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Soybeans:

March soybeans gained 5.00 cents on volume of 194,870 contracts. Total open interest increased by 2,387 contracts, which relative to volume is approximately 45% below average. The March contract lost 10,762 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on February 10, after the release of the USDA report, March soybeans are trading 1.50 higher and have made a daily low of 9.71, which is one penny below yesterday’s print. March soybeans remain on a short and intermediate term sell signal.

Soybean meal:

March soybean meal gained 20 cents on volume of 83,294 contracts. Total open interest declined by 4,104 contracts, which relative to volume is approximately 100% above average mean liquidation was extremely heavy on the fractional advance. The March contract accounted for loss of 7,292 of open interest. As this report is being compiled on February 10, after the release of the USDA report, March soybean meal is trading $1.20 higher on the day. As we said in yesterday’s report, clients who initiated bearish positions per our recommendation of January 5 should continue to hold these and exit positions upon penetration of the February 3 high of 344.70. March soybean meal remains on a short and intermediate term sell signal.

Corn:

March corn gained 5.50 cents on heavy volume of 428,407 contracts. Volume exceeded that of February 3 when March corn advanced 16.00 cents on volume of 415,112 contracts and total open interest declined by 11,969. On February 9, total open interest increased by 3,755 contracts, which relative to volume is approximately 55% below average. However, the March contract lost a hefty 30,583 of open interest, which makes the total open interest increase more impressive (bullish).As this report is being compiled on February 10 after the release of the USDA report, March corn is trading unchanged and has made a daily high of 3.91 1/2, which is one quarter cent below yesterday’s high. March corn remains on a short and intermediate term sell signal.

WTI crude oil:

March WTI crude oil gained $1.17 on heavy volume of 1,283,325 contracts. Total open interest declined by 23,685 contracts, which relative to volume is approximately 25% below average. Accounting for the total open interest decline was the hefty loss in the March contract of 60,506 contracts. As this report is being compiled on February 10, March WTI is trading $2.65 lower and has made a daily low of 49.91, which is the lowest print since 47.36 made on February 5.

Based upon yesterday’s strong performance, it appeared likely that a short-term buy signal would be generated today. However, WTI has proven to be the consistent weak sister of the petroleum group, and is trading significantly below OIA’s key pivot point for February 10 of 51.81. Stand aside.

Brent crude oil:

April Brent crude oil gained 65 cents on volume of 802,109 contracts. Total open interest declined by a massive 31,457 contracts, which relative to volume is approximately 55% above average meaning that liquidation was heavy on the advance. The March contract accounted for loss of 55,337 of open interest. As this report is being compiled on February 10, April Brent is trading $1.95 lower, or -3.271% versus WTI trading -5,32%. April Brent crude oil remains on a short-term buy signal (generated on February 3), but an intermediate term sell signal. Stand aside.

Heating oil:

March heating oil gained 3.38 cents on volume of 170,324 contracts. Total open interest increased 6,770 contracts, which relative to volume is approximately 55% above average meaning that aggressive new buyers were entering the market and driving prices to a new high for the move (1.9020). The March contract lost 6,161 of open interest, which makes the total open interest increase more impressive (bullish). For the past three sessions beginning on February 5 March heating oil has advanced each day along with open interest.

For example, from February 5 through February 9 March heating oil has advanced 10.63 cents while total open interest has increased by 19,058 contracts. Heating oil has been the out performer in terms of price and open interest action in the petroleum complex. As this report is being compiled on February 10, March heating oil is trading 4.68 cents lower on the day. On February 3, March heating oil generated a short-term buy signal, but remains on intermediate term sell signal.

Gasoline:

March gasoline gained 1.91 cents on volume of 157,240 contracts.Total open interest declined by 5,604 contracts, which relative to volume is approximately 40% above average meaning that market participants were heavily liquidating as gasoline prices advanced. The March contract accounted for loss of 10,624 the open interest. As this report is being compiled on February 10, March gasoline is trading 2.65 cents lower. On February 3, March gasoline generated a short-term buy signal, and remains on an intermediate term sell signal. Stand aside.

Gold: On February 9, April gold generated a short-term sell signal, but remains on an intermediate term by signal.

April gold gained $6.90 on very low volume of 101,233 contracts.Total open interest declined by a massive 6,663 contracts, which relative to volume is approximately 160% above average mean liquidation was extremely heavy on the modest advance. This is bearish. As this report is being compiled on February 10, April gold is trading $8.10 lower and has made daily low of 1230.60, which is the lowest print since 1228.20 made on February 6.

Although, prices are likely to trend lower from here, we do not view this as being the beginning of a new bear market. Basically, we see more backing and filling as part of the base building process. Yesterday we said: “If gold generates a short term sell signal, bullish positions should be closed.”

Silver:

March silver gained 37.6 cents on volume of 51,464 contracts. Total open interest declined by 621 contracts, which relative to volume is approximately 45% less than average.However, the March contract lost 5,438 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on February 10, March silver is trading 20.5 cents lower, however it has made daily high of 17.095, which is above OIA’s key pivot point for February 10 of 16.937. In order for a sell signal to be generated, the high of the day must be below the pivot point.

In short, March silver will not generate a short-term sell signal on February 10. However, it looks likely, and as we said yesterday, bullish positions should be pared back or liquidated entirely. The problem with gold and silver is the large number of speculative longs, who will provide selling pressure as prices move lower. These speculators likely need to be cleared out before the market can find a bottom.

Cotton: On February 4, May cotton generated a short-term buy signal, and will generate an intermediate term by signal on February 10.

May cotton gained 71 points on volume of 49,614 contracts. Total open interest declined by 6,333 contracts, which relative to volume is approximately 410% above average meaning that liquidation was off the charts heavy. Accounting for the large total open interest decline was the March contract which lost 10,487 of open interest.

Export export activity has been very positive, however the market remains massively overbought, and we recommend a stand aside posture.Additionally, March cotton is approaching first notice day (February 23) and it seems that soft commodities have unusual and exaggerated moves during this period.

Coffee:

March coffee gained 80 ticks on healthy volume of 38,948 contracts. Total open interest increased by 1,414 contracts, which relative to volume is approximately 45% above average meaning a battle ensued between buyers and sellers and buyers were able to edge the market slightly higher. However, the story is vastly different on February 10, with coffee prices sliding precipitously with the March contract closing at 1.5980, down 7.90 cents.The May contract closed at 1.6225.

In yesterday’s report, we pointed out that yesterday’s close was the “highest close since 1.6730 made on January 28. On January 29, March coffee fell sharply, down 6.90.”

Interestingly, on February 9 and 10, March coffee conformed to the exact pattern of January 28 and 29. March and May coffee remain on short and intermediate term sell signals. Stand aside.