Bloomberg Access:{OIAR<GO>}

Lean Hogs:

December lean hogs advanced 1.425 cents on volume of 35,602 contracts. Total open interest declined by a massive 1,543 contracts, which relative to volume is approximately 65% above average. The COT report released on Friday showed that managed money liquidated 2,583 of their long positions and added 1,272 to their short positions. Commercial interests added 1,738 to their long positions and liquidated 2,284 of their short positions. As of the latest report, managed money is long hogs by a ratio of 1.39:1, down from the previous week of 1.47:1 and the ratio two weeks ago of 1.43:1.

As this report is being compiled on October 31, December hogs are trading 90 points above Friday’s close and has made a daily high of 47.700. The December contract is getting close to generating a short term buy signal and this will occur if the low of the day is above OIA’s key pivot point for October 31 of 46.715. Stand aside.

WTI crude oil: December 2016 and January 2017 WTI crude oil will generate short term sell signals on October 31, but remain on intermediate term buy signals.

December WTI crude oil lost $1.02 on volume of 849,748 contracts. Volume declined from October 27 when the December contract gained 54 cents on volume of 880,417 contracts and total open interest increased by 7,134. On October 28, total open interest increased by 10,176 contracts, which relative to volume is approximately 45% below average, but an open interest increase on Friday’s decline is bearish. The December contract accounted for a loss of 918 of open interest.

The COT report released on Friday showed that managed money liquidated 16,042 of their long positions and added 3,819 to their short positions. Commercial interests added 1,926 to their long positions and also added 590 to their short positions. As of the latest report, managed money is long WTI crude oil by ratio of 4.60:1, down from the previous week of 5.22:1, but up from the ratio two weeks ago of 4.06:1. With managed money heavily long crude oil, this group will exert downward pressure as they are forced to liquidate.

As this report is being compiled on October 31, the December contract is trading sharply lower, down $1.55 or -3.18% and has made a daily low of 47.03, which is the lowest print since 47.16 made on September 29. We have been warning clients to stay away from crude oil and see lower prices ahead. The market should have its usual 1-3 day counter trend rally, which would be an opportunity to initiate bearish positions for those who are so inclined.

Brent crude oil: January and February 2017 Brent crude oil will generate short term sell signals on October 31, but remain on intermediate term buy signals.

Gasoline: December 2016 and January 2017 NY gasoline will generate short term sell signals on October 31, but remain on intermediate term buy signals.