Soybeans:

March soybeans lost 2.25 cents on light volume of 118,614 contracts. Volume declined approximately 110,000 contracts from January 27 when March soybeans advanced 3.00 cents and total open interest declined 742 contracts. On January 28, total open interest increased by a hefty 4,569 contracts, which relative to volume is approximately 50% above average, meaning that new shorts were entering the market and driving prices fractionally lower. The March contract lost 1,248 of open interest, which makes the total open interest increased more impressive (bearish).

For the past 3 sessions beginning on January 24 , open interest action has been consistently bearish relative to price advances and declines. On January 21, March soybeans generated a short and intermediate term sell signal, and we have been advising clients to trade soybeans from the bearish side only. As this report is being compiled on January 29, March soybeans are trading 17.25 cents lower and have made a low of $12.66, which is 2 1/2 cents above the low of 12.63 1/2 made on January 24, the low for the move. If bearish positions have been initiated at higher levels, use the January 24 high of 12.96 3/4 as an exit point for bearish positions.

Soybean meal:

March soybean meal lost $2.30 on volume of 58,073 contracts. Total open interest declined by 578 contracts, which relative to volume is approximately 50% below average. The March contract lost 3,227 of open interest. For the past 2 sessions, the highs in soybean meal have been $432.60 on January 27 and 432.30 on January 28. As this report is being compiled on January 29, March soybean meal is trading $7.30 lower on the day. Though March soybean meal remains on a short and intermediate term buy signal, we think sell signals are not far off. As pointed out in yesterday’s report, we believe soybeans will drive down soybean meal prices. Stand aside and wait until OIA announces that soybean meal has generated a short-term sell signal before considering bearish positions.

Corn:

March corn gained 0.25 cents on volume of 235,744 contracts. Total open interest increased only 150 contracts. The March contract lost 59,92 of open interest. As this report is being compiled on January 29, March corn is trading 2.25 cents lower on the day. March corn remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

Chicago wheat:

March Chicago wheat advanced 2.25 cents on volume of 90,508 contracts. Total open interest increased by 1,008 contracts, which relative to volume is approximately 50% below average. The March contract lost 2,621 of open interest. As this report is being compiled on January 29, March Chicago wheat has crashed through the January 10 low of $5.60 1/2 and has made a new contract low of $5.52 1/2, off 10.50 cents. March Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Live cattle:

April live cattle lost 20 points on very light volume of 42,226 contracts. Total open interest increased by 295 contracts, which relative to volume is 60% below average. The February contract lost 1,951 of open interest. As this report is being compiled on January 29, April cattle is trading 30 points higher after making a new low for the move at 1.39625. Cattle continues to consolidate its gains, and we think it is likely that new lows for the move maybe in the offing, especially if the equities market falls apart. Maintain bullish positions because we think cattle prices are ultimately headed higher, but a reduction speculative longs would be positive for the market and place cattle in stronger hands.

WTI crude oil:

March WTI crude oil advanced $1.69 on low volume of 444,915 contracts. Remarkably, volume was lower than the 460,727 contracts traded on January 27 when March WTI lost 92 cents and total open interest declined by 670 contracts. On January 28, total open interest increased by 1,990 contracts, which relative to volume is approximately 80% less than average. The March contract lost 2,590 of open interest. The action on January 28 was terrible and reinforces our negative view of WTI. March WTI is banging up against resistance at the 150 day moving average of 97.64, and though it has made a couple of attempts, WTI has been unable to reach the January 24 high of 97.80 and the January 23 high of 97.84. As we have said previously, we are not advocating bearish positions because March WTI remains on a short-term buy signal and an intermediate term sell signal. However, based on its performance over the past several days, we expect that WTI to rollover to the downside. At this juncture, there is no reason to be involved in the market from the bullish side.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.4 million barrels from the previous week. At 357.6 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 decreased by 0.8 million barrels last week, but are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 4.6 million barrels last week and are well below the lower limit of the average range for this time of year. Propane/propylene inventories fell 3.6 million barrels last week and are well below the lower limit of the average range. Total commercial petroleum inventories decreased by 3.8 million barrels last week.

Natural gas:

March natural gas advanced 26.7 cents on surprisingly light volume of 439,764 contracts. Volume declined 133,108 contracts from January 27 when natural gas declined 32.4 cents and total open interest increased by 1,221 contracts. Additionally, volume was the lightest since January 21 when 341,259 contracts were traded and natural gas advanced 10.5 cents while open interest increased by 5,451 contracts. On January 28, total open interest declined by 18,820 contracts, which relative to volume is approximately 60% above average meaning that liquidation was very heavy on the advance.  The February contract lost 16,598 of open interest. For the past 3 days, beginning on January 24 we are seeing bearish open interest action relative to price advances and declines. We think many speculators have taken profits and many have moved to the sidelines, which is a good place to be in a market this volatile. However, none of this precludes natural gas from making new contract highs. As this report is being compiled on January 29, March natural gas has made another contract high at 5.486 and has taken out the January 27 high of $5.199. Stand aside. Natural gas remains on a short and intermediate term buy signal.

Euro:

The March euro lost 10 pips on volume of 163,380 contracts. Total open interest increased by 1,004 contracts, which relative to volume is approximately 65% less than average. As this report is being compiled on January 29, the March euro is trading 2 pips lower . Yesterday, we recommended purchases of call options in the euro, and advise against the use of futures due to anticipated volatility.

British pound:

The March British pound gained 5 pips on volume of 88,216 contracts. Total open interest declined 68 contracts. The March pound made a high of 1.6619, which is 43 pips shy of the high of 1.6662 made on January 24. We think the market will likely consolidate its recent gains in a sideways to lower pattern. We like the March British pound from the bullish side as well as certain sterling currency crosses, but the March contract remains overbought relative to its 20 day moving average of 1.6468 and the 50 day moving average of 1.6367, and hefty long positions held by managed money.

Gold:

February gold lost $12.60 on heavy volume of 258,239 contracts. Volume was the highest since January 23 when 259,248 contracts were traded and open interest increased by 10,175 contracts while February gold advanced $23.70. On January 28, total open interest declined by 22,289 contracts, which relative to volume is approximately 250% above average meaning that liquidation was extremely heavy on the decline. Accounting for a good portion of this was the February contract which lost 38,027 of open interest. The February contract is approaching 1st notice day, and with tomorrow’s report we will be switching to the April contract.

As this report is being compiled on January 29, April gold is trading $9.90 higher and has made a high of 1269.00. We pointed out in yesterday’s report that when equities began to rally, precious metals began to decline. On January 29, equities are sharply lower and gold is advancing, although platinum and silver are barely above yesterday’s close. Continue to hold bullish positions in gold, but make sure risk management parameters 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 $11.70 on volume of 9,482 contracts. Total open interest increased by a massive 1,005 contracts, which relative to volume is approximately 320% higher meaning that new shorts were heavily entering the market and driving prices to new lows for the move ($1404.60). In yesterday’s report, we recommended bullish positions in platinum be liquidated and that clients should move to the sidelines. Platinum remains on a short and intermediate term buy signal, which means the market has the ability to recover and head higher. If April platinum makes a daily low that is above 1415.60, we would recommend contemplating new bullish positions.

Silver:

March silver lost 29 cents on volume of 38,972 contracts. Total open interest increased by a massive 2,366 contracts, which relative to volume is approximately 140% above average meaning that new short sellers were heavily entering the market and driving prices lower. March silver made a new low for the move at $19.455 on January 28 and as this report is being compiled on January 29, the daily low has been 19.460. Considering the weakness of silver and the fact that it did not penetrate the January 28 low through the evening of the 28th and day session of January 29 may indicate that silver has found a bottom. Silver remains on a short-term buy signal, but an intermediate term sell signal. We have no recommended position in silver at this juncture.

S&P 500 E mini:

The S&P 500 E mini gained 12.50 points on volume of 1,734,273 contracts. Open interest increased by a mere 5,644 contracts. As this report is being compiled on January 29, the E mini is trading 21.75 points lower after the release of the Federal Reserve minutes. Maintain long put protection that we have been advocating for clients who hold long equity positions.