March soybean’s advanced 16.25 cents on volume of 264,686 contracts. Total open interest increased by a hefty 8,839 contracts, which relative to volume is approximately 25% above average. The March contract accounted for a loss of 7,725 of open interest, which means there were more than enough open interest increases in the forward months to offset the decline in March and increase total open interest substantially.
As this report is being compiled on February 16, the March contract is trading 9.75 cents lower and has made a daily low of 10.50 1/4. For the rally to resume and challenge the January 18 high of 10.80, the low of the day must be above OIA’s pivot point for February 16 of 10.55 1/2. The daily moving averages are in a bullish set up with the 50 day moving average standing 10.36 1/2 and the 100 and 200 day moving averages at 10.18 1/4. On January 13, OIA announced that March soybeans generated a short term buy signal and at that time was already on an intermediate term buy signal. We have no recommendation.
March corn advanced 4.50 cents on heavy volume of 489,171 contracts. Total open interest exploded higher, up 53,077 contracts, which relative to volume is approximately 320% above average meaning huge numbers of new buyers were entering the market and driving prices to a new high for the move of 3.79.
As this report is being compiled on February 16, the March contract is trading 3.75 cents lower after making another new high for the move of 3.80 which is the highest print since the July 13, 2016 high of 3.83. Corn is getting close to a solid moving average bullish set up. The 50 day moving average stands at 3.61 1/4, 100 day moving average, 3.57 7/8 and the 200 day moving average, of 3.67 1/4. On January 5, OIA announced that March 2017 corn generated short and intermediate term buy signals. We have no recommendation.
Dollar index: On February 15, the March and June dollar index generated short term buy signals, but remain on intermediate term sell signals.
The March dollar index lost 6.9 points on volume of 43,686 contracts. Total open interest declined by 351 contracts, which relative to volume is approximately 55% below average. As this report is being compiled on February 16, the dollar index is having its typical pullback after the generation of a short term buy signal and is trading 60 points lower.
We recommend waiting another day before initiating bullish positions in futures. Unfortunately, options in the dollar index are illiquid and therefore the spreads are unreasonably wide. Avoid them. If the dollar index pulls back on the 17th, we recommend adding to the ETF UUP. On February 8, we recommended bullish positions and think it is wise to take advantage of pullbacks in the dollar index to add to the existing long position in UUP. For the original position and new additions, sell stops should be slightly below the low for the move of $25.65 made on February 2.
Also, on February 16, the euro is rallying sharply, up 72 pips or +0.67% and has made a daily high of 1.0688, which is considerably above yesterday’s low for the move of 1.0531. We expect the euro to rally for perhaps one more day and this would be the optimum time to initiate bearish positions. On February 13, the March and June euro generated short term sell signals. Both contracts remain on intermediate term sell signals.
10 Year Treasury Note:
The March 10 year note lost 8.5 points on volume of 1,551,920 contracts. Total open interest increased by 38,964 contracts, which relative to volume is average. The March contract has fallen every day since February 9 and total open interest has increased each day bringing the cumulative total from February 9 through February 15 to a massive 138,568 contracts.
As this report is being compiled on February 16, the March contract is trading 15 points above yesterday’s close. We expect the March note to generate a short term sell signal in the next couple of days. For this to occur, the high of the day must be below OIA’s key pivot point for February 16 of 124-050.