Soybeans:

March soybeans advanced 15.75 cents on heavier than normal volume of 196,646 contracts. Volume declined by approximately 43,000 contracts from January 10 (the day of the USDA report release) when March soybeans advanced 4.75 cents and total open interest increased by 7,152 contracts. On January 13, total open interest increased by 6,563 contracts, which relative to volume is approximately 35% above average meaning that new longs were entering the market at an above average pace and driving prices higher.

As this report is being compiled on January 14, March soybeans are trading 12.25 cents higher and have made a new high for the move at $13.16 3/4, which is its highest price since December 30 when March beans printed 13.16. The January contract lost 739 of open interest, which makes the total open interest increase more impressive (bullish). Despite the move higher, March soybeans remain on a short and intermediate term sell signal on January 14. The key pivot points to watch are as follows: 13.04 5/8, 13.03, 13.06 3/8. It is crucial for soybeans to make a daily low above these pivot points for soybeans to continue to move higher. The daily low for March soybeans on January 14 is 12.88 1/2. It will be important for soybeans to show an above average increase of open interest and heavier than normal volume on January 14. Stand aside.

Soybean meal:

March soybean meal advanced $8.30 on volume of 76,923 contracts. Total open interest increased by a massive 6,740 contracts, which relative to volume is approximately 250% above average meaning that new longs were entering the market at an extraordinarily high rate and driving prices higher. The January contract lost 404 of open interest. It is likely that March soybean meal will reverse the short-term sell signal generated on January 2 today. March soybean meal remains on an intermediate term buy signal. Stand aside.

Corn: On January 13, March corn generated a short-term buy signal, but remains on an intermediate term sell signal.

March corn advanced 1.75 cents on heavier than normal volume of 375,327 contracts. Volume declined from 644,921 contracts traded on January 10 when March corn advanced 20.75 cents and total open interest increased by 12,816 contracts. On January 13, total open interest declined by 5,983 contracts, which relative to volume is approximately 40% below average, meaning that liquidation was light. The March contract lost 7,291 of open interest, which makes the total open interest decline more impressive (potentially bullish). As this report is being compiled on January 14, March corn is trading 3.25 cents lower and has not taken out yesterday’s high of 4.35 1/2. As we said in yesterday’s report, we prefer corn from the short side and await a further rally to blowout speculative shorts.

Chicago wheat:

March Chicago wheat advanced 4.50 cents on volume of 97,396 contracts. Total open interest declined by 2,928 contracts, which relative to volume is approximately 20% above average. The March contract lost 4,273 and May -716 of open interest. As this report is being compiled, March wheat is trading 3.50 higher and remains on a short and intermediate term sell signal. Stand aside.

Live cattle:

April live cattle closed unchanged on volume of 64,148 contracts. Total open interest declined by 999 contracts, which relative to volume is approximately 40% below average. The February contract lost 9,239 of open interest, which makes the total open interest decline more impressive (bullish). As this report is being compiled, both February and April cattle have made  new contract highs at 1.37725 and 1.38050 respectively. Continue to hold bullish positions in cattle.

WTI crude oil:

February WTI crude oil lost 92 cents on volume of 512,113 contracts. Total open interest increased by 2,152 contracts, which relative to volume is approximately 80% below average. The February contract lost 19,864 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on January 14, WTI is having another one of its feeble rallies and is trading 89 cents higher. WTI remains on a short and intermediate term sell signal. Stand aside with the exception of the short call position, which we recommended in late December.

Brent crude oil: On January 13, March Brent crude oil generated an intermediate term sell signal and generated a short-term sell signal on January 2.

This will be our last report on Brent crude oil until such time that we see a trading opportunity.

March Brent crude oil lost 64 cents on volume of 684,505 contracts. Total open interest declined by 11,349 contracts, which relative to volume is approximately 40% less than average. The February contract accounted for loss of 19,388 of open interest. As this report is being compiled on January 14, March Brent crude oil is trading 38 cents lower. Stand aside.

Gasoline: On January 13, February gasoline generated an intermediate term sell signal after generating a short-term sell signal on January 2. Stand aside.

Natural gas:

February natural gas advanced 22.1 cents on fairly heavy volume of 438,179 contracts. Volume was the highest since January 9 when 467,901 contracts were traded and natural gas declined by 21.1 cents while open interest declined by 8,156 contracts. On January 13, total open interest declined by 8,408 contracts, which relative to volume is approximately 20% less than average. The February contract accounted for loss of 11,169 of open interest. During the past 2 days, February natural gas has advanced 26.9 cents, but open interest has declined 21,637 contracts. This is bearish open interest action relative to a fairly significant advance. As this report is being compiled on January 14, February natural gas is trading 9.5 cents higher and has made a new high for the move at 4.382. OIA’s key pivot points are as follows: 4.293, 4.369, 4.394. For February natural gas to continue to advance, it not only has to reach the pivot points on the high side, but must be above these key pivot points for at least one day. Natural gas remains on a short-term sell signal, but an intermediate term buy signal.

Euro:

The March euro advanced 13 pips on light volume of 138,985 contracts. Total open interest increased by 714 contracts, which relative to volume is approximately 75% below average. As this report is being compiled on January 14, the March contract is trading unchanged on the day after making a high at 1.3700. The euro remains on a short-term sell signal, but an intermediate term buy signal. Stand aside.

Dollar index:

The March dollar index lost 14.3 points on very light volume of 18,614 contracts. Volume was the lightest since December 31 when 6,606 contracts were traded. On January 13, total open interest declined by 379 contracts, which relative to volume is approximately 20% below average. Remarkably, on January 13, the dollar index made a low of 80.600 and on January 14 the low has been 80.540, which remains above the exit point for long futures positions of 80.537, the January 6. The March dollar index remains on a short and intermediate term buy signal.

British pound:

The March British pound lost 84 pips on volume of 96,158 contracts. Total open interest increased by 261 contracts, which is minuscule and dramatically below average. As this report is being compiled on January 14, the March British pound is trading 54 pips higher. We would like to see a further correction down to the 50 day moving average before recommending long positions in GBP/EUR and GBP/CHF.

Australian dollar: On January 13, the March Australian dollar generated a short-term buy signal, but remains on an intermediate term sell signal.

The March Australian dollar advanced 67 pips on fairly heavy volume of 96,563 contracts. However, trading activity on January 13 was significantly less than the 130,842 contracts traded on January 10 when the Australian dollar advanced 1.03 cents, or 103 pips. On January 13, total open interest declined by 6,552 contracts, which relative to volume is approximately 160% above average meaning that liquidation was extremely heavy. On January 10, total open interest declined by 3,848 contracts. As this report is being compiled on January 14, the Australian dollar is trading 1.00 cent lower. Usually, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days. In this particular case when the longer-term trend in the Australian dollar is down, the short-term buy signal could be immediately reversed (which is a rare occurrence), or this could be the pause that refreshes before the Aussie dollar resumes its short-term uptrend. Stand aside.

Gold: On January 13, February gold generated a short-term buy signal, but remains on an intermediate term sell signal.

February gold advanced $4.20 on volume of 146,049 contracts. Total open interest increased by a massive 8,010 contracts, which relative to volume is approximately 120% above average meaning that new longs were aggressively entering the market and pushing prices to new highs ($1255.30). We like the way gold is trading, and strongly urge clients to initiate bullish positions if they have not done so already. Adding to the bullish tone of gold is platinum, which generated an intermediate term buy signal on January 13, and silver, which will generate a short-term buy signal on January 14.

Platinum: On January 13, April platinum generated an intermediate term buy signal after generating a short-term buy signal on January 2.

April platinum advanced 7.00 on light volume of 6,951 contracts. Total open interest declined by 69 contracts. As we have said numerous times, the open interest action in platinum is absolutely abysmal. Consistently, open interest action has been contradicting the incredible price performance of platinum. We find it remarkable that the systematic trend following crowd has not figured out that platinum is in a bull market. This explains the terrible open interest action and bolsters our view that platinum is headed much higher short-term. 

Silver:

March silver advanced 16.2 cents on volume of 40,163 contracts. Total open interest increased by 1,457 contracts, which relative to volume is approximately 40% above average meaning that new longs were aggressively entering silver and pushing prices higher. As this report is being compiled on January 14, March silver is trading 3.2 cents lower after making a new high for the move at 20.670. One of the benchmarks that silver had to pass was breaking above $20.50, and this was exceeded handily on January 14. As we said in previous reports, for silver to generate a short-term buy signal, the low for the day had to be above $20.06. Since the low for the day on January 14 is 20.125, a short-term buy signal will be generated. For bullish positions, we recommend the use of options due to the volatility of silver. However, silver volatility is trading at its lowest level going back to mid April 2013. This means options are very cheap, and we strongly recommend their use instead of futures contracts.

S&P 500 E mini:

The S&P 500 E mini lost 22.75 points on heavier than normal volume of 1,713,084 contracts. Total open interest increased by 24, 406 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on January 14, the E mini has reversed and is trading 15.50 higher on the day and made a high of 1832.50. We continue to recommend long put protection for clients who hold long equity positions.