Soybeans:

March soybeans lost 1 cent on volume of 126,939 contracts Open interest increased by 3,786 contracts, which in relation to volume is approximately 20% above average. As stated before, we believe the low in soybeans was made on January 11 at $13 51 1/2. Managed money remains extremely bearish based upon the very low reading of the long to short ratio (please see January 20 Weekend Wrap). As this report is being compiled on January 22, March soybeans are trading 29.50 cents higher and have made a new high for the move at $14 60 3/4. It is possible that a short-term buy signal will be generated this week. Stand aside.

Soybean meal:

March soybean meal gained 40 cents on light volume of 52,244 contracts. However open interest exploded and 6,034 contracts were added, which in relation to volume is a staggering 350% above average. The March contract lost 462 contracts of open interest. Soybean meal has been the laggard in the complex, which might in part explain the very low long to short ratio of managed money based upon the latest COT report. Like soybeans, we think the low was made on January 11 when soybean meal made a low of 392.40. The market remains on a short and intermediate term sell signal. Stand aside.

Soybean oil:

March soybean oil gained 19 points on very low volume of 67,565 contracts. Open interest declined by 2,286 contracts, which in relation to volume is approximately 25% above average, which means that longs and shorts were liquidating as the market moved higher. March soybean oil reached the highest level since December 7, when March soybean oil made a high of 51.85. On January 15, March soybean oil generated a short-term buy signal, and ever since has had shallow setbacks. As this report is being compiled, March soybean oil has made another new high at 52.67 and is trading 79 points higher. It is very possible that an intermediate term buy signal will be generated on January 23. As we have said before, we like soybean oil because managed money is massively short, and as this report is being compiled soybean oil is at its highest level since October 25. This which means that managed money shorts are getting hurt. We expect the rally in soybean oil to continue along with the rest of the oilseed complex. Soybean oil is massively over bought.

Corn:

March corn gained 3 cents on volume of 232,070 contracts. Open interest increased by 2,959 contracts, which in relation to volume is approximately 45% less than average. The March contract lost 3,507 contracts of open interest. The long to short ratio in corn is near second-quarter 2012 lows of 2.82:1, which is down from the ratio of 3.49:1 made 2 weeks ago. This is precisely the kind of environment  in which corn will rally. If March corn can hold above $7.25 3/8 on the 22nd, it will generate a short-term buy signal. Interestingly, the 50 day moving average on the corn continuation chart is $7.32 1/2, which means there may not be much of a pullback once the buy signal is generated. We think the lows are in for corn, and once a short-term buy signal is generated, clients should trade corn from the long side.  Corn will have pullbacks, but this is not an indication of internal weakness.

Wheat:

March wheat gained 10 cents on volume of 75,295 contracts. Open interest increased by 1,224 contracts, which in relation to volume is approximately 30% less than average. Wheat remains on a short and intermediate term sell signal. Stand aside.

Crude oil:

March crude oil gained 10 cents on volume of 563,464 contracts. Volume declined by approximately 167,000 contracts from January 17 when crude oil advanced $1.25 and open interest increased by 29,965 contracts. On January 18, open interest declined by 17,741 contracts, which in relation to volume is approximately 20% above average. As we stated in the January 20 Weekend Wrap, from the time that crude oil bottomed on November 16 through January 17, open interest has declined, which is bearish open interest action relative to price. Though the market is firm, clients should avoid crude oil at current levels. The market continues to be massively overbought relative to its 50 day moving average and our proprietary indicators. Stand aside.

Natural gas:

March natural gas gained 7 cents on light volume of 309,385 contracts. Open interest increased by 6,753 contracts, which in relation to volume is approximately 5% less than average. Natural gas is getting near to generating a short-term buy signal, and its 50 day moving average on the continuation chart is $3.51. Stand aside.

Copper:

March copper gained 1.70 cents on light pre-holiday volume of 45,051 contracts. Open interest declined by 495 contracts, which in relation to volume is approximately 50% less than average. Copper reached $3.6975, which is the highest price since January 11 when copper made a high of $3.7180. Copper remains on a short and intermediate term buy signal, but we think there are better trades on the board.

Gold:

February gold lost $3.80 on light holiday volume of 130,184 contracts. Open interest declined by 507 contracts which is minuscule and dramatically below average. We remain friendly to gold, but we much prefer silver on the long side.

Silver:

March silver gained 12.2 cents on volume of 42,758 contracts. Open interest increased by 709 contracts, which in relation to volume is approximately 30% less than average. Silver is getting near to generating a short-term buy signal, and the market action during the past several days has been characterized by higher highs and higher lows. Similar to corn, the the buy signal would be generated at a level that is very close to the 50 day moving average, which in silver is $32.01 on the continuation chart. As a result, once the short term buy signal is generated, silver may not have much of a pullback.

Platinum:

April platinum lost $26.50 on light volume of 14,793 contracts. Open interest increased by 123 contracts, which in relation to volume is approximately 50% less than average. Due to the stratospheric level of the long to short ratio, and the massive overbought condition relative to its 50 day moving average, we have been cautioning clients to stand aside and wait for a more significant pullback. We really like platinum, but the risk with managed money heavily long is just too great.

British pound:

The March British pound lost 1.45 cents on very heavy volume of 160,809 contracts. Volume was the highest since December 13 when 216,569 contracts were traded and the March pound closed at 1.6107. On January 18, open interest declined by 1,925 contracts, which in relation to volume is approximately 50% less than average. Since January 11, the pound has declined by 2.63  cents, while open interest declined by 3,105 contracts. This number is relatively small when considering the magnitude of the decline. The latest COT report showed that leveraged funds were long the pound by a ratio of nearly 3 to 1, which means there is more liquidation ahead, especially since the pound generated a short and intermediate term sell signal on January 17. A rally is to be expected due to the oversold condition, but we doubt this will be anything more than a correction.

Euro:

The March euro lost 67 points on volume of 298,302 contracts. Volume increased by approximately 7,000 contracts from January 17 when the euro advanced 96 points and open interest increased by 6,760 contracts. On January 18, open interest declined by 5,202 contracts, which in relation to volume is approximately 25% less than average. The euro has been acting in a bullish congruent with respect to price and open interest action. We have advised clients to place their sell stops at or slightly below 1.3262, which is the low made on January 16.

Swiss Franc: On January 18, the March Swiss franc generated a short-term sell signal.

S&P 500 E mini:

The S&P 500 E mini gained 3.25 points on volume of 1,489,243 contracts. Open interest declined by 1,489 contracts, which is minuscule and dramatically below average. The E mini made a new high at 1481.00 on Friday, and as this report is being compiled has made another new high of 1486.25. As we have said before, we think that clients should avoid being long the major indices and instead focus on stocks in favored sectors that have corrected close to their 50 day moving averages. When the market has a setback, stocks that are near their 50 day moving averages, will tend to suffer less damage generally speaking, than stocks that are trading significantly above their 50 day moving averages. Regardless, of what individual stocks are purchased, clients should make sure they have appropriate sell stop protection, and should be aware when each company reports their earnings. We think it is wise to wait until companies report earnings, before implementing new positions.