Soybeans: On September 21, November soybeans generated a short-term sell signal.

November soybeans gained 3.00 cents on volume of 198,626 contracts. Volume declined by 83,103 contracts from September 20 when soybeans declined by 50.75 and open interest increased by 3,372 contracts. On September 21, open interest declined by 5,217 contracts, which in relation to volume is average. As this report is being compiled on September 24, November soybeans are trading 16.00 cents lower and have made a new low at $15.90 1/4. We have been cautioning our readers for a couple of weeks to avoid the long side. They should continue to stand aside and wait for a bottom.

Soybean meal: On September 21, December soybean meal generated a short-term sell signal.

October soybean meal gained $2.20 on volume of 61,786 contracts. Volume declined by approximately 15,500 contracts from September 20, when soybean meal declined by $17.40 and open interest declined by 4,327 contracts. On September 21, open interest declined by a massive 4,070 contracts, which in relation to volume is 275% above average. As indicated in previous reports, the massive decline of open interest is very positive for soybean meal. Speculators should continue to stand aside until a bottom is in place.

Corn:

December corn gained 2.25 cents on volume of 173,384 contracts. Volume declined by approximately 53,000 contracts from September 20 when corn declined by 10.50 and open interest increased by 1,231 contracts. On September 21, open interest declined by 3,730 contracts, which in relation to volume is somewhat below average. December corn generated a short-term sell signal on September 11. Speculators should continue to stand aside until a bottom is in place.

Wheat:

December wheat gained 17.75 cents on volume of 74,737 contracts. Volume declined by 8,000 contracts from September 20 when wheat declined by 2.00 cents and open interest declined by 289 contracts. It is disappointing to see that volume declined nearly 10% from September 20 on the advance on September 21. On September 21, open interest increased by 832 contracts, which in relation to volume is approximately 60% less than average. The open interest increase is disappointing as well. We believe the market is going to move higher, but the reality is with the other grains trading sharply lower, wheat will probably follow. As this report is being compiled on September 24, wheat is trading 10.75 cents lower. Ideally, we want to see wheat trade independently higher. Until this happens, speculators should continue to stand aside.

Crude oil:

November crude oil gained 47.00 cents on volume of 421,444 contracts. Volume was the lowest since August 30 when 400,126 contracts were traded and crude oil closed at $94.62. On September 21, open interest declined by 8,660 contracts, which in relation to volume is approximately 10% less than average. During the past five trading sessions, open interest has declined by 76,369 contracts while crude oil has declined by $6.44. While price and open interest action are acting in a constructive fashion, crude oil generated a short-term sell signal on September 20. As this report is being compiled on September 24, crude oil is trading $1.63 lower. Continue to stand aside.

Heating oil:

November heating oil gained 2.47 cents on volume of 148,872 contracts. Open interest increased by 3,769 contracts, which in relation to volume is average. The 50 day moving average and the 200 day moving average are converging at the $3.00 level, which should provide good support going forward. On September 20, heating oil made a low of $3.0227 and on September 19 made a low of $3.0246. Heating oil remains on a short and intermediate term buy signal. Although we like the long side of heating oil, if crude continues lower, heating oil will be negatively impacted. As this report is being compiled on September 24, November heating oil is trading 3.70 cents lower. If speculators want to put on long positions, they should wait to see how heating oil acts when and if it retests the lows made on September 19 in 20. At the 3.00 level, heating oil is clearly in the value zone. According to the COT report (please see Weekend Wrap for September 23) the ratio of managed money longs to shorts is sharply lower than in gasoline.

Gasoline:

November gasoline gained 3.86 cents on volume of 156,175 contracts. Open interest increased by 4,463 contracts, which in relation to volume is slightly above average. Although the supply situation for gasoline is quite bullish, the political ramifications of high gasoline prices and consumer resistance to higher prices, leaves gasoline vulnerable to downward pressure. As this report is being compiled on September 24, gasoline is trading 2.82 cents lower. Gasoline remains on a short and intermediate term buy signal.

Copper:

December copper gained 3.00 cents on volume of 53,023 contracts. Open interest increased by 2,588 contracts, which in relation to volume is almost 100% above average. Although copper generated a short-term buy signal on August 23, and an intermediate term buy signal on September 7, we remain skeptical about copper moving significantly above the $3.80 level. As we’ve indicated in previous reports, the Shanghai Composite Index is indicating there is more weakness ahead in the Chinese economy while the rest of the global economy is slowing down as well. Stand aside.

Gold:

December gold closed $7.80 higher on volume of 201,860 contracts after making a new high for the move at $1790.00 and closing at $1778.00. Open interest increased by 4,963 contracts, which in relation to volume is average. The market remains overbought and speculators are encouraged to stand aside until gold corrects at least $50-$60 from the high.

Silver:

December silver lost 4.4 cents on volume of 69,950 contracts. Volume was the highest since September 13 when 95,338 contracts were traded and silver closed at $34.716. On September 21, open interest increased by 2,731 contracts, which in relation to volume is approximately 60% above average. Silver made a new high for the move at $35.26, but was unable to hold its gains and closed at $34.638. Like gold, silver continues to be massively overbought and speculators should wait for at least a $2.00-$3.00 correction from the high.

Euro:

The December euro gained 20 points on volume of 281,259 contracts. Open interest increased by 1,856 contracts. The price and open interest action in the euro for the past few days have been positive. Although the market is pulling back due to its overbought condition relative to its 50 day moving average of 1.25, we expect the rally to continue. Stand aside.

S&P 500 E mini:

The December. S&P 500 E mini lost 1.75 points on volume of 1,666,901 contracts. Open interest declined by 84,819 contracts, and the large open interest decline is attributable to the liquidation of the September contract. We are looking for the market to retest its high of 1468 made on September 14. Speculators should have long put positions in place.