Soybeans:

March soybeans lost 19.50 cents on volume of 232,417 contracts. Volume declined by approximately 87,000 contracts from February 8 when March soybeans lost 34.25 cents and open interest increased by 2,308 contracts. On February 11, total open interest declined by only 618 contracts, which is minuscule and dramatically below average. From February 4 when March soybeans topped out at $14.98, through February 11, open interest has increased by 19,052 contracts, while March soybeans have declined by 55.75 cents. This is bearish open interest action relative to the price decline. As this report is being compiled on February 12, March soybeans are trading 11.75 cents lower and have made a new low at $14.17. As we indicated in yesterday’s report, soybeans are in a seasonal period of weakness, and a retest of the lows made in January cannot be ruled out. There is tremendous support at the 13.50 level going back to late June 2012. Despite the sharp move lower during the past couple of days, soybeans remain on a short-term buy signal and an intermediate term sell signal. Stand aside.

Soybean meal: On February 11, March soybean meal generated a short-term sell signal. This reverses the short-term buy signal generated on February 1.

March soybean meal lost $9.40 on volume of 110,589 contracts. Volume declined approximately 17,000 contracts from February 8 when March soybean meal lost $15.20 and open interest declined by 5,852 contracts. On February 11, total open interest declined by 5,316 contracts, which in relation to volume is approximately 75% above average, meaning that liquidation was heavy. Although the March contract lost 14,503 contracts of open interest, the May 2013 through July 2014 contracts added open interest. From February 4 through February 11, open interest has declined by 928 contracts, while soybean meal has declined by $19.90. The open interest decline from February 4 through February 11 is positive relative to the price decline. The performance of price in conjunction with open interest for soybean meal is far superior to soybeans during the past several days, even though soybean meal is underperforming soybeans on a price basis. Stand aside.

Soybean oil:

March soybean oil lost 19 points on volume of 126,388 contracts. Volume declined approximately 23,500 contracts from February 8 when March soybean oil lost 42 points on volume of 150,935 contracts, while open interest declined by 1,691 contracts. On February 11, open interest increased by 2,098 contracts, which in relation to volume is approximately 35% below average. March soybean oil remains on a short and intermediate term buy signal, and we will be monitoring it to determine when long positions can be implemented.

Corn: On February 11, March corn generated a short-term sell signal, which reverses the short-term buy signal generated on January 22.

March corn lost 6.75 cents on heavy volume of 399,600 contracts. Volume declined approximately 106,000 contracts from February 8 when March corn lost 1.75 cents and open interest declined by 19,369 contracts. On February 11, open interest increased by 8,476 contracts, which in relation to volume is approximately 10% below average. Since February 4, open interest has increased by 12,112 contracts while March corn has declined 33.75 cents. This is bearish open interest action relative to the price decline. As this report is being compiled, March corn is trading 7.50 cents lower and is made a new low for the move at $6.91 1/2. Stand aside.

Wheat:

March wheat lost 14.75 cents on volume of 162,987 contracts. Volume declined approximately 20,000 contracts from February 8 when wheat advanced 0.25 cents and open interest declined by 374 contracts. On February 11, open interest increased by 7,334 contracts, which in relation to volume is approximately 75% above average, meaning that new shorts were entering the market and driving prices lower. The most recent COT report was tabulated as of February 5. Since then, open interest in wheat has increased by 12,649 contracts while March wheat has declined by 16.00 cents. This is bearish open interest action relative to the price decline. As we said in previous reports, we think the continued increase in short interest by managed money, will begin to reverse as soon as exports pick up, which we think is imminent. As with all grains, we are in a period of seasonal weakness. As this report is being compiled, March wheat has taken out the low made on January 11. From a technical point of view, the real problem with wheat is there is no support until the low $6.00 area. Stand aside.

Crude oil:

March crude oil gained $1.31 on very heavy volume of 831,563 contracts. Volume was the highest since January 23 when 950,824 contracts were traded and open interest increased by 15,463 contracts while March crude oil lost $1.45. On February 11, open interest increased by 14,354 contracts, which in relation to volume is approximately 25% less than average. We don’t see a compelling reason to be long crude oil at this juncture, especially when equity markets are at their highs, and we believe the risk is to the downside.

Copper:

March copper lost 3.70 cents on volume of 64,833 contracts. Open interest declined by 3,325 contracts, which in relation to volume is approximately 100% above average, meaning that liquidation was heavy. On February 8, copper gained 3.25 while open interest declined by 2,503 contracts. In short, for the past 2 days, open interest has been acting in a bearish fashion relative to the price advance and decline. Copper is in a trading range.

Gold:

April gold lost $17.80 on heavy volume of 202,676 contracts. Volume increased by nearly 100,000 contracts from February 8 when gold lost $4.40 and open interest increased by 1,991 contracts. On February 11, open interest increased by a massive 10,735 contracts, which in relation to volume is approximately 110% above average, meaning that new shorts were heavily entering the market and driving prices lower. The action on February 11 was the most bearish in a long time. On February 11, April gold closed at 1649.50, which is slightly above its lowest close since January 7 of 1647.90. In addition, gold closed below its 200 day moving average of $1664.92. Gold remains on a short and intermediate term sell signal. Stand aside.

Platinum:

April platinum lost $18.60 on volume of 11,964 contracts. Open interest declined by 1 contract. Although platinum is on a short and intermediate term buy signal, we continue to recommend that clients stand aside due to its overbought condition and the very high long to short ratio.

Silver:

March silver lost 53.1 cents on volume of 41,252 contracts. Open interest declined by 101 contracts which is minuscule and dramatically below average. Unlike gold, silver has not closed below its 200 day moving average of $30.67. However, the market looks weak and clients should stand aside. It is possible that silver will generate a short-term sell signal on February 12, which would reverse the short term buy signal. 

Euro:

The March euro gained 26 points on volume of 217,056 contracts. Open interest declined by 4,289 contracts, which in relation to volume is approximately 20% less than average. During the past 4 days, open interest has declined 14,135 contracts while the March euro lost 1.96 cents. This is bullish open interest action relative to the price decline. On February 8, the euro made a low for the move at 1.3356 and on February 11 made a low of 1.3360. Clients should focus on this possible area of support. Preferably, we would like to see the market do some more backing and filling before recommending the implementation of bullish positions. The euro remains on a short and intermediate term buy signal.

S&P 500 E mini:

The S&P 500 E mini gained 0.50 points on terrible volume of 1,235,169 contracts. Although the E mini made a new high for the move at 1517.00, volume was the lowest since January 28 when 1,210,245 contracts were traded and the S&P gained 1.25 points, while open interest declined by 3,685 contracts. As this report is being compiled on February 12, the S&P 500 E mini has reached another new high at 1519.00. The market looks tired at these levels, and we believe it is only a matter of time before a correction begins.