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Soybeans: On October 24, January soybeans generated a short-term buy signal, but remains on an intermediate term sell signal.

January soybeans lost 16.75 cents on heavy volume of 400,880 contracts. Volume increased slightly from October 23 when January soybeans advanced 30.25 cents on volume of 398,611 contracts and total open interest increased by 3,454 contracts. On October 24, total open interest declined by a massive 72,657 contracts, which relative to volume is approximately 460% above average. The reason for this was the massive decline of open interest in the November contract of 91,304 as it approaches 1st notice day. January soybeans made a high on Friday at 10.08 3/4, which is the highest print since September 16 (10.07 3/4).

As this report is being compiled on October 27, January soybeans are trading 19.75 cents higher and has made another new high of 10.15. Usually, after the generation of a short-term buy signal, the market has a tendency to pullback from 1-3 days, and this is the opportunity to initiate bullish positions.. However, we think this is a rally in the bear market, and in order for the rally to continue, January soybeans must make a low for the day above OIA’s key pivot point for October 27 of 9.95 1/2. The next area of resistance is OIA’s key pivot point for October 27 of 10.15 1/8, and January soybeans must make a daily low above it. In order for an intermediate term buy signal to be generated, the low the day must be above OIA’s key pivot point for October 27 of 10.45 7/8. The 50 day moving average stands at 9.83 7/8. We have no recommendation.

Soybean meal: On October 24, December soybean meal generated an intermediate term buy signal after generating a short-term buy signal on October 16.

December soybean meal lost $2.20 on strong volume of 109,593 contracts. Volume increased from October 23 when December soybean meal advanced 14.40 on volume of 100,082 contracts and total open interest increased by 4,566 contracts. On October 24, total open interest declined by 3,273 contracts, which relative to volume is approximately 20% above average meaning that liquidation was heavier than usual. This is healthy open interest action relative to the price decline.The December contract accounted for loss of 7,371 of open interest. On October 24, December soybean meal made a new high for the move high of 359.20, and as this report is being compiled on October 27, has taken this out (377.20).

Additionally, the bull spreads continue to widen, which is bullish.The move in soybean meal is absolutely astounding and has caught everyone by surprise including us. On October 16, December soybean meal generated a short-term buy signal, and the market has headed straight up ever since. Although soybean meal got away from us, primarily because of our bearish views on soybeans, the strength remains surprising. December soybean meal did follow OIA’s protocol for a setback after generating the short term buy signal, and closed lower on October 17 and 20.At this juncture, we have no recommendation.

Corn:

December corn lost 6.75 cents on volume of 252,099 contracts. Volume increased from October 23 when December corn advanced 6.75 cents on volume of 229,210 contracts and total open interest declined by 2,556 contracts. On October 24, total open interest declined by 8,357 contracts, which relative to volume is approximately 35% above average meaning that liquidation was substantial on the decline. The December 2014 through July 2015 contracts all lost open interest which totaled 9,631.On Friday, December corn made a new high for the move at 3.65, which is the highest print since September 2 (3.67 1/2. As this report is being compiled on October 27, December corn is trading 8.75 cents above Friday’s close, but has not taken out Friday’s high.In order for the rally to continue, December corn must make a low above OIA’s key pivot point for October 27 of 3.58 1/8 and an intermediate term buy signal will be generated if the daily low is above OIA’s key pivot point for October 27 of 3.65 3/8. We have no recommendation.

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 lost 9.00 cents on volume of 89,146 contracts. Volume was the strongest since October 10 when December corn advanced 5.25 cents on volume of 112,735 contracts and total open interest increased by 51 contracts. On October 24, total open interest increased by 1,202 contracts, which relative to volume is approximately 45% less than average. The December contract accounted for loss of 1,331 of open interest, which makes the minor increase of open interest more impressive (bearish).

As this report is being compiled on October 27, December Chicago wheat is trading 4.75 cents higher and has made a daily low of 5.10 1/2, which is the lowest print since 5.07 1/4 made on October 20.As we pointed out in the October 20 report, December Chicago wheat needed to make a low above our pivot point if the rally was to continue. OIA’s key pivot point for October 27 is 5.28 3/4.

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.”

WTI crude oil:

December WTI crude oil lost $1.08 on light volume of 492,554 contracts. Volume was the weakest since September 23 when 492,612 contracts were traded and December WTI crude oil closed at $90.91. On October 24, total open interest increased by 10,533 contracts, which relative to volume is approximately 15% less than average. There were open interest increases in the December 2014 through April 2015 contracts. The open interest increase on Friday’s price decline is the 1st we have seen since October 15 when WTI lost 6 cents on volume of 1,100,618 contracts and total open interest increased by 8436 contracts. We encourage clients to review the October 26 Weekend Wrap on WTI crude oil. Stand aside.

Natural gas:

December natural gas lost 8 ticks on volume of 236,585 contracts. Total open interest increased by 1940 contracts, which relative to volume is approximately 55% below average. The November contract accounted for loss of 15,082 of open interest, which makes the minor increase of open interest more impressive (bearish). As this report is being compiled on October 27, December natural gas is trading 5.1 cents lower and has made a daily low of 3.622, which is above the contract low of 3.600. December natural gas remains on a short and intermediate term sell signal. Stand aside.

Gold:

December gold advanced $2.70 on light volume of 106,554 contracts. Total open interest increased by 1,808 contracts, which relative to volume is approximately 35% less than average. We have seen a consistent pattern of favorable open interest action relative to price advances and declines. However, the market lacks animal spirits to get a major rally underway. We remain concerned that both platinum and silver continue to lag the performance of gold, and there are other technical indications that the advance has been a typical bear market rally.December gold remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

Cocoa:

December cocoa lost $70.00 on heavy volume of 33,886 contracts.Volume was the strongest since October 1 when 43,525 contracts were traded and December cocoa lost $128.00 while total open interest declined by 4,731 contracts.On October 24, total open interest declined by 953 contracts, which relative to volume is average.As this report is being compiled on October 27, December cocoa has closed at 2,970, down $80.00, and the lowest close since May 19, 2014 (2,951).

From the October 26 Weekend Wrap:

“Last week, we recommended liquidating the long call position in March cocoa, but staying with the long March 2015-short December 2015 bull spread in the event the market turns around sharply. However, the position should be exited upon penetration of the October 7 low of $46.00 premium to March 2015. The action on October 23 told us that substantial trade selling was in evidence on heavy volume and the action on October 24 confirmed this. During the past week, the March 2015- December 2015 lost $3.00.”

From the October 23 report:

“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.”

Coffee:

December coffee lost 1.80 cents on volume of 28,705 contracts. Volume was the strongest since October 21 when December coffee advanced 20 ticks on volume of 30,677 contracts and total open interest increased by 1,212 contracts. On October 24, total open interest increased by 885 contracts, which relative to volume is approximately 20% above average meaning that new short sellers were entering the market and driving prices to a new low for the move (1.8845). The December contract accounted for loss of 1,146 of open interest, May 2015-240, which makes the total open interest increase more impressive (bearish).As this report is being compiled on October 27, December coffee is closed at 1.9090, down 60 ticks. Per our comments in the October 26 report, we recommend exiting the long July 2015- short March 2016 bull spread upon penetration of the August 4 low of 3.05 cents premium to March 2016 and the July 22 low of 3.10 cents premium to March 2016.

From the October 26 Weekend Wrap:

Although, we continue to think that coffee prices are headed significantly higher longer-term, money management is of paramount importance, and this should govern whether you stay in the coffee bull spread. On a major rally, the spread could turn around in a day or two, but on the other hand, if coffee prices continue to drift lower, the March 2016 contract will likely gain on July 2015. Going back 150 trading days, (March 24) the July 2015-March 2016 spread made its low of 3.10 cents premium to March 2016 on July 22 and made a secondary low at 3.05 on August 4. We recommend using the lows to exit if the spread if it closes below them. 

S&P 500 E mini:

The December S&P 500 E mini advanced 13.75 points on volume of 1,604,778 contracts and total open interest declined by 13,302 contracts.This is bearish open interest action relative to the price advance and continues the pattern of negative open interest since the beginning of the rally on October 16. It appears that the December E mini will generate an intermediate term buy signal, but there are 90 minutes left in the session. Stand aside.