Soybeans:

November soybeans closed. 29.00 cents lower on fairly heavy volume of 277,417 contracts. Volume increased approximately 600 contracts from September 17 when soybeans lost 70.00 cents and open interest declined by 1,749 contracts. On September 18, open interest declined by 3,952 contracts, which in relation to volume is approximately 40% less than average. As indicated in prior reports, the market looks to head lower in the next couple of weeks and investors should stand aside until a bottom is in place.

Soybean meal:

October soybean meal lost $12.10 on heavy volume of 95,539 contracts. Volume declined approximately 3,000 contracts from September 17 when  meal closed down $20.00 and open interest declined by 1,121 contracts. On September 18, open interest declined by 3,942 contracts, which in relation to volume is approximately 35% above average. For the past several days, we’ve seen open interest declines that exceed soybeans based upon open interest decreases relative to volume. Consider that on September 18, volume in soybeans was approximately 285% more than soybean meal, but the open interest decline was nearly equal. We are pleased that massive liquidation is occurring because soybean meal is going to be a terrific performer once the liquidation is over. Like soybeans, soybean meal will drift lower until it finds a bottom, which is likely in the next 2 to 3 weeks.

Corn:

December corn lost 8.00 cents on volume of 238,434 contracts. Volume increased by approximately 15,000 contracts from September 17 when corn lost 34.00 cents and open interest declined by 3,471 contracts. On September 18, open interest declined by 3,549 contracts, which in relation to volume is approximately 40% less than average. During the last four sessions, volume in soybeans has exceeded corn, which is highly unusual. The continued lack of volume in corn, is problematic for longs. Like soybeans and soybean meal, corn will follow the rest of the grain complex lower in the next couple of weeks. Stand aside for now.

Wheat:

December wheat lost 14.50 cents on volume of 84,952 contracts. Volume declined by approximately 6,000 contracts from September 17, when wheat fell 46.25 and open interest declined by 8,633 contracts. On September 18, open interest declined by 4,884 contracts, which in relation to volume is approximately 100% above average. During the past two days, open interest has declined by 14,571 contracts while wheat prices lost 60.75 cents. During September 13 and 14, open interest increased by 19,943 while wheat advanced 34.25 cents. In essence, wheat has lost a majority of the open interest build that occurred on September 13 and 14. At this juncture, wheat will likely trade in synchronization with the rest of the grain complex. Stand aside for now.

 Crude oil: 

November crude oil lost $1.33 on volume of 545,299 contracts. Volume declined by 174,239 contracts from September 17 when crude oil lost $2.38 and open interest declined by 27,684 contracts. On September 18, open interest declined by 5,938 contracts, which in relation to volume is approximately 70% less than average. We have been warning our clients for a number of weeks that open interest action relative to price performance has been dismal. On September 17, we wrote there were large numbers of longs that would need to liquidate if prices moved much lower. Additionally, on September 14, we wrote that the high of $100.42 was likely to be the top for awhile. Readers should review that report. After September 14, crude oil prices have fallen and as this report is being compiled on September 19, crude oil is trading $3.75 lower.

Heating oil:

November heating oil lost 3.80 cents on light volume of 113,873 contracts. Volume declined approximately 37,000 contracts from September 17 when heating oil declined 7.61 cents and open interest declined by 6,902 contracts. On September 18, open interest declined by 3,355 contracts, which in relation to volume is average. We have been warning that heating oil is overbought and that speculators should stand aside. As this report is being compiled on September 19, heating oil is trading 9.34 cents lower. Stand aside.

Gasoline:

November gasoline lost 5.04 cents on light volume of 125,701 contracts. Volume declined approximately 39,000 contracts from September 17 when gasoline lost 7.23 and open interest declined by 8,882 contracts. On September 18, open interest increased by 937 contracts. We have been saying the top is in for gasoline and there is no reason to be involved in it. As this report is being compiled on September 19, November gasoline is trading 10.34 cents lower. Stand aside.

Copper:

December copper lost .0050 on volume of 56,144 contracts. Open interest declined by 764 contracts. Although copper continues to act well, as we indicated in previous reports, our concern is the performance of the Shanghai Composite Index. The index is giving indications that  there are deeper troubles facing the Chinese economy. Since China is the world’s largest consumer of copper, it is difficult to see how copper moves significantly above the $3.80 level. Conceivably, we have a garden-variety countertrend rally, but the ultimate direction of copper is unclear at this juncture. The market remains overbought. Stand aside.

Gold:

December gold gained 60.00 cents on volume of 176,220 contracts. Open interest increased by 5,031 contracts, which in relation to volume is average. The market remains overbought. Stand aside.

Silver:

December silver gained 35.1 cents on volume of 63,699 contracts. Volume increased by approximately 15,000 contracts from September 17 when silver lost 28.9 cents and open interest declined by 696 contracts. On September 18, open interest increased by 3,362 contracts, which in relation to volume is approximately 100% above average. During the past four trading sessions, open interest has increased by 7,310 contracts while silver prices have advanced $1.54. The market is acting strong and on September 18 reached a new high for the move at 35.10. Despite this, the market is massively overbought and is vulnerable to a setback of at least $2.00. Stand aside.

Euro:

The December euro lost 68 points on light volume of 227,930 contracts. During the past two days when the euro has declined volume shrinks with it. This is positive market action. On September 18, open interest declined by 3,898 contracts, which is positive and in relation to price is approximately 30% less than average. The market continues to act well, and we continue to advise speculators not to short the euro.

S&P 500 E mini:

The December. S&P 500 E mini gained 1.50 on volume of 2,583,774 contracts. Open interest increased by 116,649 contracts, which in relation to volume is approximately 50% above average. We continue to believe the market will climb higher at least until  September 30 when end of the third quarter window dressing comes to an end. We continue to suggest long put protection, and holders of Apple Computer should have protective sell stops to protect profits.