Soybeans:

January soybeans lost 9.25 cents on total volume of 211,736 contracts. Total open interest increased by 5,543 contracts, which relative to volume is approximately average. As this report is being compiled on November 29, a holiday shortened trading day, January soybeans are trading 17.50 cents higher and have made a high of 13.39 1/2, which is 1.50 cents below the high of November 27. On November 25, January soybeans generated a short-term buy signal and had already been on an intermediate term buy signal. Since generating the buy signal, the market has not had much of the pullback, and the low made on November 27 of 13.18 1/4 may represent a short-term low. However, the real test will be on December 2 when normal trading resumes.

Soybean meal:

December soybean meal lost $4.30 and January -2.30 on total volume of 122,004 contracts. Total open interest declined by 958 contracts, which relative to volume is approximately 60% below average. The December contract lost 4,724 of open interest, and there was sufficient open interest increases in the forward months to bring the total figure down to a below average number. As this report is being compiled on November 29, January soybean meal is trading $8.40 and has made a high of 439.00, which is $1.00 shy of the high made on November 27. The low in January meal on November 27 was 428.30, and this may represent a short-term low. Like soybeans, we would prefer to see a setback before recommending bullish positions, but if we continue to see a blistering export pace setbacks may be shallow. For soybeans and soybean meal, clients may want to consider a more conservative way of trading the long side of the markets by initiating bull call spreads or a bull put spreads after a setback.

Corn:

March corn gained 1.75 cents on fairly heavy volume of 356,671 contracts. Total open interest declined 27,165 contracts, which is undoubtedly due to the December contract entering 1st notice day on November 29. The December contract lost 46,394 of open interest. As this report is being compiled on November 29, March corn is trading unchanged. Corn remains on a short and intermediate term sell signal. Stand aside.

Wheat:

March Chicago wheat gained 7.50 cents on volume of 98,519 contracts. Total open interest declined by 5,822 contracts, which is undoubtedly due to the December contract entering 1st notice day on November 29. The December contract lost 12,544 of open interest, however, there were open interest increases in the forward months, which brought the total number down. As this report is being compiled on November 29, March wheat is trading 4.00 cents higher and has made a new high for the move at $6.70 3/4. As we said before, we think the bottom is in for Chicago wheat and Kansas City wheat is not far behind.

March Kansas City wheat gained 8.00 cents on volume of 23,610 contracts. Total open interest declined by 2,420 contracts, which is undoubtedly due to the December contract entering 1st notice day on November 29. The December contract lost 5,265 of open interest. As this report is being compiled on November 29, March KC wheat is trading 1.75 cents higher and has made a new high for the move at $7.15 1/2, which is its highest price since November 11 when March KC wheat made a high of 7.16 3/4. Keep in mind, on November 29 volume is low volume day and it doesn’t take much to move markets. We think trading activity and fundamentals indicate that Kansas City wheat is bottoming. A more conservative way to trade Chicago and KC wheat is to write out of the money puts with strikes based upon your risk tolerance.

Live cattle: On November 27, February cattle generated an intermediate term buy signal and it is likely that it will generate a short-term buy signal on November 29.

February cattle gained 1.075 cents on volume of 49,302 contracts. Taking into account that November 27 was preholiday trading, the volume was more than respectable. It increased by approximately 7500 contracts from November 26 when February cattle advanced 1.10 cents and total open interest increased by 879 contracts. On November 27, total open interest increased by 3,570 contracts, which relative to volume is approximately 185% above average meaning that new longs were aggressively entering the market and driving prices to new highs for the move at 1.34450. This was the highest price since November 18 when February cattle reached 1.34650. The December contract accounted for loss of 1,920 of open interest, which makes the total open interest increase much more impressive (bullish). We think a setback to the 133.000 level should be bought.

WTI Crude oil:

January crude oil lost $1.38 on light holiday volume of 442,555 contracts. Total open interest declined only 1,508 contracts, which is minuscule and dramatically below average. The January contract lost 3,214 of open interest. January crude oil made a new low for the move at $91.77, which is its lowest price since June 26 when it reached $91.38. The market is massively oversold and is well overdue for a good-sized bounce, especially since Brent crude, heating oil and gasoline are on short and intermediate term buy signals. As this report is being compiled on November 29, January WTI is trading 57 cents higher and has made a daily high of 93.90. Although the performance of WTI is abysmal, and remains on sell signals, we are unable to join the bearish camp at current levels. Stand aside.

Brent crude oil:

January Brent crude advanced 43 cents on volume of 519,333 contracts. Total open interest increased by 5,543 contracts, which relative to volume is approximately 50% below average. Brent made a high of 111.65 on November 27, which matched the high made on November 25 of 111.66. As this report is being compiled on November 29, January Brent is trading $$1.01 lower. It appears that Brent may have reached a temporary top, and we would prefer to see a setback to the $107.97 area, which is the 20 day moving average and the 50 day moving average of 108.00. Brent remains on a short and intermediate term buy signal.

Natural gas:

January natural gas advanced 3.1 cents on volume of 236,185 contracts. Total open interest increased by 11,117 contracts, which relative to volume is approximately 75% above average meaning that new longs were aggressive about initiating new positions and driving prices higher. The January contract lost 5,116 of open interest, which makes the total open interest increased much more impressive (bullish). On November 27, January natural gas closed at $3.895, which is above our key pivot point of 3.888. It has yet to close above the final pivot point of 3.946, however as this report is being compiled on November 29, January natural gas is trading 6.3 cents higher and has made a new high for the move at 3.962.

The open interest increase on the 27th, was the largest since November 22 when natural gas advanced 7.1 cents and total open interest increased by 8,764 contracts. It appears the trend following blackbox crowd is jumping into natural gas futures in a major way at the very high end of the multi month trading range. Natural gas is getting very close to generating an intermediate term buy signal, but we discourage new long positions at current levels. Once a setback occurs and shakes out the new longs, a more conservative way to trade the market would be to initiate bull call spreads, and/or bull put spreads.

Euro:

The December euro lost 2 pips on volume of 160,191 contracts. Total open interest increased by 2,999 contracts, which relative to volume is approximately 25% below average. The December euro made a new high for the move at 1.3615, which is the highest price since October 31 when it made a high at 1.3740. As this report is being compiled on November 29, the December euro is trading 15 pips higher and has made a new high for the move at 1.3623. Although the euro has yet to generate a short-term buy signal, it is getting very close. The December 6 employment report is likely to have a major impact on the euro, and as a consequence we suggest that clients remain on the sidelines until after the report.

British pound:

The December British pound advanced 58 pips on heavy volume of 127,562 contracts. Volume was the highest since November 13 when 127,823 contracts were traded and the December pound closed at 1.6019. On November 27, total open interest increased by a massive 10,515 contracts, which relative to volume is approximately 220% above average, meaning that new longs were aggressively initiating positions and driving prices to new highs. As this report is being compiled on November 29, the December pound has made another new high at 1.6383, which is the highest price for the pound since August 2011. Since November 13, when the rally began, the December British pound has advanced 3.88 cents and there have only been 3 days when the market closed lower. On November 22, the British pound generated a short-term buy signal, which reversed the short-term sell signal generated on November 1. The market has already on an intermediate term buy signal. The pound is massively overbought, and we advise a stand aside posture.

S&P 500 E mini:

The December S&P 500 E mini gained 2.25 points on low volume of 874,827 contracts. Total open interest increased by 31,644 contracts, which relative to volume is approximately 40% above average, meaning that new longs were aggressively initiating positions and driving prices fractionally higher. We direct clients’ attention to the December 6 employment report, which could have a major impact on equities, interest rates and the dollar. If the employment report is positive or very positive, we could see interest rates reach new highs, which in our view will begin to significantly impact equity prices. We think it is prudent to maintain long put protection if clients hold long equity positions.