Soybeans: On November 11, January soybeans generated a short and intermediate term buy signal, which reversed the short-term sell signal generated on September 30 and the intermediate term sell signal generated on November 1.

November soybeans advanced 2.00 cents while the January contract gained 5.00 on total volume of 158,957 contracts. Total open interest increased by 513 contracts, which relative to volume is approximately 85% below average. The November contract lost 1,023 of open interest and January lost 1,218, which makes the total open interest increase more impressive. As we indicated in yesterday’s report, soybeans have a tendency to rally through the 4th quarter, and the generation of a short and intermediate term buy signal confirms the likelihood of the rally continuing. Although relative to volume, open interest increases have not been very impressive, the fact remains that soybeans have advanced for 4 consecutive days beginning on November 6 and open interest has increased each day. As this report is being compiled on November 12, January soybeans are trading 14.75 higher and has made a new high for the move at $13.19 3/4, which is the highest price for the January contract since September 27 when soybeans made a high of 13.28 3/4. Usually, after the generation of buy signals, there is a pullback lasting from 1-3 days, and it is the pullback that presents the buying opportunity.

Soybean meal: On November 11, December soybean meal generated a short-term buy signal, which reversed the short-term sell signal generated on October 31. Soybean meal has remained on an intermediate term buy signal

December soybean meal lost 20 cents on volume of 77,156 contracts. Total open interest increased by 2,053 contracts, which relative to volume is average. The December contract lost 5,050 of open interest, which makes the total open interest increase much more impressive(bullish). Since November 6, soybean meal has advanced each day with the exception of November 11 and open interest has increased each day with the exception of November 8 when soybean meal advanced $18.50 and total open interest declined by 508 contracts. Like soybeans, after the market generates a buy signal, a pullback lasting 1-3 days is to be expected. The pullback is the buying opportunity. It is very positive that the long to short ratio in soybean meal is at the very low-end of the range for the last 2 months. In short any excess on the long side has been wrung out of the market.

Corn:

December corn gained 8.00 cents on very heavy volume of 506,680 contracts. Volume declined by 179,243 contracts from November 8 when December corn advanced 6.25 cents and total open interest increased by 22,918 contracts. On November 11, total open interest declined by 14,211 contracts, which relative to volume is average. The December contract lost a massive 46,105 contracts, but there was sufficient open interest increases in the forward months to bring the total open interest declined down to an average number. December corn made a new high for the move the $4.37 1/4, and as this report is being compiled on November 12, December corn is trading 0.25 lower and has made a new high for the move at $4.38. Based upon the massive decline in the December contract, we have just begun to see short covering by market participants who have been bearish at the bottom of the market. We think corn will continue to move higher, until it squeezes out a sufficient number of shorts. After this, it will be a terrific candidate for new short positions. Corn remains on a short and intermediate term sell signal.

Wheat:

December Chicago wheat lost 3.50 cents on huge volume of 190,029 contracts. Volume was slightly above the previous high of 190,017 traded on June 24 when December Chicago wheat closed at $7.02. On November 11, total open interest increased by 7,319 contracts, which relative to volume is approximately 50% above average meaning that new short sellers were aggressively entering the market and driving prices lower. The December contract lost 13,046 of open interest, which makes the total open interest increase much more impressive (bearish). We’ve seen massive increases of open interest during the past several days. For example, open interest has increased every day since November 4 through November 11 and totals 39,717 contracts while December Chicago wheat has declined every day for a total of 21.50 cents. December wheat remains on a short and intermediate term sell signal. Stand aside.

December Kansas City wheat lost 2.25 cents on total volume of 30,609 contracts. Total open interest increased by 664 contracts, which relative to volume is approximately 15% below average. The December contract lost 4,759 of open interest, which makes the total open interest increase much more impressive (bearish). This is only the second time that we have seen total open interest increase on a price decline. Undoubtedly, there remains a hefty number of managed money longs who still need to liquidate, and therefore wheat prices in the Kansas City contract shouldf continue to decline. December Kansas City wheat remains on a short and intermediate term sell signal.

Live cattle:

December live cattle gained 35 points on volume of 52,316 contracts. Total open interest increased by 1,296 contracts, which relative to volume is average. The December contract lost 5,571 of open interest, which makes the total open interest increase more impressive (bullish). Cattle made a high of 1.33000, and this remains the high on November 12. Considering the stratospheric long to short ratio in cattle of 6.01:1, cattle has to be a disappointment to the bulls due to its sideways to lower movement. We remain bullish on cattle, but do not think the market is headed higher until the massive long position of manage money is pared down. Stand aside.

Crude oil:

December crude oil advanced 54 cents on very light volume of 432,745 contracts. Total open interest increased by 5,019 contracts, which relative to volume is approximately 45% less than average. The December contract lost 19,146 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on November 12, December crude oil is trading 96 cents lower. Crude oil remains on a short and intermediate term sell signal, and clients who are short calls recommended on September 29 should continue to hold this position.

Natural gas:

December natural gas advanced 1.5 cents on volume of 228,797 contracts. Total open interest increased by 7,402 contracts, which relative to volume is approximately 30% above average meaning that new longs were entering the market fairly aggressively and pushing prices fractionally higher. The December contract lost 3,038 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on November 12, natural gas is trading 7.1 cents higher, and in yesterday’s report, we said that natural gas has been trading within its short and longer term value zone. We see no reason to be involved in natural gas at this juncture. Natural gas remains on a short and intermediate term sell signal.

Platinum:

January platinum lost $10.50 on volume of 8,226 contracts. Total open interest declined by 457 contracts, which relative to volume is approximately 120% above average meaning that liquidation was extraordinarily heavy on the decline. Although this is positive open interest relative to the price decline, we remain concerned about rising interest rates, dollar strength, and their implications for platinum in particular and the precious metals in general. Platinum remains on a short and intermediate term buy signal.

Japanese yen: On November 11, the December yen generated an intermediate term sell signal and generated a short-term sell signal on November 1.

Euro:

The December euro advanced 48 points on very low volume of 114,137 contracts. Total open interest increased by 2,598 contracts, which relative to volume is approximately 5% below average, but is a constructive number considering the low volume and moderate price increase. As this report is being compiled on November 12, the December euro is trading 38 points higher and has made a high of 1.3457 on much heavier volume than November 11.

We think the euro could rally to the 1.3484-1.3509, which is the 50 day moving average before resuming its downtrend. Clients should be positioning themselves on the bearish side of the market. According to the COT report which was released on November 8, managed money is becoming disillusioned with the long side of the euro and the long to short ratio dropped to 1.98:1 on November 5 (the tabulation date) from 3.04:1 on October 29. During this period, the euro fell 2.3 cents or 1.68%. Year to date, the December euro is trading 1.1 cent higher or + 0.82%. The euro remains on a short-term sell signal, but an intermediate term buy signal.

Australian dollar:

The December Australian dollar lost 30 points on volume of 53,259 contracts. Total open interest declined by 644 contracts, which relative to volume is approximately 45% less than average. As this report is being compiled on November 12, the Australian dollar is trading 49 points lower and has made a new low for the move at 92.47. The December Australian dollar remains on a short term sell signal, but an intermediate term buy signal.

S&P 500 E mini:

The December S&P 500 E mini gained 1.50 points on extremely low volume of 964,950 contracts. Total open interest increased by only 1,779 contracts, which is minuscule and dramatically below average. For the past 2 days, the E mini has advanced 22.25 points, but open interest has increased 6,527 contracts, which is a terrible performance considering that the market is trading near the high end of its range, and is entering the period of time when performance is usually outstanding. In yesterday’s report, we outlined the terrible performance of open interest versus price for the past several trading sessions.We have no idea whether the market will continue to move higher, but strongly suggest that clients have long put protection if they own equities.