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We caution clients to be especially careful if holding long positions in commodities and equities due to the heightened global risk in commodities, equities and credit.

Corn:

December corn lost 2.25 cents on volume of 188,094 contracts. Total open interest declined by 4,648 contracts, which relative to volume is average. Total open interest decreasing on a price decline is perfectly normal. The December contract lost 8,886 of open interest. As this report is being compiled on September 29, the December contract is trading unchanged and has made a daily low of 3.85, which is above yesterday’s print of 3.83 3/4 and has made a daily high of 3.89 1/2, which is below yesterday’s print of 3.92 1/2. For the past two days, total open interest action has been bullish.

On September 14, December corn generated a short-term buy signal and for it to generate an intermediate term buy signal the low of the day must be above OIA’s key pivot point for September 29 of 3.96 1/2. Thus far, since the short-term buy signal was generated, the market has been trading in a sideways to slightly higher pattern, but does not exhibit the kind of continuous strength that would get us more enthusiastic about the long side of this market. As mentioned above, we continue to be greatly concerned about global macro risk and the well-publicized financial troubles of some major commodity trading houses. We have no recommendation.

Soybeans:

November soybeans lost 12.50 cents on volume of 179,870 contracts. Volume declined substantially from September 25 when the November contract advanced 21.25 cents on volume of 231,070 contracts and total open interest increased by 2,624. On September 28, total open interest declined by 7,634 contracts, which relative to volume is approximately 55% above average meaning liquidation with substantial on the decline. This is perfectly normal activity on a price decline. For the past two days, total open interest action has been bullish.The November contract lost 10,954 of open interest and March 2016 -771.

As this report is being compiled on September 28, the November contract is trading 5.00 cents above yesterday’s close and has made a daily high of 8.84 1/4, which is below yesterday’s print of 8.92.For November soybeans to resume their advance, the market must generate a short-term buy signal, which will occur if the November contract makes a daily low above OIA’s key pivot point for September 28 of 8.84. The downtrend will resume if the November contract makes a daily high below OIA’s key pivot point for September 28 of 8.68 3/8. We have no recommendation.

Chicago wheat:

December Chicago wheat lost 2.25 cents on volume of 88,857 contracts. It should be noted that volume increased from September 25 when the December contract advanced 10.50 on volume of 77,764 contracts and total open interest increased by 2246. We consider this to be negative.

On September 28, total open interest declined by a massive 9,025 contracts, which relative to volume is approximately 300% above average meaning liquidation was extremely heavy, but this is not necessarily a negative because the December contract made a low of 5.00, which was above the September 25 low of 4.96 1/4. In short, the massive liquidation was not pushing prices substantially lower.

For the past two days, total open interest action has been bullish, but the problem is that December wheat has been unable to generate a short-term buy signal despite making a new high for the move yesterday of 5.15 1/2,which is the highest print since 5.16 made on August 25. . For the December contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point of 5.01 1/4. As this report is being compiled on September 29 the low of the day has been 5.00 1/2.

Cocoa:

December cocoa lost $34.00 on volume of 31,871 contracts. Total open interest increased by 115 contracts, which relative to volume is approximately 80% below average, but yesterday’s total open interest increase is the 15th in a row.

For the past six days, total open interest has increased by 9,399 contracts and the December contract has declined by $69.00. This is bearish open interest action for the past six days relative to the cumulative price decline and shows that short-sellers are in control.

From September 8, when December cocoa generated short and intermediate term buy signals through September 28, total open interest has increased every day, which brings the cumulative increase to 37,893 contracts while December cocoa has advanced $ 74.00.

We have recommended that clients stand aside in cocoa due to massive open interest increases and it now appears likely that cocoa will generate a short term sell signal. As this report is being compiled on September 29, December cocoa has made a daily low of $3,171, which is below OIA’s pivot point of 3,182. For a short-term sell signal to occur the high of the day must be above below the pivot point and the high thus far in trading on September 29 has been $3,250. Stand aside.

Sugar: On September 28, March 2016 sugar generated a short-term buy signal, but remains on an intermediate term sell signal.

This will be our last report on sugar until we announce a signal change, see a trading opportunity or report on unusual activity.

March 2016 sugar lost 3 points on volume of 150,537 contracts. Total open interest declined by 13,320 contracts, which relative to volume is approximately 250% above average meaning liquidation was extremely heavy on the modest decline. As this report is being compiled on September 29, the March contract is trading 7 points lower and has made a new high for the move of 12.76.

Now that March sugar is on a short-term buy signal, the market should pullback from 1-3 days. Our problem with sugar is that the fundamentals are bearish and this tempers our enthusiasm for the long side of the market. The open interest action on advances is consistently bearish and there are still large numbers of managed money shorts who have yet to cover. We recommend a stand aside posture.

Dollar index:

The December dollar index lost 25.2 points on volume of 29,000 contracts. Total open interest declined by 521 contracts, which relative to volume is approximately 25% below average. As this report is being compiled on September 29, the dollar index is trading 12.2 points lower. Although, we do not think it is likely, a short term sell signal will be generated if the high of the day is below OIA’s key pivot point for September 29 of 95.487. The rally will resume if the daily low is above OIA’s key pivot point for September 29 of 96.277. We have no recommendation.

Euro:

The December euro advanced 41 pips on volume of 193,597 contracts. Total open interest increased by 1,360, which relative to volume is approximately 60% below average. However, an open interest increase on yesterday’s price advance is positive. On September 22, the December euro generated a short-term sell signal and thus far has been unable to break down, which is testament to the currency being used as a flight to safety as global equities trend lower.

For the rally to resume, the December contract must make a low above OIA’s pivot point of 1.1281 and a short-term buy signal will be generated if the December contract makes a daily low above OIA’s key pivot point of 1.1352.We have no recommendation at this juncture.

WTI crude oil:

November WTI crude oil lost $1.27 on light volume of 520,460 contracts. Volume was the weakest since August 4 when 576,638 contracts were traded and WTI advanced 57 cents while total open interest increased by 2,869 contracts. On September 28, total open interest declined only 3,462 contracts, which relative to volume is approximately 65% below average. The action yesterday was positive from a volume and open interest standpoint. The November contract lost 6,333 of open interest.

Reduced volume on a hefty decline and a minor decrease in open interest shows support. Additionally, open interest has been acting in a bullish congruent fashion for several days despite WTI trading in a sideways pattern for most of September.

As this report is being compiled on September 29, the November contract is trading 1.10 higher and has made a daily high of 45.67, which is slightly above yesterday’s print of 45.50. For a sell signal to be generated, the daily high must be below OIA’s key pivot point for September 29 of $43.81 and for the rally to resume, the low of the day must be above OIA’s pivot point of $46.19.

November WTI remains on a short-term buy signal, but an intermediate term sell signal. We have no recommendation.

S&P 500 E-mini:

The S&P 500 E-mini lost 47.25 points on volume of 2,359,735 contracts. Total open interest increased by 67,819 contracts, which relative to volume is average, but the increase is substantial nonetheless. This indicates that new short-sellers were entering the market in fairly large numbers and driving prices to a new low for the move of 1868.75.

As this report is being compiled on September 29, the December contract is trading 8.00 points higher and is having one of the very few positive days during the past week, though it has made a new low for the move of 1861.00. We continue to recommend holding the long option straddle in the November and December contracts originally recommended two weeks ago at much higher prices and think lower prices are ahead. As we said in yesterday’s report, fund managers are going to be liquidating their holdings as the third quarter ends tomorrow. Additionally, the employment report will be released this Friday, and it is always a major market mover.