Soybeans:

March soybeans lost 1.75 cents on volume of 151,141 contracts. Open interest increased by 2,200 contracts, which in relation to volume is approximately 40% less than average. Soybeans dipped to $14.15, which is the lowest price since January 16 when soybeans made a low of 14.12 1/4. Beans then rallied to close slightly lower on the day. The export sales report was disappointing at 14,080,000 bushels. The elephant in the room is the crop in Brazil and Argentina, which is going to be massive. As we said in yesterday’s report, Brazil may have major problems with respect to moving the crop from the interior to the port. The market remains on a short and intermediate term sell signal. Stand aside.

Soybean meal:

March soybean meal lost $1.80 on volume of 60,246 contracts. Open interest increased by 5,097 contracts, which in relation to volume is average. The export sales report was a respectable 217,970 tons. In order to meet the USDA projection, sales need to average only 40,480 tons. Approximately 81% of the export sales total has been fulfilled. For the past 8 sessions, beginning on January 14, open interest has increased by 23,117 contracts. There was only one day during the past 8 that open interest declined and this occurred on January 23 (-551). During the past 8 days, March soybean meal has advanced $10.40. Although the open interest increase in conjunction with advancing prices is positive, the fact that it took over 23,000 contracts to move soybean meal somewhat more than $10.00 indicates there is quite a bit of selling pressure keeping a lid on prices. As we have said before, soybean meal has been a major laggard on a year to date basis.

Soybean oil:

March soybean oil gained 8 points on volume of 74,098 contracts. Open interest increased by 1,041 contracts, which which in relation to volume is approximately 45% less than average. Export sales for the most recent week were 26,310 tons, which is dramatically above the average of 7,080 tons needed to meet the USDA export projection. Soybean oil continues to be the star performer of the bean complex, and the low of 51.50 made on January 24 has been the largest setback from the high thus far. Despite this, the market remains overbought.

Corn:

March corn gained 3.50 cents on volume of 244,570 contracts. Open interest increased by a massive 12,450 contracts, which in relation to volume is approximately 140% above average. Corn made a low of $7.14 1/2, which is the lowest price since it made a low of 7.13 on January 14. The export sales report showed another dismal week of sales of 5.5  million bushels. As we have said before, we think the market has discounted poor sales and reduced amount of ethanol production. On January 22, March corn generated a short-term buy signal, which usually means that there will be a setback for a day or two before resuming its upward trend. Corn continues to act in a bullish congruent fashion with open interest increasing on price advances and declining when price declines.

Wheat:

March wheat lost 6.25 cents on volume of 73,206 contracts. Open interest declined by 829 contracts, which in relation to volume is approximately 50% less than average. Wheat sales came in at 21 million bushels, which is above the average weekly sales of 15 million order to reach the USDA export projection. Like corn, wheat price and open interest action has been acting in a bullish congruent fashion. Wheat remains on a short and intermediate term sell signal.

Crude oil:

March crude oil gained 72 cents on volume of 639,215 contracts. Volume declined by over 300,000 contracts from January 23 when crude oil declined by $1.45 and open interest increased by 15,463 contracts. On January 24, open interest increased by 4,344 contracts, which in relation to volume is approximately 55% less than average, meaning that new commitments were less than enthusiastic. Although crude oil is on a short and intermediate term buy signal, we think that clients should stand aside.

Natural gas:

March natural gas lost 9.9 cents on fairly heavy volume of 472,344 contracts. Volume was the highest since January 22 when 496,918 contracts were traded and open interest declined by 18,041 contracts while March natural gas declined by . 008, which is essentially unchanged. On January 24, open interest declined by 10,421 contracts, which in relation to volume is average. Stand aside.

Copper:

March copper lost .0080 on volume of 45,574 contracts. Open interest declined by 421 contracts, which in relation to volume is approximately 50% less than average. Copper remains on a short and intermediate term buy signal, but we recommend that clients stand aside.

Gold:

February gold lost $16.80 on heavy volume of 232,152 contracts. Volume was slightly above that of January 17 when 231,037 contracts were traded. On January 24, open interest increased by 2,279 contracts, which in relation to volume is approximately 50% below average. Gold made a low of 1664.20, which is the lowest price since January 14 when it reached 1659.50. As this report is being compiled on January 25, gold is trading $10.10 lower and has made a new low for the move at $1655.00 Gold remains on a short and intermediate term sell signal. We think that weakness in the precious metals is the result of rising interest rates. We will discuss this in greater detail in the upcoming Weekend Wrap

Platinum:

April platinum lost $8.00 on volume of 10,967 contracts. Open interest increased by a massive 2,069 contracts, which in relation to volume is approximately an astounding 650% above average. On January 24, the shorts were in control, and we suspect this was the result of trade selling. Platinum continues to be overbought, and though we are bullish, we suggest that clients stand aside.

Silver:

March silver lost 71.7 cents on volume of 55,573 contracts. Volume was the highest since January 17 when 58,453 contracts were traded and silver advanced 26.8 cents and open interest declined by 1,290 contracts. On January 24, open interest increased by a massive 4,156 contracts, which in relation to volume is approximately 210% above average. On January 23, March silver generated a short-term buy signal, and the massive increase of open interest on the decline is bearish. As we stated before, silver would have a pullback after generating the buy signal. Pullbacks can last from 1 to 2 sometimes 3 days. As this report is being compiled, silver is trading 45.7 cents lower, which means that it should be close to making a low either on January 25 or January 28. However, rising interest rates may continue to weigh on silver prices and conceivably result in a reversal of the buy signal.

British pound:

The March British pound lost 49 points on volume of 126,774 contracts. Open interest increased by 3,528 contracts, which in relation to volume is average. This was the highest increase of open interest since January 2 when the British pound gained 2 points and open interest increased by 5,182 contracts on volume of 78,113 contracts. As we have stated before, the British pound is massively oversold and the first major increase of open interest is indicative of speculators piling in at the very low end of the trading range. The pound is due for a good-sized bear market rally.

Canadian dollar:

The March Canadian dollar lost 36 points on 96,713 contracts. Open interest declined by 3,297 contracts, which in relation to volume is approximately 40% above average meaning that liquidation was fairly heavy. This was the first major decline of open interest, which we forecasted due to the stratospheric long to short ratio. As this report is being compiled on January 25, the March Canadian dollar is trading 58 points lower and has made a new low for the move at 98.89.

Euro:

The March euro gained 53 points on volume of 287,050 contracts. Open interest increased by 7,532 contracts, which in relation to volume is average. The open interest increase on January 24 was the largest since January 17 when the euro advanced 96 points and open interest increased by 6,760 contracts. Additionally, the open interest increase on on January 24 was the highest for 2013. As our clients know, we have been bullish on the euro ever since it generated a short-term buy signal on December 3, which confirmed the intermediate term buy signal. As this report is being compiled on January 25, the March euro has advanced 84 points and has made a new high for the move at 1.3485.

S&P 500 E mini:

The S&P 500 E mini gained 1.50 points on heavy volume of 1,830,332 contracts. Volume was the highest since January 2 when 1,943,131 contracts were traded and the E mini gained 37.00 points, while open interest increased by 11,152 contracts. On January 24, open interest declined by 26,812 contracts, which in relation to volume is approximately 40% less than average. The E mini made a new high for the move at 1497.75, but longs and shorts were liquidating. We believe the performance of Apple computer will continue to weigh on the market and provide a psychological depressant. The market is overstretched by any standard and clients should not enter long positions in the indices at current levels.