Soybeans: On November 19, January soybeans generated a short-term sell signal, but remains on an intermediate term buy signal.

January soybeans lost 11.25 cents on heavier than normal volume of 194,419 contracts. Volume was the highest since November 12 when 213,205 contracts were traded and January soybeans advanced 13.50 cents while open interest increased by 4,324 contracts. The January contract lost 8,288 of open interest. As this report is being compiled on November 20, January soybeans are trading 2.00 cents lower, but have not taken out the low of $12.68 1/4 made on November 19. Usually, after the generation of a short-term sell signal, the market will rally from 1-3 days. However, January soybeans are trading near their 20 day moving average of 12.80 3/4 (50 day MA 12.96 1/8) and therefore rallies may be muted. With managed money massively long according to the most recent COT report, we see lower prices ahead fueled by liquidation of managed money. For a more conservative trade, clients can write out of the money calls in the January contract. Soybeans should be traded only from the short side.

Soybean meal: On November 19, January soybean meal generated a short-term sell signal, but remains on an intermediate term buy signal.

December soybean meal lost $6.90 while January declined 5.60 on volume of 103,198 contracts. Volume was the highest since November 15 when soybean meal declined $14.10 on volume of 107,439 contracts and open interest declined by 2,049 contracts. On November 19, total open interest declined by 636 contracts, which relative to volume is approximately 65% less than average. The December contract accounted for loss of 4,848 of open interest. As this report is being compiled on November 20, January soybean meal is trading $1.60 lower, but has not taken out the low of $401.50 made on November 19. The 20 day moving average for the January contract is 405.00 and the 50 day MA is 407.70, therefore any bounce that we would normally see after the generation of a short-term sell signal may be muted. Soybean meal should be traded only from the short side.

Corn:

December corn advanced 5.75 cents on volume of 392,775 contracts. Volume was the lowest since November 14 when 351,339 contracts were traded and December corn lost 3.25 cents while total open interest declined 644 contracts. On November 19, total open interest increased by 1,159 contracts, which is minuscule and dramatically below average. The December contract lost 31,484 contracts, which makes the total total open interest increase more impressive (bullish). We continue to advise a stand aside posture in corn due to its oversold condition. Corn remains on a short and intermediate term sell signal.

Wheat:

December Chicago wheat advanced 8.00 cents on heavy volume of 153,230 contracts. Volume was the highest since November 11 when 190,029 contracts were traded and December Chicago wheat lost 3.50 cents while open interest increased by 7,319 contracts. On November 19, total open interest declined by a massive 14,405 contracts, which relative to volume is approximately 275% above average meaning that both longs and shorts were massively liquidating as prices moved higher. The December contract accounted for loss of 29,031 contracts of open interest. The open interest action was a total reversal from November 18 when December Chicago wheat lost 4.25 cents and open interest increased by 14,700 contracts. In short, the open interest action continues to be bearish. December Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

December Kansas City wheat advanced 4.50 cents on volume of 19,615 contracts. Total open interest increased by 408 contracts, which relative to volume is approximately 20% below average. The December contract lost 1,676 of open interest, which makes the total open interest increase more impressive (Bullish). The spread between Kansas City and Chicago wheat narrowed another 3.50 cents, which underscores the strength of Chicago wheat versus KC wheat. As this report is being compiled on November 20, December Chicago wheat is trading 1.75 lower while KC is trading -2.25 cents. KC wheat remains on a short and intermediate term sell signal.

Live cattle: On November 19, February cattle generated an intermediate term sell signal and generated a short-term sell signal on November 18

February live cattle lost 1.525 cents on heavy volume of 75,455 contracts. Volume was the highest since October 25 when 77,415 contracts were traded and December live cattle advanced 10 points while open interest increased 2,972 contracts. On November 19, total open interest declined by 6,661 contracts, which relative to volume is approximately 250% above average, meaning that liquidation was extremely heavy on the decline. The December contract accounted for loss of 7,732 of open interest. As this report is being compiled on November 20, February cattle is trading 12.5 points lower and has made a new low for the move at 1.31250. We think February cattle should find support at the 1.30000 level and much of this will depend upon the degree to which managed money is shaken out of long positions. Stand aside.

Crude oil:

January crude oil advanced 21 cents on volume of 591,367 contracts. Total open interest declined by 9,717 contracts, which relative to volume is approximately 40% less than average. The December contract lost 41,707 of open interest, and there was sufficient open interest increases in the forward months to bring total open interest to a below average number. We have commented on this before, but it is worth mentioning again. Rarely, does open interest increase on price declines. This indicates to us that market participants are not willing to initiate new short positions. However, the inability of the market to rally tells us lower prices are in store, especially with managed money still bullish. The structure of the moving averages also is bearish: 5 day MA 94.13, 20 day MA 95.13, 50 day MA 99.27, 100 day MA 100.41.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.4 million barrels from the previous week. At 388.5 million barrels, U.S. crude oil inventories are well above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 0.3 million barrels last week, but are near the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 4.8 million barrels last week and are near the lower limit of the average range for this time of year. Propane/propylene inventories fell 2.4 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 11.7 million barrels last week.

Platinum: We will not be reporting on platinum until we see a trading opportunity. January platinum generated a short and intermediate term sell signal on November 18. In our view platinum is headed lower, but clients should wait for a rally before contemplating bearish positions.

Euro:

The December euro advanced 32 points on volume of 201,960 contracts. Volume increased approximately 78,000 contracts from November 18 when the euro advanced 10 pips and open interest increased by 1,691 contracts. On November 19, total open interest increased by 1,133 contracts, which relative to volume is approximately 70% below average. On November 20, we are seeing a key reversal day in which the December euro is trading 96 pips lower after making a high on November 19 in the early evening session at 1.3582. We think this is an ideal opportunity to initiate bearish positions, and we recommend using options to initiate long puts, or write out of the money calls. Alternatively, clients can initiate bullish positions in the dollar index. We continue to like the long side of USDJPY.

British pound:

The December British pound gained 2 pips on volume of 74,567 contracts. Total open interest increased by 770 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on November 20, the December British pound is trading 7 pips higher and has made a high for the move at 1.6175. However, the British pound will not generate a short-term buy signal on November 20. As we have said before, this is the critical area for the pound, and the low for the day must trade above 1.6120 in order to generate a short-term buy signal.

Australian dollar:

The December Australian dollar advanced 42 points on volume of 70,469 contracts. Total open interest increased by 1,205 contracts, which relative to volume is approximately 30% less than average. However, this is the first time in quite a while that we have seen price and open interest act in a bullish congruent manner. The 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 lost 3.50 on volume of 1,591,344 contracts. Total open interest increased by 5400 contracts, which is minuscule and dramatically below average. We continue to advise long put protection for those clients who hold long equity positions.