Soybeans:

March soybeans lost 2.50 cents on volume of 194,154 contracts. Total open interest declined by 1,529 contracts, which relative to volume is approximately 60% less than average. The March contract lost 6,848 of open interest. As this report is being compiled on January 24, March soybeans are trading 1.50 cents lower and have made a new low for the move at $12.63 1/2. On January 21, March soybeans generated a short and intermediate term sell signal, and therefore recommend that beans be traded from the short side only. The market looks weak and though we have recommended initiating bearish positions on rallies, we question how much of a bounce we are likely to get at this juncture.

The USDA reported that 703.4 thousand metric tons(tmt) have been sold bringing total commitments to date of 1548.7 billion bushels (bb) versus USDA projections of 1.495 bb.

Soybean meal:

March soybean meal lost 70 cents on volume of 86,296 contracts. Total open interest increased by 2,851 contracts, which relative to volume is approximately 40% above average. The March contract lost 543 of open interest. As this report is being compiled on January 24, March soybean meal is trading $2.50 higher on low volume. March soybean meal remains on a short and intermediate term buy signal.

The USDA reported that 241.4 tmt had been sold bringing total sales season to date of 6695 tmt versus USDA projections for the season of 9707 tmt.

Corn:

March corn advanced 2.75 cents on higher than normal volume of 292,284 contracts. Volume was the highest since January 13 when 375,327 contracts were traded and March corn advanced 1.75 cents while open interest declined 5,983 contracts. On January 23, total open interest increased by a massive 15,248 contracts, which relative to volume is approximately 100% above average meaning that new longs and shorts were aggressively entering the market, but longs had the edge by moving the market fractionally higher. Open interest increased in the March through July 2014 contracts. March corn made a high of $4.31 1/4, which is its highest price since January 15 when it reached 4.31 1/2. As this report is being compiled on January 24, March corn is trading 0.50 cents higher. March corn remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

The USDA reported that 693 tmt have been sold bringing total commitments to date of 1.184.8 bb versus USDA projections for the season of 1.450 bb.

Chicago wheat:

March Chicago wheat advanced 8.75 cents on volume of 83,541 contracts. Total open interest increased by 1,791 contracts, which relative to volume is approximately 15% less than average. Open interest increased in the March through May 2014 contracts. As this report is being compiled on January 24, March wheat is trading 5.50 lower and has made a low of 5.62 1/2, which is above the contract low of $5.60 1/2 made on January 10. March wheat has been skating on the lows for the past couple of weeks and with export sales as good as they are, we think wheat is clearly searching for a bottom. March Chicago wheat remains on a short and intermediate term sell signal.

That USDA reported that sales totaled 421.4 tmt, which is the highest number in 4 weeks. Total commitments season to date are 930 million bushels (mb), which is 195 mb below the total projections for the season (ending May 31) by the USDA of 1.125 bb.

Live cattle:

April live cattle lost 1.20 cents on volume of 68,892 contracts. Total open interest declined by 2,612 contracts, which relative to volume is approximately 50% above average meaning that liquidation was fairly heavy on the decline. The February contract lost 3,421 of open interest. The market topped out at 1.43125 on January 22 and through January 24, has made a low of 1.39750. We have been warning about an imminent pullback and though it may continue for a couple of days, we think prices are headed higher. Stay with bullish positions.

 Cocoa:

March cocoa advanced 94.00 on heavy volume of 43,513 contracts.Volume was the highest since November 11, 2013 when 53,472 contracts were traded. On January 23, total open interest increased by a massive 4,606 contracts, which relative to volume is approximately 320% above average meaning that new longs were massively entering cocoa and driving prices higher. We recommended bearish positions in cocoa and advised to exit the positions at 2772.00. Cocoa will generate a short-term buy signal on January 24, which will reverse the short-term sell signal generated on January 2. Cocoa remains on an intermediate term buy signal. Stand aside.

 

WTI crude oil:

March WTI crude oil advanced 59 cents on fairly heavy volume of 646,012 contracts. Interestingly, volume increased by approximately 100,000 contracts from January 22 when WTI advanced $1.76 and total open interest declined by 16,207 contracts. On January 23, total open interest declined by 5775 contracts, which relative to volume is approximately 55% less than average. The March contract accounted for loss of 3915 of open interest. As for the past 4 sessions beginning on January 17, March WTI has advanced $3.22, while open interest has declined by 33,903 contracts. This is bearish open interest action relative to the price advance. On January 23, March crude made a high of $97.84 and thus far in the session on January 24 is 97.80. Although we think crude has the wherewithal to continue its advance, the abysmal open interest action tells us to be cautious. Stand aside.

Natural gas:

February natural gas advanced 4.1 cents on volume of 571,918 contracts. Total open interest declined by 10,278 contracts, which relative to volume is approximately 25% less than average. The February contract accounted for loss of 20,841 of open interest. The February contract made a new high for the move the $4.947 and as this report is being compiled on January 24 has made another new high at $5.098 and March’s high is 5.037. The market continues its extraordinary move and we strongly advise against initiating new bullish positions. Additionally, we caution clients not to get carried away by the move if they are long from lower levels. Once cold-weather begins to dissipate, so will the bullish move in natural gas. Natural gas remains on a short and intermediate term buy signal.

Euro:

The March euro advanced 1.50 cents on volume of 321,124 contracts. Volume was the highest since December 12 when 387,214 contracts were traded and the March euro closed at 1.3743. On January 23, total open interest increased by 7,923 contracts, which relative to volume is average. As this report is being compiled on January 24, the March euro is trading 12 pips lower and has made a high for the move at 1.3740, which is its highest price since December 31 when the March euro reached 1.3812. If today’s low holds, the March euro will generate a short-term buy signal, which will reverse the short-term sell signal generated on January 8.

Swiss franc:

The March Swiss franc advanced 1.73 cents on volume of 56,080 contracts. Volume was the highest since December 12 when 63,428 contracts were traded and the March franc closed at 1.1242. On January 23, total open interest declined by 2656 contracts, which relative to volume is approximately 90% above average meaning that liquidation was heavy on the advance. What makes this striking is that according to the COT report, which was tabulated on January 14 the long to short ratio of managed money for the Swiss franc was 1.51:1 and the euro 1.72:1. In short, market participants reacted bullishly to the advance in the euro and bearishly to the gain in the Swiss franc, even though the percentage gain in the Swiss franc was considerably higher than the euro. It appears the Swiss franc will generate an intermediate term buy signal on January 24, but not a short-term buy signal.

 Dollar index:

The March dollar index lost 78 points on heavy volume of 35,255 contracts. Volume was the heaviest since January 10 when 38,856 contracts were traded. On January 23, total open interest declined by 580 contracts, which relative to volume is approximately 40% below average. Considering the magnitude of the decline, it is troubling that the open interest decline was significantly below average. We’ve seen open interest builds on price advances, yet it appears that longs are digging in and not liquidating.

The problem with this is that the euro will likely generate a short-term buy signal today, and is already on an intermediate term buy signal. Since the euro represents approximately 58% of the movement of the dollar index, we think it is best to exit the trade at this juncture. Additionally, the March treasury note generated a short-term buy signal on January 23, which means that interest rates are likely to move lower, and this is negative for the dollar. Also, it appears that the March yen may generate a short-term buy signal, which will further pressure the dollar. We advise the liquidation of all bullish positions in the dollar index immediately.

British pound:

The March British pound advanced 54 pips on heavy volume of 135,361 contracts. Total open interest increased by 2,304 contracts, which relative to volume is approximately 25% less than average. March sterling made a new high for the move at 1.6638 and on January 24, as this report is being compiled, made another new high at 1.6662, but the pound has reversed and is now trading 1.30 cents lower. The market is massively overbought from a price and open interest standpoint. There are large numbers of longs who entered the market in the past 5 sessions, which will provide fuel for a correction. Stand aside.

Gold:

February gold advanced $23.70 on very heavy volume of 259,248 contracts. Volume was the highest since November 26 when 310,510 contracts were traded and February gold closed at $1241.40. On January 23, total open interest increased by a robust 10,175 contracts, which relative to volume is approximately 50% above average meaning that aggressive new longs were entering positions and driving prices to new highs for the move (1267.00). The high on January 23 was identical to the one made on December 10. As this report is being compiled on January 24, February gold has made a new breakout high at $1273.20 on healthy volume. This is the highest price since November 20 when February gold reached 1275.70. However, the terrible performance of silver is tamping down our bullish enthusiasm for gold. Usually, silver leads the precious metals higher, not gold and platinum. Maintain bullish positions with appropriate risk measures in place. The the equity market is clearly rolling over, and on a major decline, it is likely that many commodities will be caught in the wave.

Platinum:

April platinum advanced 80 cents on volume of 12,317 contracts. Total open interest increased by 595 contracts, which relative to volume is approximately 100% above average meaning both longs and shorts were battling for position, but prices changed only fractionally. As this report is being compiled on January 24, April platinum is trading 15.50 lower and has made a low for the move at 1423.00.The market had a move that was literally straight up, and we warned about the parabolic nature of it and the hazards relating to it. We suspect that much of the downside in platinum on January 24 is due to sharply lower equities. Stand aside. If long from lower levels continue to hold positions, but make sure risk management is in place, especially since it appears that equities are headed still lower.

Silver:

March silver gained 17.1 cents on volume of 56,221 contracts. Volume was the highest since January 14 when 56,627 contracts were traded and March silver closed at $20.282. On January 23, total open interest increased by 706 contracts, which relative to volume is approximately 45% below average. As this report is being compiled, silver is trading 18.1 cents lower and has made a low of 19.715. Silver continues to be the laggard, and it needs to pull its own weight before we get a rip-roaring bull market in the precious metals.

10 year treasury note: On January 23, the March 10 year treasury note generated a short-term buy signal, but remains on an intermediate term sell signal.

The 10 year treasury note lost 26 points on volume of 1,653,771 contracts. Volume was the highest since January 10 when 1,683,252 contracts were traded. On January 23, total open interest increased by 32,798 contracts, which relative to volume is approximately 20% below average. This is the first buy signal in the treasury note in quite a while, and confirms that interest rates are headed lower. We have no trading recommendation.

S&P 500 E mini:

The S&P 500 E mini lost 14.25 points on fairly heavy volume of 1,821,274 contracts.Total open interest increased by 26,626 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on January 24, the March E mini is trading 30.50 points lower and has made a new low for the move at 1790.50. For number of months, we have been recommending long put protection for those clients who hold long equity positions.