Soybeans:

March soybeans advanced 5.75 cents on volume of 240,429 contracts. Volume increased from the 190,595 contracts traded on January 29 when March soybeans lost 16.25 and total open interest increased by a massive 14,064 contracts. On January 30, total open interest increased 3,335 contracts, which relative to volume is approximately 40% less than average. The March contract lost 952 of open interest. Maintain bearish positions and use the January 23 high of $12.96 3/4 as an exit point. March soybeans remain on a short and intermediate term sell signal.

Soybean meal:

March soybean meal advanced $1.90 on volume of 83,153 contracts. Volume increased from the 61,871 contracts traded on January 29 when March soybean meal declined $5.30 in total open interest increased 1,626 contracts. On January 30, total open interest increased by 3,672 contracts, which relative to volume is approximately 75% above average. Not only was the total open interest increase strong, open interest increased in the March 2014 through July 2015 contracts. For clients with profits in bearish soybean positions, consider a very light bullish position in soybean meal. The market has been consistently strong and sell-offs are followed by recoveries. March soybean meal remains on a short and intermediate term buy signal.

Corn:

March corn advanced 6.00 cents on heavy volume of 326,584 contracts. Volume increased from the 272,318 contracts traded on January 29 when March corn lost 4.50 and total open interest declined by 4,564 contracts. Additionally, volume was the highest since January 13 when 375,327 contracts were traded and March corn advanced 1.75 cents while total open interest declined by 5,983 contracts. On January 30, total open interest declined by 707 contracts. The March contract accounted for loss of 7,649 of open interest. As this report is being compiled on January 31, March corn is trading -0.25 on the day. Stand aside.

Chicago wheat:

March Chicago wheat advanced 2.00 cents on heavy volume of 128,964 contracts. Volume declined from the 166,688 contracts traded on January 29 when March wheat declined 14.50 and total open interest increased by 1,985 contracts. On January 30, total open interest declined by 2,230 contracts, which relative to volume is approximately 25% less than average. The March contract lost 7,993 of open interest. March Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Live cattle:

April live cattle closed unchanged on very low volume of 38,310 contracts. Volume was the lightest since December 31 when 33,777 contracts were traded and April cattle closed at 1.35300. On January 30, total open interest increased by 3,707 contracts, which relative to volume is approximately 300% above average, meaning that both longs and shorts were aggressively initiating new positions, but neither side could move the market. From January 24 through January 30, April cattle has been trading sideways and our concern is that open interest has increased 10,682 contracts each of the 5 days, but prices are essentially unchanged. Often, when a market moves sideways and there is a substantial increase of open interest, it signals the market is ready to breakout. In this case, we tend to think a further correction is in store. One could argue that the open interest increase could result in a move higher, however, commercials are on the short side and speculators are on the long side. With cattle prices in the stratosphere, there is a greater likelihood that commercial short sellers are on the right side of the market at this juncture. Although we think prices are headed higher, clients must be prepared for a further setback. One way of mitigating loss of profit is to write out of the money calls against bullish positions.

WTI crude oil:

March WTI crude oil advanced 87 cents on very low volume of 426,933 contracts. Volume increased from the 416,634 contracts traded on January 29 when March WTI lost 5 cents and total open interest declined by 11,350 contracts. On January 30, total open interest increased only 233 contracts. The March contract lost 8,533 of open interest. On January 28 and 30, crude oil advanced $1.69 and 87 cents respectively, but total open interest increased only 2,223 contracts, which is terrible open interest action relative to a $2.56 advance. There does not appear to be much interest in WTI and minor increases of open interest and  low volume confirms it. There is no reason to be involved in the market at this time.

Heating oil: On January 30, March heating oil generated a short and intermediate-term buy signal.

Natural gas:

March natural gas lost 45.4 cents on volume of 507,121 contracts. Total open interest declined by 7,698 contracts, which relative to volume is approximately 40% below average. For the past 3 days beginning on January 28, total open interest has declined by 37,853 contracts while March natural gas has risen 33.7 cents. This is bearish open interest action relative to the price advance. As this report is being compiled on January 31, March natural gas is trading 18.7 cents lower and has made a low for the day of 4.721. Natural gas remains on a short and intermediate term buy signal. Stand aside.

Euro: The March euro will generate a short-term sell signal on January 31, but remains on an intermediate term buy signal.

The March euro lost 1.13 cents on volume of 266,225 contracts. Interestingly, volume actually declined from January 29 when 266,717 contracts were traded and the March euro lost 2 pips while open interest increased 9,710 contracts. The trading range on January 29 was 82 pips while the range on January 30 was 1.21 cents (121 pips).  On January 30, total open interest declined by 3136 contracts, which relative to volume is approximately 45% less than average. Based upon the relatively low volume (considering the magnitude of the decline) in Thursday’s trading combined with the open interest decline, which was significantly below average, we have concluded that speculative longs are likely digging in and refusing to liquidate. As this report is being compiled, the March euro is trading 45 pips lower and has made a daily low of 1.3479. Yesterday, we advised clients to liquidate bullish positions and move to the sidelines.

British pound:

The March British pound lost 97 pips on volume of 99,465 contracts. Total open interest declined by 1,922 contracts, which relative to volume is approximately 20% below average. Yesterday, the pound made a low of 1.6439 and this has been taken out on January 31 with a daily low of 1.6422. We continue to wait for a decline to at least the 50 day moving average of 1.6382, and below that March sterling should find solid support at 1.6300.

Yen:

The March yen lost 66 pips on volume of 187,401 contracts. Total open interest declined by 5,756 contracts, which relative to volume is approximately 20% above average meaning that both longs and shorts were liquidating as prices declined. This is healthy and positive. On January 27, the March yen generated a short-term buy signal, and the market has acted extremely well since then. For the yen to continue moving higher, the March yen must make a daily low above .9738.

Copper: On January 30, March copper generated in intermediate term sell signal and had generated a short-term sell signal on January 24.

Gold:

April gold lost $19 70 on fairly heavy volume of 221,410 contracts. Total open interest increased only 167 contracts. However, the February contract lost 13,237 of open interest, which means there were open interest increases in the forward months to bring down total open interest. Although gold remains on a short-term buy signal and an intermediate term sell signal, we think the market is going to struggle. Platinum is going to generate a short and intermediate term sell signal on January 30 and silver will generate a short-term sell signal on the 31st. In this scenario, we do not see how gold will swim against the tide. If clients have not liquidated bullish positions, we suggest they do so.

Platinum: On January 30, April platinum generated a short and intermediate term sell signal. This will be our last report on platinum until we see a trading opportunity.

April platinum lost $25.80 on volume of 12,658 contracts. Total open interest declined by 1,055 contracts, which relative to volume is approximately 210% above average meaning that liquidation was extremely heavy on the decline.

Silver: March silver will generate a short-term sell signal on January 31, which will reverse the short-term buy signal generated on January 14.

March silver lost 42.6 cents on heavy volume of 52,792 contracts. Total open interest increased by a massive 3,812 contracts, which relative to volume is approximately 185% above average meaning that new short sellers were heavily initiating positions and driving prices to new lows for the move ($18.97). The silver market has looked terrible for quite some time, and our thesis has been that unless silver started showing some independent strength, the precious metals were not going very far on the upside. The massive open interest increase on the decline to new lows for the move is extremely bearish. Stand aside.

S&P 500 E mini:

The S&P 500 E mini advanced 10.00 points on volume of 1,831,648 contracts. Total open interest declined by 28,888 contracts. This is bearish open interest action relative to the price advance. As this report is being compiled on January 31, the March S&P 500 E mini is trading 4.25 points higher after making a new low for the move at 1761.25. We do not think the correction is over, and continue to advise long put protection for those clients who hold long equity positions.