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Soybeans:

March soybeans gained 8.75 cents on 338,586 contracts. Total open interest declined by a massive 18,525 contracts, which relative to volume is approximately 120% above average meaning that liquidation was extremely heavy on the price advance. The March contract accounted for loss of 30,234 of open interest.

As this report is being compiled on February 12, March soybeans are trading 3.25  cents higher and has made daily high of 9.85, which is above yesterday’s high of 9.81. March soybeans remain on a short and intermediate term sell signal and should be traded from the short side. For an exit point, we recommend using the February 3 high of 9.99.

Soybean Meal:

March soybean meal gained $2.70 on volume of 90,367 contracts. Total open interest declined by 594 contracts, which relative to volume is approximately 70% below average. The March contract accounted for loss of 8,236 of open interest. As this report is being compiled on February 12, March soybean meal is trading 20 cents higher on the day.Maintain bearish positions recommended in the January 5 report and use the February 3 high of 344.72 to exit.March soybean meal remains on a short and intermediate term sell signal.

Corn:

March corn lost 2.25 cents on volume of 361,996 contracts. Total open interest increased by 9,873 contracts, which relative to volume is  average. The March contract accounted for loss of 24,065 open interest. As this report is being compiled on February 12, March corn is trading 1.50 lower and has made daily low of 3.81 1/4, which is the lowest print since 3.80 made on February 6. Corn should be traded from the short side. It remains on the short and intermediate term sell signal.

WTI crude oil:

March WTI crude oil lost $1.18 on heavy volume of 1,143,232 contracts. Total interest increased by 26,692 contracts, which relative to volume is approximately 10% below average. However, the March contract lost 30,504 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on February 12, March WTI crude oil is rallying, up $1.93 and has made daily high of 51.41, which is the highest print since 52.61 made on February 10. Although Brent crude oil, heating oil and gasoline generated short-term buy signals on February 3, WTI has been unable to do so. However, it looks increasingly likely that a buy signal is on the horizon.For March WTI to generate a short-term buy signal, the low the day must the above OIA’s key pivot point for February 12 of 49.95.

Brent crude oil:

April Brent crude oil lost $1.57 on volume of 818,841 contracts. Total open interest declined by 28,717 contracts, which relative to volume is approximately 40% above average meaning that liquidation was extremely heavy on the decline. The March contract account for loss of 45,919 of open interest. Note the difference in the open interest action and volume between the WTI and Brent contracts. The open interest action in Brent was positive, but negative in WTI.

As this report is being compiled on February 12, April Brent crude is trading $2.72 higher on the day and has made daily high of 59.09, which is highest print since 59.62 made on February 10.On February 3, Brent crude oil generated a short-term by signal, but remains on intermediate-term sell signal. Stand aside.

Heating oil:

March heating oil lost 1.86 cents on volume of 187,296 contract. Total open interest increased by 6,406 contracts, which relative to volume is approximately 35% above average meaning that short sellers were entering the market in large numbers and driving prices lower. The March contract accounted for loss of 4,468 of open interest which makes the total open interest increase more impressive (bearish).

However, on February 12 the story in heating oil is markedly different with the March contract trading 8.68 cents higher on the day and has made a daily high 1.9046, which takes out the previous high of 1.9020 made on February 9. On February 3, March heating oil generated a short-term buy signal, but remains on intermediate-term sell signal.

Gasoline:

March gasoline lost 91 ticks on volume of 198,284 contracts. Total open interest declined by 7,726 contracts, which relative to volume is approximately 50% above average. The March contract accounted for loss of 12,439 of open interest. As this report is being compiled on February 12, March gasoline is trading 5.25 cents higher and has made daily high of 1.6047, which is slightly below the February 9 print of 1.6064. On February 3, March gasoline generated a short-term buy signal, but remains on and intermediate term sell signal.

Gold:

April gold lost $12.60 volume of 125,162 contracts. Total open interest declined by 3,547 contracts, which relative to volume is average. As this report is being compiled on February 12, April gold is trading 40 cents lower on the day. On February 9, April gold generated a short-term sell signal and for an intermediate-term sell signal to be generated, the high of the day must be below OIA’s key pivot point for February 12 of $1208.20. Stand aside.

Silver:

March silver lost 11.2 cents on volume of 55,126 contracts.Total open interest increased by 1,188 contracts, which relative to volume is approximately 15% below average. However, an open interest increase on a price decline is bearish. The March contract lost 2,944 of open interest, which makes the total open interest increase more impressive (bearish).

For the past two sessions, March silver has lost 30.9 cents while total open interest has increased 1,988 contracts.However, the March contract refuses to generate a short-term sell signal, and the high for February 12 has been 17.040, which is above OIA’s key pivot point for February 12 of 16.921. Silver continues to be the out performer of the precious metal. However, we recommend a stand aside posture until we see an improved performance from gold.

Yen: On February 11, the March Yen generated a short-term sell signal, which reversed the short-term buy signal of January 14. The March Yen remains on an intermediate term sell signal.

The March yen lost 58 pips on light volume of 136,019 contracts.Total open interest increased by a massive 14,045 contracts, which relative to volume is approximately 305% above average meaning that aggressive new short-sellers were entering the market in large numbers and driving prices to a new low for the move (.8303).

As this report is being compiled on February 12, the March yen is trading 95 pips higher on the day.Conceivably, the yen may rally for one more day before heading lower. The rally on February 12 is the first day of the typical counter trend rally that occurs after the generation of the sell signal.

S&P 500 E mini: On February 11, the March E mini generated a short-term buy signal and remains on an intermediate term buy signal.

The S&P 500 E mini gained 3.50 points on volume of 1,298,579 contracts. Total open interest declined by 16,027 contracts, which relative to volume is approximately 45% below average.As this report is being compiled on February 12, the March E mini is trading 16.00 points higher and has made a new high for the move at 2082.50. Although,we think the E mini can continue to move higher, we remain cautious and recommend initiating a straddle: buy a call at the money and buy a put at the money in the June contract.

The rationale behind the position is that if the market continues to rally, the call side will gain at the expense of the put, and if the rally is substantial, the position will be profitable. However, the real reason for the straddle is that it  protects clients from asymmetric downside risk. In the event of a market meltdown, the straddle position will become immensely profitable. 

Cocoa: On February 12, May cocoa will generate a short-term buy signal, but remains on an intermediate term sell signal.The market is massively overbought- do not chase it.

Coffee:

May coffee gained  five ticks on heavy volume of 62,303 contract. Total open interest declined by 273 contracts, which relative to volume is approximately 80% below average. The March contract accounted for loss of 9,171 of open interest. as this report is being compiled on February 12, May coffee has closed at 1.6745, up 4.70 cents. For May coffee to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for February 12 of 1.7230. Stand aside.