Soybeans:

March soybeans lost 17.25 cents on volume of 84,452 contracts. Open interest declined by 6,339 contracts, which in relation to volume is approximately 210% above average, meaning that liquidation was heavy. Although from a US standpoint, exports continue at their blistering pace, the prospect of a large Brazilian and Argentinian soybean crop continue to weigh on prices. It is likely that soybeans are going to test the November 16 low of $13.56. Stand aside.

Soybean meal:

March soybean meal lost $4.20 on volume of 35,030 contracts. Open interest declined by 2,360 contracts, which in relation to volume is approximately 160% above average. Much of the liquidation in soybean meal can be attributed to the loss of open interest in the January contract. Although the export pace for soybean meal has been at an astounding rate, it will follow soybeans lower. Speculators are bailing out of soybeans and soybean meal, and undoubtedly some of this can be attributed to the decline in all markets due to the fiscal problems being played out in Washington. Stand aside.

Corn:

March corn lost 11 cents on volume of 84,294 contracts. Open interest increased by 370 contracts, which is minuscule and dramatically below average. Stand aside.

Wheat:

March wheat lost 19.25 cents on volume of 36,321 contracts. Open interest increased by 2,735 contracts, which in relation to volume is approximately 200% above average, meaning that new short sellers were piling into the market and driving prices lower.. Stand aside.

Crude oil:

February crude oil gained $2.37 on volume of 324,812 contracts. Open interest increased by 6,502 contracts, which in relation to volume is approximately 5% below average. Although low volume would be expected on the day after Christmas, the fact that open interest increased by less than average is testament to the lack of enthusiasm by participants for crude oil. Prior to December 26, the last time crude oil advanced by nearly the same amount occurred on November 19 when it closed $2.36 higher on volume of 493,581 contracts while open interest declined by 12,887. On November 6, crude oil advanced $3.05 on volume of 590,709 contracts while open interest increased by only 5,979 contracts, which in relation to volume is approximately 50% less than average. In other words, during days that crude had significant rallies, open interest action was dismal. Additionally, volume on the advances was tepid compared to the average daily volume year to date of 566,555 contracts. Despite this, February crude oil closed at $90.98 which is the highest price for crude since October 19 when it closed at $91.45. From December 11, when crude made a low of 85.76 through December 26 when crude made a high of 91.30, open interest has declined by a total of 60,300 contracts, which is more confirmation that the rally is suspect. As we have said before, crude has a tendency to rally into early January, and therefore it is quite possible that this will continue for the next week or so. Stand aside.

Natural gas:

February natural gas gained 4.7 cents on volume of 164,341 contracts. Open interest declined by a massive 10,728 contracts, which in relation to volume is approximately 160% above average, meaning that liquidation was heavy. Stand aside.

Copper:

March copper gained 5.15 cents on volume of 20,823 contracts. Open interest increased by 708 contracts, which in relation to volume is approximately 40% above average, meaning that new longs were entering the market and pushing prices higher at an above average rate. On December 20, March copper generated a short-term sell signal and has not yet generated in intermediate term sell signal. There is no reason to be involved in copper at this juncture.

Gold:

February gold advanced $1.20 on volume of 55,732 contracts. Open interest declined by 2,021 contracts, which in relation to volume is approximately 40% above average, meaning that liquidation was fairly heavy. Gold continues to trade in a lackluster fashion, and at this juncture there is no reason to be involved in it. Gold is on a short and intermediate term sell signal. Stand aside

Silver:

March silver gained 13.8 cents on volume of 16,434 contracts. Open interest declined by 627 contracts, which in relation to volume is approximately 50% above average, meaning that liquidation was fairly heavy on the advance. Like gold, silver is trading poorly, and at this juncture there is no reason to be involved in it. Stand aside.

British pound:

The March British pound lost 6 points on volume of 31,092 contracts. Open interest increased by 691 contracts, which in relation to volume is average. Since topping out on December 19 at 1.6304 to the low made on December 27 of 1.6065, the British pound has lost 2.39 cents. In previous reports, we emphasized that the British pound was massively overbought relative to its high long to short ratio, and price, while its relative strength was weak compared to the euro. Stand aside.

Euro:

The March euro gained 31 points on volume of 53,695 contracts. Open interest increased by 3,097 contracts, which in relation to volume is approximately 130% above average, meaning that new buyers were unusually aggressive and were  moving the euro higher. The euro continues to trade in an impressive manner, but we expect it to pullback to 1.3100- 1.3150. Conceivably, the pullback could be as low as 1.3050. The 50 day moving average is 1.2973, however we do not expect the euro to move to this level. A pullback would be a healthy development, and would set the stage for a sharply higher move during the next 45 days. Money management stops should be in place.

S&P 500 E mini:

The S&P 500 E mini lost 6.25 points on volume of 580,615 contracts. Open interest increased by 10,680 contracts, which in relation to volume is approximately 5% below average, but a fairly large number nonetheless. The market is increasingly trading in a very bearish fashion, and the impact of the tax hikes in 2013 are becoming a reality to investors. From December 1 through December 26, the March E mini has advanced 4.75 points or +0.34%. If if figure this holds, or worsens through December, 31, December 2012, would rank far below the average return of 1.00% for the month of December for the years of 2000-2011. As this report is being compiled on December 27, the March E mini is trading 14.75 points lower, and has made a low for the day of 1396.00. It appears highly likely that the low of 1391.25 made on December 21 will be taken out. The VIX, also known as the fear gauge is currently trading at at 20.41, up from 15.00 at the end of November, and the highest since late July 2012. Stand aside.