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Soybeans: January 2015 soybeans will generate a short-term buy signal on October 24.

January soybeans advanced 30.25 cents on very heavy volume of 398,611 contracts. Volume was the strongest since October 14 when soybeans advanced 19.50 cents on volume of 402,225 contracts and total open interest declined by 9,432 contracts. On October 23, total open interest increased by 3,454 contracts, which relative to volume is approximately 55% less than average. The November contract lost 12,666 of open interest, March 2015 -886, May 2015-151, which makes the total open interest increase somewhat more impressive (bullish).

 

Frankly, the total open interest increase is a disappointment considering the magnitude of the move even though there were open interest losses in 3 contract months. In short, there were large numbers of potential market participants who remained on the sidelines in yesterday’s trading. As this report is being compiled on October 24, January soybeans are trading 15.50 cents lower and have made a daily low of 9.83, which is above OIA’s key pivot point for October 24 of 9.79 1/8. If soybeans continue to trade above the pivot point, a short-term buy signal will be generated.We have no recommendation.

Soybean meal: December soybean meal will generate an intermediate term buy signal on October 24.

December soybean meal advanced $14.40 on fairly heavy volume of 100,082 contracts. Volume shrank dramatically from October 22 when December soybean meal lost 4.90 on volume of 164,795 contracts and total open interest declined by 5,023 contracts. On October 23, total open interest increased by 4,566 contracts, which relative to volume is approximately 75% above average. The May 2015, July 2015, August 2015 and October 2015 contracts lost a total of 781 of open interest, which makes the total open interest increased more impressive (bullish).

As this report is being compiled on October 24, December soybean meal has made a daily high of 359.20, which is the highest print since September 2 (362.00). This area has provided resistance going back to late July 2014. In order for December soybean meal to generate an intermediate term buy signal, the low the day must be above OIA’s key pivot point for October 24 of 339.00.On October 16, December soybean meal generated a short-term buy signal. We have no recommendation.

Corn: 

December corn advanced 6.75 cents on volume of 229,210 contracts. Volume was disappointing and below that of October 22 when December corn lost 3.00 cents on volume of 267,963 contracts and total open interest declined by 3,139 contracts. Additionally, volume was the lowest since October 20 when December corn advanced 0.25 cent on volume of 204,161 contracts and total open interest increased by 12,135 contracts. In addition to the volume being disappointing, total open interest declined by 2,556 contracts, which relative to volume is approximately 50% below average, but a total open interest decline on yesterday’s advance is negative. The December contract accounted for loss of 7,045 contracts and there were insufficient increases in the forward months to offset the decline in December.

As this report is being compiled on October 24, December corn has made a new high for the move at 3.65, which takes out yesterday’s high of 3.60 1/4.However, the market has pulled back and is now trading 6.25 cents lower. On October 9, December corn generated a short-term buy signal, but remains on an intermediate term sell signal.As indicated in the October 21 report, December corn needed to make lows above 2 of our key pivot points and thus far has been unable to do so. Additionally, it is likely that the 3.65 level will provide resistance, which is near OIA’s key pivot point of 3.65 1/2 for an intermediate term buy signal.

From the October 21 report:

“For the rally to continue, the next key pivot point for October 22 is 3.58, and December corn must make a low above it. After this: OIA’s key pivot point for the generation of an intermediate term buy signal of 3.65 1/2.”

Chicago wheat:

December Chicago wheat advanced 4.50 cents on volume of 63,340 contracts. Volume fell from October 22 when December wheat advanced 3.00 cents on volume of 78,436 contracts and total open interest increased by 3,665 contracts. On October 23, open interest increased again, this time by 3,409 contracts, which relative to volume is approximately 110% above average meaning that new longs were aggressively entering the market in heavy numbers and driving prices to a new high for the move (5.30 3/4), which takes out the previous high of 5.28 3/4 made on October 22.

The open interest increase on October 23 along with the price advance is the 3rd day in a row. As this report is being compiled on October 24, December Chicago wheat is trading 7.25 cents lower, but made a new high for the move at 5.39 1/4, which is the highest print since 5.39 1/4 made on September 8. As the extract from the October 20 report shows, December Chicago wheat is encountering difficulty in making a daily low above OIA’s key pivot point of October 20 and today’s pivot point of 5.28 7/8. Stand aside.

From the October 20 report:

In order for December Chicago wheat to continue its advance, it must make a low above OIA’s key pivot point for October 21 of 5.28 5/8. If it is unable to do so, that may be the extent of the rally, at least for now.”

Kansas City wheat: We are suspending coverage on Kansas City wheat until we see a trading opportunity or a change of signal.

WTI crude oil:

December WTI crude oil advanced $1.57 on volume of 634,598 contracts. Volume fell slightly from October 22 when December WTI lost 1.97 on volume of 647,036 contracts and total open interest declined by 6,133 contracts. On October 23, total open interest increased by 527 contracts, which is minuscule and dramatically below average. The November contract accounted for loss of 2,522 of open interest, December 2014 -6050. As this report is being compiled on October 24, December WTI is trading 87 cents lower and has made a daily low of 80.36, which is above yesterday’s low of 80.05. Stand aside.

Natural gas:

November natural gas lost 3.7 cents on heavy volume of 339,468 contracts. Volume was the strongest since October 9 when November natural gas lost 1.00 cent on volume of 365,533 contracts and total open interest increased by 2,636 contracts. On October 23, total open interest declined by a hefty 12,047 contracts, which relative to volume is approximately 40% above average meaning that liquidation was very heavy on the modest decline. Yesterday, the November contract made a new contract low at 3.590, and as this report is being compiled on October 24, has made another contract low at 3.558. On October 10, November and December natural gas generated a short term sell signal and remains on an intermediate term sell signal. Stand aside.

Gold:

December gold lost $16.40 on volume of 151,856 contracts. Volume increased from October 22 when December gold lost 6.20 on volume of 123,886 contracts and total open interest declined by 1,632 contracts. On October 23, total open interest declined just 324 contracts, which is minuscule and dramatically below average. As this report is being compiled on October 24, December gold is trading 2.20 higher and has made a low of 1228.70, which is only 40 cents below yesterday’s closing price of 1229.10. On October 21, December gold generated a short-term buy signal, and since then has had 2 days of corrective action. If the short term buy signal is to hold, the market should begin to rally from here.We are reluctant to recommend bullish positions at this juncture due to the under performance of silver and platinum.

From the October 21 report:

“After the generation of a buy signal, the market has a tendency to pullback from 1-3 days, and this is the opportunity to initiate bullish positions.However, as we said in yesterday’s report: our major concern is that platinum and silver remain on short and intermediate term sell signals. “

Yen:

The December yen lost 88 pips on volume of 166,814 contracts. Total open interest declined by 1,969 contracts, which relative to volume is approximately 45% below average. As this report is being compiled on October 24, the December yen is trading 18 pips higher and has made a daily low of .9237 and a daily high of .9281, but in order for the December yen to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for October 24 of .9249.The December yen remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

Cocoa: Subscribers to OIA direct were notified to liquidate the long call position in March cocoa. Maintain the long March 2015-short December 2015 bull spread and liquidate it upon penetration of the October 7 low of $46.00 premium to March 2015.

December cocoa advanced $7.00 on heavy volume of 26,831 contracts. Volume was the strongest since October 10 when December cocoa advanced 100.00 on volume of 32,349 contracts and total open interest increased by 951 contracts. On October 23, total open interest increased by a massive 2,578 contracts, which relative to volume is approximately 285% above average meaning a major battle ensued between longs and shorts on heavy volume and longs were able to move the market fractionally higher. The September 2015 contract lost 85 of open interest, May 2016-103.It appears that a major trade selling occurred on October 23, and as this report is being compiled on October 24, December cocoa has closed at 3050, down $70.00.

Coffee: On October 23, December coffee generated a short-term sell signal, but remains on an intermediate term buy signal.

December coffee advanced 2.20 cents on volume of 24,963 contracts. Total open interest declined by 626 contracts, which relative to volume is average. The December contract accounted for loss of 1,456 of open interest and May 2015 – 106.For the past 2 days, December coffee has lost 6.30 cents and total open interest declined by 1,881 contracts. We tend to think there is more liquidation ahead, and expect to see open interest declines on any price advance, which should occur after the generation of the short-term sell signal. Yesterday, the July 2015-March 2016 spread widened by 35 points, and we continue to recommend holding this position.We think it is a lower risk way of participating in a major move higher.

S&P 500 E mini:

The December S&P 500 E mini advanced 21.00 points on volume of 2,019,894 contracts. Total open interest increased 16,887 contracts, which relative to volume is approximately 60% below average. Since the rally began on October 16 through October 23, the December S&P 500 E mini has advanced 99.25 points while total open interest has declined by 43,238 contracts. On the 3 days that open interest increased (October 21, 22, 23) relative to volume they were significantly below average.

In summary, there is a shortage of strongly committed market participants even though the market has rallied sharply since October 16. Remarkably, the December E mini has been unable to generate a short or intermediate term buy signal.In order for a short-term buy signal to be generated, the low of the day must be above OIA’s key pivot point for October 24 of 1951.40 and an intermediate term buy signal will be generated if the low the day is above OIA’s key pivot point for October 24 of 1944.10.

From the October 20 report:

“In order for the December E mini to generate a short-term buy signal the low the day must be above OIA’s key pivot point of 1950.65 and for an intermediate term buy signal to be generated, the low the day must be above OIA’s key pivot point for October 21 of 1943.90. In short, the earliest that buy signals could be generated would be tomorrow.”