation was extremely heavy on the advance.

Yesterday’s open interest decline on the strong price advance confirms the bearish set up for the Canadian dollar despite it generating a short-term buy signal on October 5. For the December Canadian dollar to generate an intermediate term buy signal, the low of the day must be above OIA’s key pivot point for October 7 of 77.25. We think this is unlikely, and the pivot point may act as resistance.

For the past four days beginning on October 1, the December Canadian dollar has rallied a total 1.67 cents and total open interest has declined each day bringing the cumulative total open interest decline for the four day period to 14,925 contracts. This confirms that short-sellers have been powering the Canadian dollar higher, not new buying.

Once sufficient numbers of short-sellers have been blown out, the only way the Canadian dollar can continue to rally is if new buyers are willing to pay substantially higher prices. If the crude oil market continues to rally, this could provide a bit of support because Canada is a major exporter of oil, but ultimately we think prices are headed lower.

As this report is being compiled on October 7, the December contract is trading 16 pips higher and has made a new high for the move of 77.06 which takes out yesterday’s print of 76.52, and is the highest print since 77.10 made on August 13. We will be looking for a spot to initiate bearish positions once it appears that short-sellers have been sufficiently blown out.

S&P 500 E-mini: On October 6, the December S&P 500 E-mini generated a short term buy signal, but remains on an intermediate term sell signal.

This will be our last report on the S&P 500 E-mini until we announce a signal change, see a trading opportunity or spot unusual activity.

The S&P 500 E-mini lost 6.25 points on volume of 1,616,913 contracts. Total open interest increased by 7,806 contracts, which relative to volume is approximately 75% below average. As this report is being compiled on October 7, the December contract is trading 15.00 points higher and has made a new high for the move of 1991.25, which is the highest print since 2011.75 made on September 17. We have no recommendation.