Soybeans:

January soybeans advanced 17.75 cents on volume of 159,394 contracts. Total open interest declined by 2,017 contracts, which relative to volume is approximately 45% less than average. The January contract lost 10,801 of open interest. As this report is being compiled on November 22, January soybeans are trading 20.25 cents higher and have made a daily high of 13.14 1/2. We have been advising clients to write out of the money calls in soybeans, and unless the market pulls back significantly from the daily highs, we recommend that the call position be liquidated by the end of the day. The reason for this is it is likely that a short-term buy signal could be generated on November 22 if the market closes near its highs. The dollar is trading approximately 1/2% lower, and this may be giving boost to soybeans. We have no doubt that soybeans are ultimately headed lower, but we know that seasonally soybeans tend to strengthen in the 4th quarter. Although, we said yesterday the market could advance, the rally has been greater than we originally thought. 

Soybean meal:

December soybean meal advanced $4.00 while January gained 2.60 on volume of 94,117 contracts. Total open interest declined by 5,280 contracts, which relative to volume is approximately 120% above average. The December contract accounted for loss of 10,101 of open interest. As this report is being compiled on November 22, January soybean meal is trading $11.50 higher and has made a daily high of 418.30. Like soybeans, we advise that short call positions be liquidated and if other bearish positions are being held, these should be liquidated as well. It is likely that soybean meal will generate a short-term buy signal on November 22.

Corn:

December corn gained 6.00 cents on volume of 398,962 contracts. Total open interest declined by 10,896 contracts, which relative to volume is average. We continue to advise a stand aside posture in corn until such time that there is a sufficient rally to take out some of the weak shorts.

Wheat:

December Chicago wheat gained 1.50 cents on volume of 102,897 contracts. Total open interest increased by 1,050 contracts, which relative to volume is approximately 50% below average. The December contract accounted for loss of 11,756 contracts, which makes the total open interest increase more impressive (bullish). This is the first time since November 13 that open interest increased on a price advance. We think the short side of wheat is about played out, and we await the generation of a short term buy signal, to recommend bullish positions. As this report is being compiled on November 22, March Chicago wheat is trading 3.75 cents higher.

December Kansas City wheat lost 0.75 cents on volume of 20,863 contracts. Total open interest increased by 1 contract and the December contract lost 2,304 of open interest. As this report is being compiled on November 22, March Kansas City wheat is trading 5.25 cents higher and we await the generation of a short-term buy signal to recommend bullish positions. Both Chicago and KC wheat remain on short and intermediate term sell signals.

Live cattle:

February live cattle gained 40 points on very light volume of 33,906 contracts. Total open interest declined by 609 contracts, which relative to volume is approximately 25% below average. The December contract accounted for loss of 2,067 of open interest. As this report is being compiled on November 22, February cattle is trading 57.5 points lower, but has not taken out the low of 1.31550 made on November 21. We continue to see prices drift lower and this should continue until a sufficient number of managed money longs have liquidated. Continue to stand aside. Cattle remains on a short and intermediate term sell signal.

WTI Crude oil:

January crude oil advanced $1.59 on light volume of 482,176 contracts however, open interest increased by a substantial 19,470 contracts, which relative to volume is approximately 55% above average meaning that new longs were aggressively entering the market and driving prices higher. The big disappointment on November 21 was the lack of participation as evidenced by low volume. We think crude oil prices are headed higher, but WTI has not generated a short-term buy signal.

Brent crude oil: On November 21, January crude oil generated a short and intermediate term buy signal.

January Brent crude oil advanced $2.02 on fairly light volume of 699,434 contracts. Total open interest increased by only 11,832 contracts, which relative to volume is approximately 25% below average. Like WTI, it is apparent that market participants are not wildly enthusiastic about the long side of Brent crude. The COT report, which was tabulated on November 12 showed managed money long by a ratio of 1.86:1, which is considerably less than WTI with a long to short ratio of 4.22:1. Additionally, from November 8 through November 21, January brent crude advanced $6.48 while open interest advanced only 12,837 contracts. In short, there is a great deal of skepticism on the part of market participants about the possibility of a continued advance in Brent crude. We beg to differ, and recommend that clients stand aside pending a pullback, which usually occurs after the generation of buy signals. As this report is being compiled on November 22, January Brent crude is trading 66 cents higher while WTI is trading 49 cents lower.

Gasoline: On November 21, January gasoline generated a short and intermediate term buy signal.

Heating oil: On November 21, January heating oil generated a short-term buy signal.

Euro:

The December euro advanced 41 points on volume of 231,812 contracts. Total open interest declined by 1,820 contracts, which relative to volume is approximately 65% less than average. As this report is being compiled on November 22, the December euro is trading 86 pips higher and has made a high at 1.3554 on very low volume. The euro is trading at its 50 day moving average, and for it to generate a short-term buy signal, which would reverse the short-term sell signal generated on November 1, the low for the day must be above 1.3597. For those clients who have written out of the money calls, we suggest they stay with these positions, but of course, this depends upon how far out of the money the call was written and each individual client’s risk tolerance. The dollar index on Friday is trading approximately one half percent lower, and therefore clients should have sell stops in place if long the dollar index. We think the euro is headed lower and do not think it has the power to generate a short-term buy signal.

British pound:

The December British pound advanced 73 points on volume of 104,700 contracts. Volume declined from November 20 when 124,344 contracts were traded and open interest increased by 5,214 contracts while the December British pound lost 2.7 pips. On November 21, total open interest increased by 4,249 contracts, which relative to volume is approximately 55% above average. As this report is being compiled on November 22, the December British pound is trading 49 points higher and has made a new high for the move at 1.6217. As we said in yesterday’s report, the daily low in the pound would have to be above 1.6120 for a short term buy signal. The low on November 22 is 1.6174, and therefore the British pound will generate a short-term buy signal on November 22. This will reverse the short-term sell signal generated on November 1. The British pound remains on an intermediate term buy signal. A trade that we think makes a lot of sense is the long side of GBP/EUR. We were concerned for the past couple of days that the increase of open interest was not moving prices, but action on November 21 and 22 constitutes a breakout of the trading range of the past several days.

Australian dollar:

The Australian dollar lost 1.08 cents on heavy volume of 146,234 contracts. Total open interest declined by 3,284 contracts, which relative to volume is approximately 10% below average. As this report is being compiled on November 22, the Australian dollar is trading 57 points lower and has made a new low for the move at 91.30. The Australian dollar will generate an intermediate term sell signal on November 22 and has been on a short term sell signal since November 1.

S&P 500 E mini:

The S&P 500 E mini gained 14.00 points on volume of 1,395,975 contracts. Total open interest increased by 9,516 contracts, which relative to volume is approximately 65% less than average. As this report is being compiled on November 22, the E mini is rallying into new high territory and has made a new high for the move at 1801.00 up 7.00 points for the day. For those clients who hold on equity positions maintain long put protection.