Soybeans:

September soybeans lost 5.25 cents on volume of 139,951 contracts. Total open interest increased by 1,984 contracts, which relative to volume is approximately 40% below average. The August through November contracts lost a total of 2,725 of open interest, which makes the total open interest increase more impressive (bearish). On August 5, September beans made a new low for the move the $11.86 1/2. As this report is being compiled on August 6, September soybeans are trading 13.00 cents lower. Soybeans remain on a short and intermediate term sell signal. Although soybeans can certainly continue lower, we think that a short covering rally is likely to be on the horizon and  discourage clients from entering new short positions at current levels.

Soybean meal: On August 5, September soybean meal generated a short and intermediate term sell signal.

September soybean meal lost $8.10 on volume of 63,076 contracts. Total open interest declined 1,601 contracts, which relative to volume is average. The August and September contracts lost a total of 2,002 of open interest. On August 5, September meal made a low of $375.00, and as this report is being compiled on August 6, September soybean meal is trading $5.80 lower. Like soybeans, we expect a short covering rally that will chase out some shorts, and this would be the time when we would be looking to enter bearish positions.

Corn:

September corn lost 6.75 cents on volume of 227,223 contracts. Total open interest increased by 5,403 contracts, which relative to volume is average. The September contract lost 4,953 of open interest, which makes the total open interest increase more impressive (bearish). For the past 3 days beginning on August 1, September corn has declined 29.75 cents while total open interest has increased by 10,820 contracts. This is bearish open interest action relative to the price decline. On August 5, September corn made another new low at $4.65 1/2 and this is also the low on August 6. As in the case of soybeans and soybean meal, corn is vulnerable to a short covering rally, especially since managed money is heavily net short. Corn remains on a short and intermediate term sell signal.

Wheat:

September wheat lost 15.25 cents on heavy volume of 142,514 contracts. Volume was the heaviest since July 31 when 147,828 contracts were traded and wheat advanced 9 cents while open interest increased 462 contracts. On August 5, total open interest increased by a massive 8,132 contracts, which relative to volume is approximately 120% above average. Making the total open interest increase more impressive (bearish) was the fact that September lost 3,093 of open interest. In the August 1 report, we recommended writing out of the money puts, and on August 2 suggested that these positions be covered because we had penetrated the $6.48 level, which has been providing support since July 25. As this report is being compiled on August 6, wheat is trading 3.50 cents higher. We continue to think that wheat is a turnaround story, but until it generates a short-term buy signal, it is better to be on the sidelines.

Cotton:

December cotton gained 22 points on volume of 12,105 contracts. Open interest increased by a massive 1,660 contracts, which relative to volume is approximately 330% above average. Cotton continues to trade in its sideways pattern, and we think the trend is lower, however there may be a short-term bounce. As such, we recommend that those holding bearish positions exit at 86.55 or slightly above.

Live cattle: On August 5, October cattle generated an intermediate term sell signal, but remains on a short-term buy signal.

October live cattle gained 7 points on volume of 42,072 contracts. Total open interest declined 918 contracts, which relative to volume is approximately 20% below average. The August contract lost 1,374 of open interest. The market continues to trade in its sideways to lower pattern and with the generation of an intermediate term sell signal, the prognosis for a continued advance appears to be dim.

Crude oil:

September crude oil lost 38 cents on very light volume of 408,075 contracts. However, open interest increased by a massive 16,330 contracts, which relative to volume is approximately 55% above average meaning that both longs and shorts were aggressively entering the market, but shorts could only drive prices fractionally lower. The September contract lost 4,713 of open interest, which makes the total open interest increase much more impressive. The total open interest increase was the largest since July 23 when crude oil advanced 29  cents on volume of 559,744 contracts and open interest increased 23,236 contracts.

As this report is being compiled on August 6, September crude is trading $1.51 lower and has made a new low for the move at $104.86. We have been pounding the table and telling our clients that the crude oil rally has been the result of the unwinding of spreads and the shifting logistics of crude withdrawals from stocks in Cushing, Oklahoma. We think the double top made on August 1 of $108.82 and the other made on July 19 of $108.93 is the high. Crude remains on a short and intermediate term buy signal. We discourage clients from entering bullish positions in the current environment.

Natural gas:

September natural gas lost 2.8 cents on volume of 199,516 contracts. Total open interest increased by 961 contracts, which relative to volume is approximately 75% below average. The September contract lost 3,159 of open interest. September natural gas made a new low of $3.309, and as this report is being compiled on August 6, September natural gas is trading unchanged on the day, but has not made a new low. Natural gas generated a short-term sell signal on May 31 and an intermediate term sell signal on June 24.

Euro:

The September euro lost 27 points on volume of 155,395 contracts. Open interest declined 1,771 contracts, which relative to volume is approximately 50% less than average. As this report is being compiled on August 6, the September euro is trading 51 points higher and has made a high of 1.3326, which is shy of the high made on July 31 of 1.3347. The market looks strong and appears it wants to go higher. The euro remains on a short and intermediate term buy signal.

S&P 500 E mini:

The S&P 500 E mini lost 1.50 points on extremely low volume of 857,985 contracts. The markets are entering a period when trading slows to a crawl, and we can expect continued low volume days in most markets. Total open interest declined 14,661 contracts, which relative to volume is approximately 25% less than average. As we have stated numerous times, we think it is imperative for those that hold long positions in equities to have long put protection. During the next couple of months, there will be a series of events that can cause the market to take a major dive.