Soybeans:

March soybeans advanced 20.50 cents on volume of 224,538 contracts. Remarkably, volume was lower than the 240,429 contracts traded on January 30 when March soybeans advanced 5.75 cents and open interest increased by 3,335 contracts. Although volume was relatively light considering the magnitude of the advance, total open interest increased by a massive 9,446 contracts, which relative to volume is approximately 60% above average meaning that new longs were aggressively entering the market and pushing prices to new highs for the move (13.16). As this report is being compiled on February 6, March soybeans are trading 1.25 cents higher and have made a new high for the move at 13.21 1/4.

The light volume on advances accompanied by moderate increases of open interest prior to February 4 indicate there is a lack of market enthusiasm for the long side of soybeans at this juncture. It appears that March soybeans will generate a short and intermediate term buy signal on February 5 as long as March soybeans trade above its low for the day of 13.05. We have no recommended position in soybeans at this juncture.

Soybean meal:

March soybean meal advanced $13.00 on heavy volume of 103,782 contracts. Volume was the highest since December 17 when 106,695 contracts were traded and March soybean meal closed at $436.60. On February 4, March soybean meal made a new high for the move at $447.60, which is the highest price on the continuation chart since soybean meal made a high of 451.50 on December 30, 2013. As this report is being compiled on February 5, March soybean meal has made another new high at 448.80, but is now trading $5.30 lower on the day. Aside from recommending a light bullish position in soybean meal on January 31 in conjunction with bearish positions in soybeans, we have no recommended position at this juncture. The key area to watch is the 452.00 area. If the market is able to break significantly above that, there is no resistance until the 480.00 area. The 5 day moving average is 434.60 and the 20 DMA is 426.50.

Corn:

March corn advanced 6.00 cents on fairly heavy volume of 322,106 contracts. Volume shrank from the 327,188 contracts traded on February 3 when March corn advanced 1.75 cents and total open interest increased by 5,632 contracts. On February 4, total open interest increased by 8,512 contracts, which relative to volume is average. The March contract lost 8,101 of open interest, which makes the open interest increase much more impressive (bullish).  During the past 2 days, corn has advanced accompanied by increases of open interest. As this report is being compiled on February 5, March corn is trading in a very narrow range of 3.00 cents and is unchanged on the day. March corn remains on a short-term buy signal, but an intermediate term sell signal. However, corn is getting close to generating an intermediate term buy signal.

Chicago wheat:

March Chicago wheat advanced 20.75 cents on very heavy volume of 148,428 contracts. Volume was the highest since January 29 when 166,688 contracts were traded and March Chicago wheat lost 14.50 cents while total open interest increased by 1985 contracts. On February 4, total open interest declined by 459 contracts, which is minuscule and dramatically below average. The March contract lost 10,942 of open interest, which makes the total open interest decline somewhat more impressive (potentially bullish). The May 2014 through September 2015 contracts all gained open interest, which offset most of the March open interest decline. As we stated in yesterday’s report: “If March wheat makes a low above $5.76 3/4, a short-term buy signal will be generated.” As this report is being compiled on February 5, March Chicago wheat is trading 0.50 higher and has made a new high for the move at 5.88 3/4. Unless wheat falls apart, it will generate a short-term buy signal on February 5.

Kansas City wheat:

March Kansas City wheat advanced 22.25 cents on heavy volume of 31,589 contracts. Volume was the highest since January 10 when 37,051 contracts were traded and March KC wheat closed at $6.26. On February 4, total open interest declined by 945 contracts, which relative to volume is approximately 20% above average. The March contract lost 2,918 of open interest. Based upon trading on February 5, March KC wheat will definitely generate a short-term buy signal on February 5 . 

From the February 3 report:

Kansas City wheat: March Kansas City wheat will generate a short-term buy signal if the daily low is above $6.33 3/8. March Kansas City wheat has been outperforming Chicago wheat on a year-to-date basis with KC wheat declining 2.54% while March Chicago wheat – 6.86%.

Live cattle:

April live cattle lost 50 points on low volume of 46,994 contracts. Total open interest declined by 702 contracts, which relative to volume is approximately 40% below average. The February contract lost 2,010 of open interest. We continue to think that cattle is in a corrective mode and our opinion would change if cattle makes a low for the day above of 1.39600.

WTI crude oil:

March WTI crude oil advanced 76 cents on light volume of 437,880 contracts. Total open interest declined by 195 contracts, which is minuscule and dramatically below average. The March contract lost 6,345 of open interest. Price and open interest action along with lackluster volume confirm the total lack of enthusiasm by the market for WTI crude oil. March WTI remains on a short-term buy signal, but an intermediate term sell signal. As this report is being compiled on February 5, March WTI is made a high of 98.26 and is currently trading 17 cents higher on the day. We think it is only a matter of time before March WTI generates a short-term sell signal.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.4 million barrels from the previous week. At 358.1 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 0.5 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 2.4 million barrels last week and are well below the lower limit of the average range for this time of year. Propane/propylene inventories fell 0.8 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 5.3 million barrels last week.

Natural gas:

March natural gas advanced 47 cents on relatively light volume of 394,188 contracts. Total open interest increased by 13,628 contracts, which relative to volume is approximately 40% above average meaning that new longs were aggressively entering the market and driving prices higher. As this report is being compiled on February 5, natural gas has made another new contract high at $5.737, but is currently trading 24 cents lower on the day. This is a market to be avoided.

Euro:

The March euro lost 15 pips on volume of 181,760 contracts. Total open interest increased by 726 contracts, which relative to volume is approximately 85% below average. The ECB meets tomorrow and it is anybody’s guess what will come out of the meeting. We advise a stand aside posture until Friday. The March euro remains on a short and intermediate term sell signal.

British pound: On February 4, the March British pound generated a short-term sell signal, but remains on an intermediate term buy signal.

The March British pound gained 14 pips on volume of 103,509 contracts. Total open interest declined by 7,020 contracts, which relative to volume is approximately 160% above average meaning that liquidation was extremely heavy. February 4 was the 4th day in a row that prices declined along with open interest. This is extremely healthy considering the massive numbers of speculative longs in the pound. The next area we are focusing on is 1.6300. If the March pound’s daily high is below this number, we see the market trading down to support between 1.6164 and 1.6215. During the next couple of days we will be examining potential long sterling crosses that have been overbought,, but have corrected close to their 50 day moving averages and are on short and intermediate term buy signals.

Yen:

The March yen lost 75 pips on volume of 201,688 contracts. Volume shrank from the 252,193 contracts traded on February 3 when the March yen advanced 143 pips and total open interest declined by 858 contracts. On February 4, total open interest declined by 3,003 contracts, which is healthy and relative to volume is approximately 40% below average. As this report is being compiled on February 5, the March yen is trading 15 pips higher and has made a high of .9923. This area is exhibiting resistance for the past 3 sessions. The high on February 3 was .9926 while the high on February 4 was .9927. It appears the yen wants to go higher and we see the current activity as consolidation. The March yen remains on a short-term buy signal, but an intermediate term sell signal.

Gold:

April gold lost $8.70 on light volume of 102,516 contracts. Total open interest declined by 2,854 contracts, which relative to volume is average. As this report is being compiled on February 5, gold has been trading higher on the day however it has slipped back after making a high of $1274.50 on low volume. Silver is higher on the day and platinum is unchanged. Stand aside.

10 year treasury note: On February 4, the March 10 year treasury note generated an intermediate term buy signal after generating a short-term buy signal on January 23

The March 10 year treasury note lost 9 points on heavy volume of 1,994,583 contracts. Volume was higher than the 1,988,672 contracts traded on January 29, and was exceeded by volume of November 27 when 2,720,858 contracts were traded. On February 4, total open interest declined by 17,097 contracts, which relative to volume is approximately 55% less than average. It is not surprising to see open interest decline as treasury note prices advanced to the upper end of their trading range after trending solidly higher since January 2. We expect to see a pullback that lasts 1-3 days and as this report is being compiled, the March note has made a high of 126-15 and is trading 8.5 points lower on the day.

S&P 500 E mini:

The March S&P 500 E mini advanced 11.00 point on volume of 2,332,009 contracts. Total open interest declined by 28,445 contracts, which relative to volume is approximately 45% less than average, however a decline on a price advance is bearish open interest action. As this report is being compiled on February 5, the S&P 500 E mini is trading 4.75 points higher and has made a high for the day of 1750.75, which is a couple of points short of the high of 1753.50 made on February 4. We continue to advise the maintenance of long put protection for clients who hold long equity positions.