Soybeans:

March soybeans advanced 7.75 cents on higher than normal volume of 212,130 contracts. Volume was the highest since January 14 when 220,963 contracts were traded and March soybeans advanced 12.75 while open interest increased by 702 contracts. On January 24, total open interest declined by 3,075 contracts, which relative to volume is approximately 40% below average. The March contract accounted for loss of 4,858 of open interest. This is the second time since January 15 that soybean prices advanced and open interest declined. The most recent day prior to the 24th was on January 15 when soybeans advanced 11.00 cents and total open interest declined 1,435 contracts. On January 21, March soybeans generated a short and intermediate term sell signal, which means that soybeans should be traded only from the bearish side. The market looks weak and we would use the January 23 high of $12.96 3/4 as an exit point for bearish positions.

Soybean meal:

March soybean meal advanced $7.00 on volume of 79,409 contracts. Total open interest increased by 3,883 contracts, which relative to volume is approximately 95% above average meaning that new longs were aggressively entering the market and driving prices higher. Open interest increased in the March through July 2014 contracts. As this report is being compiled on January 27, March soybean meal is trading $1.70 higher while March soybeans are trading 3.25 cents lower. March soybean meal has made a high of $432.60 on the 27th, which is its highest price since January 21 when it reached 432.30. From a price and open interest standpoint, soybean meal is clearly the strongest in the bean complex. Soybean meal remains on a short and intermediate term buy signal. Stand aside.

Corn:

March corn advanced 0.50 cents on volume of 256,829 contracts. Volume declined approximately 36,000 contracts from January 23 when March corn advanced 2.75 and total open interest increased by 15,248 contracts. On January 24, total open interest declined by 8,071 contracts, which relative to volume is approximately 25% above average, meaning that both longs and shorts were liquidating as corn closed fractionally higher. As this report is being compiled on January 27, March corn is trading 1.00 cent higher and has made a new high for the move at $4.3200, which is its highest price since January 14 when it made a high of 4.3400. March corn remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

Chicago wheat:

March Chicago wheat lost 4.75 cents on volume of 69,025 contracts. Total open interest increased by 3,403 contracts, which relative to volume is approximately 100% above average meaning that shorts were aggressively entering the market and driving prices lower. Open interest increased in the March through July 2014 contracts. Despite many attempts, March wheat has been unable to penetrate the January 10 low of $5.60 1/2. As this report is being compiled on January 27, March wheat is trading unchanged on the day at $5.65 1/4. Stand aside.

Live cattle:

April live cattle lost 50 points on volume of 46,649 contracts. Total open interest increased by 649 contracts, which relative to volume is approximately 45% below average. The February contract lost 1,822 of open interest. As this report is being compiled on January 27, April cattle is trading 5 points higher after making a new low for the move at 1.39450. This low filled the gap made between January 17 and January 21 (January 20 was a holiday). It is difficult to determine how much further April cattle will correct, but we prefer to see more backing and filling. We do not see evidence that recent futures price increases have been passed on to the retail consumer. As a result, consumers will not cut back significantly in their beef consumption until it hurts them in the pocket-book. Our monitoring of the media indicates the rise in cattle prices has not become a front-page story. Until it does, consumption should be steady, which is bullish for cattle. The market may consolidate in a sideways to lower pattern before making a fresh assault on the January 22 high of 1.43125. Maintain bullish positions.

WTI crude oil: On January 24, March WTI crude oil generated a short-term buy signal, but remains on an intermediate term sell signal.

March WTI crude oil lost 68 cents on volume of 493,442 contracts. Total open interest declined by 660 contracts, which is minuscule and dramatically below average. The March contract lost 898 of open interest. As this report is being compiled on January 27, March WTI is trading $1.33 lower and has made a low for the move at $95.21 which is its lowest price since January 22 when it reached 95.12. Usually, after the generation of a buy signal, the market tends to pullback from 1-3 days, and March WTI is following the pattern on January 27. In the January 26 Weekend Wrap, we discussed our lack of enthusiasm for crude oil even though it had generated a short-term buy signal. Despite this, we tend to think there will be a test of the January 24 high of 97.80 and the January 23 high of 97.84. With gasoline, heating oil and Brent crude oil on sell signals, we cannot make a bullish recommendation in WTI, and the short-term buy signal warns us about getting bearish. Stand aside.

Natural gas:

March natural gas advanced 41.9 cents on huge volume of 711,753 contracts. Volume was the highest since December 12 when 726,395 contracts were traded and March natural gas closed at $4.363. On January 24, total open interest increased only 850 contracts. The February contract lost 13,632 of open interest. The total open interest increase of only 850 contracts on a move of nearly 42 cents is extremely negative. In short, it indicates that shorts are getting blown out in huge numbers as evidenced by the high-volume, but new long and short positions are not being initiated to any degree. Natural gas is a weather market and it can make you money rapidly and take it away just as fast. It is best to sit on the sidelines and watch the action rather than participate in it. March natural gas made a high on January 27 of $5.199 and currently is trading 15.7 cents lower on the day.

Euro: On January 24, the March euro generated a short-term buy signal, which reversed the short-term sell signal generated on January 8. The euro remains on an intermediate term buy signal.

The March euro lost 20 pips on volume of 244,810 contracts. Volume shrank by approximately 77,000 contracts from January 23 when the euro advanced 1.50 cents and open interest increased by 7,923 contracts. On January 24, total open interest declined by 1,955 contracts, which relative to volume is approximately 55% less than average. We think the performance of the euro on Friday was outstanding, and confirms it is headed higher. Trade the euro from the long side only. For more information, please review the January 26 Weekend Wrap.

Swiss franc: On January 24, the March Swiss franc generated a short and intermediate term buy signal. Trade the Swiss franc from the long side only.

British pound:

The March British pound lost 1.24 cents on very heavy volume of 157,524 contracts. Volume was the highest since December 12 when 226,583 contracts were traded and the March pound closed at 1.6336. On January 24, total open interest declined by 4,516 contracts, which relative to volume is average. The decline on Friday was the largest since January 2 when the March pound lost 1.44  cents on volume of 76,494 contracts and open interest declined by 4,356 contracts. Although the March pound should be traded from the long side, there has been a large build of open interest, especially by speculators, which make it vulnerable to more of a correction. As a consequence, we think sterling will trade in a sideways to lower pattern. We want to see speculators shed more of their long positions before recommending bullish positions in the March pound and bullish pound crosses.

Copper: On January 24, March copper generated a short-term sell signal, but remains on an intermediate term buy signal. Although March copper has not yet generated in intermediate term sell signal, we think this is inevitable and as a result copper should be traded from the bearish side.

Gold:

February gold advanced $2.00 on heavier than normal volume of 208,460 contracts. Total open interest declined by 6,633 contracts, which relative to volume is approximately 25% above average, meaning that both longs and shorts were liquidating even as February gold made a new high for the move at $1273.20. The February contract, which is approaching 1st notice day lost 16,880 of open interest. We consider the performance on January 24 to be negative, and it confirms the fact that managed money is not participating in the rally to any great degree. As this report is being compiled on January 27, February gold has made another new high at $1279.80 and currently is trading $3.20 lower on the day. Maintain bullish positions, but make sure sell stops are in place in the event of a reversal. Gold remains on a short-term buy signal, but an intermediate term sell signal.

Platinum:

April platinum lost $34.60 on heavy volume of 17,205 contracts. Volume was the heaviest since January 21 when 18,283 contracts were traded and April platinum lost 60 cents while open interest declined 401 contracts. On January 24, total open interest declined by 400 contracts, which relative to volume is approximately 10% below average. The fact that open interest did not decline by a larger amount is not surprising considering that open interest increases when platinum was advancing was almost non-existent. It was only with the current COT report that we saw managed money increase their long positions and decreased their short positions for the first time since April platinum generated a short-term buy signal on January 2. Please see the January 26 Weekend Wrap. Maintain bullish positions, but make sure sell stops are in place. If April platinum penetrates $1413.40, this would be the first sign of a possible reversal. Platinum remains on a short and intermediate term buy signal.

Silver:

March silver lost 24.5 cents on volume of 48,559 contracts. Total open interest increased by only 132 contracts, which is minuscule and dramatically below average. As this report is being compiled on January 27, March silver is trading 3.2 cents lower on the day.Until silver begins to show some independent strength, we think that gold and platinum will have trouble advancing. Silver remains on a short-term buy signal, but an intermediate term sell signal. March silver may possibly reverse if it penetrates $19.595. Clients should be on the sidelines with respect to silver.

S&P 500 E mini: More than likely, the S&P 500 E mini will generate a short-term sell signal on January 27.

The S&P 500 E mini lost 42.25 points on heavy volume of 2,576,866 contracts.Volume was the highest since December 18 when 2,702,375 contracts were traded and the March S&P closed at 1804.75. On January 24, total open interest increased by 23,435 contracts, which relative to volume is approximately 50% below average. In short the below average open interest increase tells us that new short sellers do not have much confidence in the move lower, and that longs were not liquidating and were entering new long positions. We think the market has much further to go on the downside, and have been recommending long put protection to clients who hold long equity positions.