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Corn:

December corn advanced 2.25 cents on heavy volume of 247,776 contracts. Volume was the strongest since September 14 when the December contract gained 6.50 cents on volume of 280,523 contracts and total open interest declined by 4,810. September 14 was the day that December corn generated a short-term buy signal.

On September 29, total open interest increased by 7,125 contracts, which relative to volume is average. September 29 was the third day in a row in which open interest action relative to price was bullish. The May 2016 contract lost 1243 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in the May 2016 contract and increase total open interest.

As this report is being compiled after the release of the USDA grain stocks report, the December contract is trading unchanged after making a daily high of 3.94 1/2, which takes out the September 28 high of 3.92 1/2 and is the highest print since 3.95 made on September 15.

In order for December corn to continue its advance, it must make a daily low above OIA’s key pivot point for September 30 of 3.96 1/2, and this would generate an intermediate term buy signal. If it is unable to accomplish this, December corn will trade sideways to lower. December corn remains on a short-term buy signal, but an intermediate term sell signal.We have no recommendation.

Soybeans:

November soybeans advanced 7.50 cents on volume of 167,149 contracts. Volume fell from September 28 when the November contract lost 12.50 cents on volume of 179,870 contracts and total open interest declined by 7,634. On September 29, total open interest declined by 206 contracts, which is minuscule and substantially below average, but an open interest decline on yesterday’s price advance is negative. There was considerable liquidation the November contract and it lost 6,015 of open interest.

The most positive day for soybeans occurred on September 25 when the November contract gained 21.25 cents on volume of 231,070 contracts and total open interest increased by 2,624, but this was 50% below average and a disappointment considering the magnitude of the move. In summary, open interest action has been unimpressive for soybeans when prices advanced.

As this report is being compiled after the release of the USDA grain stocks report, the November contract is trading near unchanged after making a new high for the move of $9.02 1/4.For November soybeans to continue its advance, it must generate a short-term buy signal, and this would occur if the daily low is above OIA’s key pivot point for September 30 of 8.84 1/2. Until this happens, November soybeans will trade sideways to lower. November soybeans remain on short and intermediate term sell signals.

Chicago wheat:

December Chicago wheat lost 1.75 cents on volume of 62,261 contracts. Total open interest declined by 2,293 contracts, which relative to volume is approximately 20% above average meaning liquidation was substantial on the modest decline.

As this report is being compiled on September 30, the December contract is trading 6.50 cents higher and is the best performer in the grain complex. Despite the move higher on September 30, the December contract has made a low of 4.98 1/4, which is below OIA’s key pivot point for September 30 of 5.01 1/4. December Chicago wheat remains on short and intermediate term sell signals. We have no recommendation.

Cocoa:

December cocoa lost $60.00 on heavy volume of 35,494 contracts. Volume increased from September 28 when the December contract lost $34.00 on volume of 31,871 contracts and total open interest increased by 115. On September 29, total open interest declined for the first time since before September 4 when the rally in cocoa began. The total open interest decline of 1,285 contracts is approximately 20% above average meaning market participants finally began to liquidate as prices moved to a new low for the move of $3,171.

As this report is being compiled on September 30, the December contract is trading sharply lower, down $70.00. The December contract will generate a short and intermediate term sell signal if the daily high is below OIA’s key pivot point for September 30 of $3,179 and 3,173 respectively. The daily high on September 30 has been $3,191, which means tomorrow is the earliest sell signals could be generated.

Sugar:

March 2016 sugar is rallying sharply on September 30 and OIA will issue a report on today’s activity tomorrow. On September 28, March 2016 sugar generated a short-term buy signal, but remains on an intermediate term sell signal. According to the most recent COT report, managed money is short sugar by ratio of 1.12:1, and it will be interesting to see who is powering the market higher in today’s trading.

WTI crude oil:

November WTI crude oil advanced 80 cents on very light volume of 462,622 contracts. Volume fell below that of September 28 when the November contract lost $1.27 on volume of 520,460 contracts and total open interest declined by 3,462. On September 29, total open interest increased by 6,439 contracts, which relative to volume is approximately 40% below average, but an open interest increase on yesterday’s price advance is positive and continues the pattern of positive open interest action relative to price advances and declines. The November contract lost 1,322 of open interest.

As this report is being compiled on September 30, the November contract is trading 16 cents lower after making a daily high of 45.85, which is above yesterday’s print of 45.70 and is the highest price since 46.38 made on September 25. Though price and open interest action is in positive, the market has been unable to move out of the sideways channel since early September and has been unable to generate a short-term sell signal, nor make a low above the pivot point, which would indicate a resumption of the uptrend.

For the November contract to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for September 30 of $43.86 and the uptrend will resume if the November contract makes a daily low above OIA’s pivot point for September 30 of $46.18. We have no recommendation.

The Energy Information Administration announced on September 30 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.0 million barrels from the previous week. At 457.9 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 3.3 million barrels last week, and are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 0.3 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.7 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 3.7 million barrels last week.

Dollar index:

The December dollar index lost 18.9 points on volume of 28,326 contracts. Total open interest declined by 472 contracts, which relative to volume is approximately 35% below average, but for the past three trading sessions beginning on September 25 total open interest has been acting in a bullish congruent fashion. As this report is being compiled on September 30, the December contract is trading 40.2 points higher and has made a daily high of 96.565, which is the highest print since 96.670 made on September 28.

On September 23, the December dollar index generated a short-term buy signal, but remains on an intermediate term sell signal. The rally will resume if the December contract makes a daily low above OIA’s pivot point of 96.286 and will generate a short term sell signal ( highly unlikely) if the daily high is below OIA’s key pivot point for September 30 of 95.505. We have no recommendation.

Euro:

The December euro advanced 28 pips on volume of 210,149 contracts. Volume increased from September 28 when the December contract gained 41 pips on volume of 193,597 contracts and total open interest increased by 1,360. On September 29, total open interest increased again, this time by 117 contracts, which is minuscule and substantially below average, but seeing total open interest increases on price advances keeps us from recommending bearish trades.

As this report is being compiled on September 30, the December contract is trading 74 pips lower after making a daily high of 1.1275, which is below yesterday’s print of 1.1295 and has made a daily low of 1.1171, which is the lowest print since 1.1160 made on September 28. 

On September 22, the December euro generated a short-term sell signal, but remains on an intermediate term buy signal. Selling should accelerate if the December contract makes a daily high below OIA’s pivot point of 1.1216. The short-term buy signal would be reversed if the December contract makes a daily low above OIA’s key pivot point for September 30 of 1.1349, which we view as being highly unlikely. At this juncture, we have no recommendation.

Gold-Silver:

Both gold and silver are getting close to reversing their short term buy signals.They remain on intermediate term sell signals.

S&P 500 E-mini:

The December S&P 500 E-mini gained 2.50 points on volume of 2,385,260 contracts. Total open interest increased by 18,083 contracts. The open interest increase on yesterday’s minor price advance is the most positive action we seen since September 24 when the December contract lost 9.75 points and total open interest declined by 8,092.

As this report is being compiled on September 30, the December contract is in a rally mode, up 25.00 points, and it looks likely the rally may continue until the eve of the employment report this Friday. We recommend staying with the straddle recommended two weeks ago: the position can make money from a strong up move or a major downside washout.Yesterday, the December contract made a low of 1861.00 in 2 four hour time frames, and it appears this low will hold for a while.

The December contract is a substantial distance away from generating a short-term buy signal and for this to occur, the low of the day must be above OIA’s key pivot point for September 30 of 1971.55.