Soybeans:

March soybeans gained 19 cents on volume of 189,253 contracts. Volume shrank by approximately 88,000 contracts from December 13 when soybeans gained 3 and open interest increased by 11,291 contracts. It is an unfavorable that volume would shrink so dramatically on the largest advance since December 5 when soybeans advanced 23.75 on volume of 168,160 contracts and open interest increased by 2,537 contracts. On December 14, open interest declined by 2,977 contracts, which in relation to volume is approximately 35% less than average. The January contract accounted for loss of 9,002 contracts of open interest. As this report is being compiled on December 17, March soybeans have made a high of 15.01 1/4, which is the highest price for March soybeans since November 6 when they made a high of 15.03 1/4. Since bottoming at 13.56 (March) on November 16 through December 14, total open interest has increased by only 9,992 contracts, which is a minor increase considering that during that time soybeans rallied $1.36 from the low. Stand aside.

Soybean meal:

March soybean meal advanced $3.10 on volume of 67,968 contracts. Total open interest increased by a whopping 4,549 contracts, which in relation to volume is approximately 160% above average, meaning that both longs and shorts were aggressive in staking out their positions, but new longs were moving the market higher. Total open interest increases are more impressive considering that December lost 398 and January lost 1,501 contracts of open interest. Since bottoming at $405.50 (March) on November 20 through December 14 total open interest has increased by 16,949 contracts, which is a dramatically higher number than soybeans and more impressive considering that soybean meal trades approximately 60-70% less volume than soybeans. March soybean meal will not generate a short or intermediate term buy signal on December 17, but is getting close to it. Stand aside.

Corn:

March corn gained 10.50 cents on light volume of 164,809 contracts. Volume was the lowest since December 6 when 152,454 contracts were traded and March corn declined by 6.25 cents while open interest increased by 2,504 contracts. Total open interest declined on the rally by 6,521 contracts, which in relation to volume is approximately 50% above average, meaning that liquidation was fairly heavy on the  rally. The rally was the largest since November 27 when corn advanced 12.75 on volume of 353,367 and open interest declined by 25,322 contracts. Low volume on the rally combined with a fairly heavy decline of open interest reveals the internal weakness of corn. Stand aside.

Wheat:

March wheat advanced 5.25 cents on light volume of 61,934 contracts. Open interest increased by 709 contracts, which in relation to volume is approximately 50% less than average. Stand aside.

Crude oil:

January crude oil advanced 84 cents on heavy volume of 690,911 contracts. Volume increased by approximately 196,000 contracts from December 13 when 494,132 contracts were traded and January crude oil declined by 88 cents while open interest declined by 2,109 contracts. Volume was the heaviest since December 12 when 722,130 contracts were traded and crude oil advanced by 98 cents, while open interest increased by 10,542 contracts. On December 14, open interest declined by 33,209 contracts, which in relation to volume is approximately 80% above average, meaning that liquidation was fairly heavy on a rather minor advance. The interesting aspect of trading on December 14 was that crude traded in a narrow range of $86.05 to 86.92, which is below its 21 day average true range of $1.04. Stand aside.

Natural gas:

 January natural gas lost 3.3 cents on volume of 391,969 contracts. Open interest advanced by 3,163 contracts, which in relation to volume is approximately 55% below average. Stand aside.

Copper:

March copper gained 2.30 cents on very light volume of 36,700 contracts. Open interest increased by 1,805 contracts, which in relation to volume is approximately 100% above average. Although participation was low as evidenced by the paltry volume, those involved in copper were very aggressive, and longs were moving the market higher. In the Weekend Wrap of December 16, we wrote about the lackluster volume of the past several trading days. We remain unimpressed by market action despite copper being on a short and intermediate term buy signal. As this report is being compiled on December 17, March copper is trading 1.45 cents lower. Stand aside.

Gold:

February gold gained 20 cents on very light volume of 97,874 contracts. Open interest increased by 1,195 contracts, which in relation to volume is approximately 45% less than average. As this report is being compiled on December 17, the high for the day is $1701.00, which is below the high made on December 14 of 1701.90. The dollar is lower, not by much, yet gold has been unable to surpass the high it made on Friday, but has made a new low of 1687.50 on December 17, which is below 1694.00, the low of December 14. The gold market is deteriorating, and it seems to be accelerating. Stand aside.

Silver: On December 14, March silver generated a short-term sell signal.

March silver lost 5.6 cents on light volume of 30,718 contracts. Open interest declined by 1,468 contracts, which in relation to volume is approximately 75% above average. Like gold, silver continues to deteriorate. Stand aside.

British pound:

The March British pound gained 57 points on volume of 143,742 contracts. Volume declined by approximately 73,000 contracts from December 13, when the pound lost 47 points and open interest increased by 23,044 contracts. On December 14, total open interest increased by 11,168 contracts, which in relation to volume is approximately 210% above average, meaning that longs and shorts had strong opinions about the direction of the pound, but longs were in control. The December contract lost 15,646 contracts of open interest, but the March contract more than compensated for this by adding 26,813 contracts. This is the 3rd day in a row that open interest has increased dramatically. As we indicated in the December 16 Weekend Wrap, managed money has piled into the pound, despite the fact that the euro has been outperforming during the 4th quarter. The pound is on a short and intermediate term buy signal, but is vulnerable to a sharp setback. Stand aside.

Euro:

 The March euro gained 83 points on heavy volume of 337,113 contracts. Total open interest declined by 2,446 contracts, which in relation to volume is approximately 70% less than average, meaning the decline was not significant. The December contract accounted for a loss of 29,315 contracts, which will be going off the board shortly. Despite the relatively low decline of open interest on the advance, it is somewhat disappointing that the advance was not accompanied by an open interest increase. However, it is expected that shorts would be covering, and positions in December liquidated. The market continues to act well, and as it continues to advance, we expect that open interest will be increasing as well, especially after more shorts get blown out.

S&P 500 E mini:

The S&P 500 E mini lost 2.75 points on heavier than normal volume of 2,733,032 contracts. Open interest declined by 53,176 contracts, which in relation to volume is a proximately 5% below average. As the expiration of the nearby contract approaches. volume tends to increase and open interest becomes distorted. The high on Friday was 1419.25, and as this report is being compiled on December 17, the E mini has made a high of 1422.75 on ideas that an agreement is getting closer with respect to resolving the fiscal cliff issue. As pointed out in the Weekend Wrap of December 16, we believe the market has for the most part discounted the resolution of this issue. Maintenance of long puts should be based upon your risk tolerance and assessment of fiscal and economic issues.