Soybeans:

March soybeans gained 22.50 cents on volume of 185,917 contracts. Volume was the highest since January 14 when 230,161 contracts were traded and soybeans advanced by 44.75 cents and open interest declined by 679 contracts. On January 22, open interest increased by 7,882 contracts, which in relation to volume is approximately 65% above average, meaning that new longs were entering the market and pushing prices higher. Soybeans made a new high for the move at $14.60 3/4, which is the highest price since December 19 when March soybeans made a high of 14.66 1/2. Soybeans remain on a short and intermediate term sell signal. Stand aside.

Soybean meal:

March soybean meal advanced $7.20 on volume of 66,975 contracts. Volume was the highest January 17 when 67,903 contracts were traded and March soybean meal declined by $5.10, while open interest increased by 2,590 contracts. On January 22, open interest increased by a massive 4,354 contracts, which in relation to volume is approximately 160% above average. We have highlighted the percentage increase of open interest relative to volume in soybeans and soybean meal to illustrate the disparity between the two. On January 22, soybeans advanced 1.57% while soybean meal advanced 1.74% There was significantly more buying in soybean meal despite the fact that both performed about equally. March soybean meal made a new high for the move at $425.30, which is the highest price since December 31 when March soybean meal made a high of 426.70. March soybean meal continues to be the laggard, and remains on a short and intermediate term sell signal. Stand aside.

Soybean oil:

March soybean oil gained 75 points on volume of 83,682 contracts. Volume was the highest since January 16 when 135,428 contracts were traded and March soybean oil advanced 44 points while open interest increased by 628 contracts. On January 22, open interest increased by 2,111 contracts, which in relation to volume is average. However it is the largest increase of open interest since March soybean oil generated a short-term buy signal on January 15. On January 22, March soybean oil reached its highest price since October 25 when March oil made a high of 53.03. On January 22, soybean oil gapped higher and the gap measures 19 points. Undoubtedly, the gap will be filled rather quickly because soybean oil is massively overbought.

Corn: On January 22, March corn generated a short-term buy signal.

March corn gained 1 cent on volume of 170,673 contracts. Volume declined by approximately 61,000 contracts from January 18 when corn advanced 3 cents and open interest increased by 2959 contracts. On January 22, open interest increased by 4,700 contracts, which in relation to volume is average. As we said in yesterday’s report corn will have a pullback, but it may be shallow because corn trading at its 50 day moving average. For the past 5 trading sessions, corn’s open interest and price action has been acting in a bullish congruent fashion.

Wheat:

March wheat lost 12 cents on relatively heavy volume of 108,681 contracts. Volume increased by approximately 33,000 contracts from January 18 when wheat gained 10 cents and open interest increased by 1,224 contracts. Additionally, volume was the highest since January 15 when 137,655 contracts were traded and wheat advanced 15.75 cents while open interest declined by 2,642 contracts. On January 22, open interest declined by 3,963 contracts, which in relation to volume is approximately 40% above average. Wheat remains on a short and intermediate term sell signal. Stand aside.

Crude oil:

March crude oil gained 64 cents on volume of 529,234 contracts. Volume declined from January 18 when 563,464 contracts were traded and crude oil advanced 10 cents while open interest declined by 17,741 contracts. Additionally, volume was the lightest since January 9 when 470,459 contracts were traded and crude oil declined by 5 cents while open interest increased by 1,246 contracts. On January 22 open interest declined by 3,116 contracts, which in relation to volume is approximately 70% below average. During the past 2 days, crude oil has advanced 74 cents while open interest has declined by a total of 20,857 contracts. From January 16 through January 22, crude oil has advanced a total of $2.95, while open interest has has declined by 3,282 contracts. This is bearish open interest action relative to the price advance. As we have stated in prior reports, the entire bull move in crude oil has been characterized by a net decline of open interest, and this has continued. Crude oil remains on a short and intermediate term buy signal, but it is massively overbought. Stand aside. 

Natural gas:

March natural gas lost .008 cent (essentially unchanged) on heavy volume of 496,918 contracts. Volume was the highest since December 13 when 548,515 contracts were traded and March natural gas closed at $3.407. On January 22, open interest declined by a massive 18,041 contracts, which in relation to volume is approximately 40% above average, meaning that liquidation was fairly heavy, which when looking at price action is a bit of a surprise. On January 22, natural gas did not break below its previous day’s low of 3.473, and in addition, made a new high for the move at 3.636. This is the highest price since December 7 when March natural gas made a high of 3.699. Apparently, nervous longs and shorts decided they were better off liquidating on the advance. Natural gas remains on a short and intermediate term sell signal, but is getting close to generating a short-term buy signal.

Copper:

March copper advanced 2.60 cents on fairly heavy volume of 68,405 contracts. Volume was the highest since November 30 when 72,832 contracts were traded and March copper closed at $3.6500. On January 22, open interest increased by 2,077 contracts, which in relation to volume is approximately 20% above average. Copper remains on a short and intermediate term buy signal, but we find the market dull and uninteresting.

Gold:

February gold advanced $6.20 on fairly heavy volume of 200,437 contracts. Volume was the highest since January 17 when 231,037 contracts were traded and February gold advanced $7.60 while open interest increased by 9,77 contracts. On January 22, open interest increased by 9,48 contracts, which in relation to volume is approximately 75% above average. The healthy volume and increase of open interest is positive, but as we have stated before,we much prefer silver. Gold remains on a short and intermediate term sell signal.

Platinum:

April platinum gained $24.50 on volume of 16,175 contracts. Open interest declined by 178 contracts, which in relation to volume is approximately 50% less than average. This is the first time since platinum generated a short and intermediate term buy signal on January 11 that open interest declined on a price advance. The market looks tired at the upper end of its trading range, and is due for a sizable correction. Platinum remains on a short and intermediate term buy signal, however clients should stand aside until the market has corrected.

Silver:

March silver gained 24.5 cents on volume of 50,883 contracts. Volume was the highest since January 17 when 58,453 contracts were traded and March silver advanced by 26.8 cents while open interest declined by 1,290 contracts. On January 22, open interest increased by 1,837 contracts, which in relation to volume is approximately 40% above average. March silver closed over its 50 day moving average for the first time since December 3, and the past several days have seen a series of higher highs and higher lows. We like the way silver is trading, and it is highly likely that it will generate a short-term buy signal on January 23.

British pound:

The March British pound lost 18 points on heavy volume of 189,398 contracts. Volume was the highest since December 13 when 216,569 contracts were traded and the March pound closed at 1.6107. On January 22, open interest declined by 1,271 contracts, which in relation to volume is approximately 75% less than average. The pound remains on a short and intermediate term sell signal, but has rallied since generating the signals. The market is massively oversold.

Euro:

The March euro lost 10 points on very heavy volume of 401,046 contracts. Volume was the highest since September 14 when 439,133 contracts were traded and the March euro closed at 1.3139. On January 22, open interest increased by 3,908 contracts, which in relation to volume is approximately 50% less than average. The market has been trading in a sideways pattern, but compared to the British pound, Australian dollar and Canadian dollar, it continues to outperform. Sell stops should be placed at 1.3262 or slightly below.

S&P 500 E mini:

The S&P 500 E mini gained 11.50 points on light volume of 1,476,463 contracts. Amazingly, volume actually declined from January 18 when 1,489,243 contracts were traded and the mini gained 3.25 points while open interest declined by 1489 contracts. On January 22, open interest increased by a massive 75,248 contracts, which in relation to volume is approximately 100% above average, meaning that new longs were piling into the market and pushing prices higher. We have warned clients before that huge spikes in volume or open interest can signify a top or that a top near. This is not to say this is THE top, but the market is massively overstretched and is vulnerable to a good-sized correction. It is concerning that volume was abysmal, especially when the S&P made a new high for the move at 1491.50. Additionally, volume was significantly below January 17 when 1,751,158 contracts were traded and the S&P E mini gained 10.25 points while open interest increased by 47,922 contracts. The high on January 17 was 1480.50, which was a new high for the move on that date. After the close, Apple will report its earnings and this could have a significant an impact on the overall market.