Soybeans:

November soybeans closed 12.25 cents higher on volume of 223,073 contracts. Open interest declined by 1,705 contracts, which in relation to volume is approximately 60% less than average. The November contract lost 15,995 contracts, which accounts for the decline overall. The crop progress report showed that 80% of harvest is complete.

We have already sent out a Special Bulletin with respect entering long positions in soybeans. As we have said before, we think the low was made on October 15 at 14.85 3/4.

Soybean meal:

December soybean meal gained $7.20 on volume of 60,022 contracts. Open interest declined by 207 contracts, which is minuscule and considerably less than average. The December contract lost 1,611 contracts of open interest, which accounts for the total decline. We sent out a Special Bulletin notifying our clients to enter long positions toward the end of the session.

Corn:

December corn lost 0.25 cents on incredibly light volume of 118,241 contracts. This was likely to be the lowest volume day of 2012, which shows a lack of interest by market participants. Open interest increased by 600 contracts, which in relation to volume is approximately 70% below average. The buying in the forward months was able to overcome the decline of open interest in the December contract of 4,823. As we said before, we think corn will have a healthy bull market toward the end of this year, or in early 2013. Stand aside.

Wheat:

December wheat advanced 5.75 cents on light volume of 55,713 contracts. Open interest increased by 3,324 contracts, which in relation to volume is 140% above average, which means the increase was heavy. The market made a high of $8.84 1/2 but couldn’t hold the gains and closed at $8.78 1/4. This was a replay of the October 19 session when wheat reached 8.85 1/2, but closed at 8.72 1/2. For wheat to have a sustained advance, it  must close near the highs on a consistent basis. As indicated in yesterday’s report, wheat not only has to close above its 50 day moving average, but the low of the day has to be above it. Stand aside.

Crude oil:

December crude oil lost $1.79 on light volume of 479,849 contracts. Open interest declined by 2,377 contracts, which in relation to volume is approximately 80% less than average, meaning the increase was extremely light. As this report is being compiled on October 23, December crude oil is trading $2.45 lower and has made a new low for the move at 85.69. Clients that took the advice of OIA have made handsome profits on their put positions. Maintain long puts, but do not add new positions at this level. 

Heating oil:

December heating oil lost 5.08 cents on very heavy volume of 220,144 contracts. Volume was higher than October 3 when 210,267 contracts changed hands and also higher than August 27 when 214,920 contracts were traded. We went back to our records to early May and couldn’t find a day when volume was greater than on October 22. Volume traded for heating oil was over 2 times the amount of volume traded in gasoline.  On October 22, open interest declined by 5,833 contracts, which in relation to volume is average. As pointed out in the October 21 Weekend Wrap, the long to short ratio in heating oil had skyrocketed. It appears that managed money got caught with a fairly heavy long position at the top of the market. As this report is being compiled on October 23, December heating oil is trading 5.11 cents lower. Stand aside.

Gasoline: On October 22, December gasoline generated a short-term sell signal.

December gasoline declined by 3.73 cents on incredibly light volume of 108,323 contracts. Open interest increased by 937 contracts, which in relation to volume is approximately 50% less than average. Gasoline closed under its 200 day moving average of 2.68 for the 1st time since early August. As this report is being compiled on October 23, December gasoline is trading 5.29 cents lower. Stand aside.

Natural gas:

November natural gas lost 16.5 cents on relatively light volume of 433,507 contracts. Open interest declined by 11,298 contracts, which in relation to volume is average. As this report is being compiled on October 23 November natural gas has bounced back trading 10.4 cents higher. Stand aside.

Copper: On October 22, December copper generated a short term sell signal. 

December copper lost 1.55 cents on volume of 47,691 contracts. Open interest increased by 249 contracts, which is minuscule and significantly below average. As this report is being compiled on October 23, December copper is trading 5.10 cents lower and has made a new low for the move at 3.5480. Stand aside.

Silver: On October 19, December silver generated a short-term sell signal.

December silver gained 15.5 cents on volume of 31,999 contracts. Open interest declined by 350 contracts, which in relation to volume is approximately 50% less than average. As this report is being compiled on October 23, December silver is trading 42.7 cents lower and has made a new low for the move at 31.65, which is only 6 cents below silver’s low on October 22. Stand aside.

Gold: On October 22, December gold generated a short-term sell signal.

December gold gained $2.30 on light volume of 116,747 contracts. Open interest declined by 4,128, which in relation to volume is 40% above average, which means the liquidation was moderately heavy. The open interest action in gold relative to price continues to be positive, much more so than silver, which has large numbers of speculative longs whose positions are showing good size losses. As this report is being compiled on October 23, gold is trading $16.40 lower, and has made a new low for the move at 1705.10. With most of the markets down sharply, gold is moving in tandem. There is a possibility that gold could go lower if the S&P 500 E mini breaks below its current low for the day on October 23 of 1402. Until gold shows that it is uncorrelated to other markets, there is more potential risk on the downside. We like the long side gold, and will keep an eye out on possible entry points.

Euro:

The December euro closed 22 points higher on volume of 205,232 contracts. Open interest declined by 1,081 contracts, which in relation to volume is approximately 50% less than average. As this report is being compiled on October 23, the euro is trading 70 points lower. We continue to think the euro will move higher. Stand aside.

S&P 500 E mini: On October 22, the December S&P 500 E mini generated a short-term sell signal.

The S&P 500 E mini gained 6.00 points on volume of 1,779,595 contracts. Open interest declined by a minuscule 5,395 contracts, which is approximately 90% less than average. The market has been looking dismal for quite some time and those clients who purchased puts at higher levels should continue to hold them. New put positions should not be added at current levels. It wouldn’t surprise us if the Federal Reserve tries to pull a rabbit out of its hat between now and election day. This could cause the market to rally, if only temporarily. The problem is the Federal Reserve cannot fix the problems that are besieging the market.