Soybeans:
For the week, March soybeans gained 33.25 cents, May +39.50, July +37.50. The COT report showed that managed money added 4,230 contracts to their long positions and liquidated 2,816 contracts of their short positions. Commercial interests added 7,299 contracts to their long positions and also added 9,848 contracts to their short positions. As of the latest report, managed money is long soybeans by a ratio of 5.23:1, which is up from the previous week of 4.53:1 and the ratio of 2 weeks ago of 3.70:1.
Soybean meal: On February 1, March soybean meal generated a short-term buy signal.
For the week, March soybean meal gained $11.80, May $13.50, July +12.90. The COT report showed that managed money added 1,549 contracts to their long positions and also added 1,085 contracts to their short positions. Commercial interests liquidated 115 contracts of their long positions and added 4,932 contracts to their short positions. As of the latest report, managed money is long soybean meal by a ratio of 2.81:1, which is down slightly from the previous week of 2.88:1, but above the ratio of 2 weeks ago of 2.18:1.
Soybean oil: On February 1, March soybean oil generated an intermediate term buy signal.
For the week, March soybean oil gained 89 points, May +93, July +97. The COT report showed that managed money added 4,794 contracts to their long positions and liquidated 3,680 contracts of their short positions. Commercial interests added 1,515 contracts to their long positions and also added 4,206 contracts to their short positions. As of the latest report, managed money remained short by a ratio of 1.07:1, which is down from the previous week of 1.25:1, and down dramatically from the ratio of 2 weeks ago of 1.83:1.
Soybean oil has generated an intermediate term buy signal, which confirms the short term buy signal generated on January 15. This solidifies the bullish position of soybean oil. It is important to note that neither soybeans, nor soybean meal have generated an intermediate term buy signal. Soybeans generated a short-term buy signal just a couple of days ago on January 29 and soybean meal generated a short-term buy signal on February 1.
We are providing a relative strength analysis that compares price performance to the long to short ratios in the soybean complex. We also have have performed this exercise for the currencies listed below. The purpose of this is to give clients a better idea of where potential selling can occur, and where additional buying can take place. The theory behind the relative strength analysis is our belief that managed money will significantly increase their long positions in the commodity that is outperforming, even if they are late to the party. This definitely appears to be the case in soybean oil. With this knowledge, clients can be more confident of entering new long positions on setbacks. The comparison of soybean performance to soybean oil, is revealing because of the massive difference in the ratios and the similarity of price performance. Additionally, despite outperforming soybean meal during the January 9 through January 29 period, soybean oil continues to have a net short position among managed money speculators. On a year to date basis through February 1, March soybean oil has advanced 6.62% while soybeans have gained 4.59% and soybean meal +2.10%. Even more remarkable, soybean oil has been strong from the 4th quarter through February 1. For example, from October 1 through February 1, March soybean oil has advanced 1.94% versus soybeans, which have declined by 3.61% and soybean meal, which has declined -6.75%. In short, we think the soybean oil move has farther to go, though it is overbought relative to its 50 day moving average of 50.09 on the continuation chart, and 50.54 on the March soybean oil chart.
Performance January 9-January 29 Long to Short Ratio (January 8) Long to Short Ratio (January 29)
March soybeans +4.78% 3.49:1 5.23:1
March bean oil +4.17% 1.90:1 (short) 1.07:1 (short)
March bean meal +3.19% 3.18:1 2.81:1
Corn:
For the week, March corn gained 15.25 cents, May +16.25, July +16.00. The COT report showed that managed money added 15,938 contracts to their long positions and liquidated 2,415 contracts of their short positions. Commercial interests added 4,276 contracts to their long positions and also added 8,520 contracts to their short positions. As of the latest report, managed money is long corn by a ratio of 3.62:1, which is up from the previous week of 3.30:1, and up dramatically from the ratio of 2 weeks ago of 2.82:1.
Wheat:
For the week, March wheat lost 11.50 cents, May -11.50, July -10.25. The COT report showed that managed money added 3,825 contracts to their long positions and liquidated 5,093 contracts of their short positions. Commercial interests liquidated 6,168 contracts of their long positions and also liquidated 257 contracts of their short positions. As of the latest report, managed money is short wheat by a ratio of 1.30:1, which is down slightly from the previous week of 1.37:1 and equal to the ratio of 2 weeks ago of 1.30:1.
Performance Year to Date:
March bean oil +6.62%
March corn +5.41%
March beans +4.59%
March meal +2.10%
March wheat -1.67%
Crude oil:
For the week, March crude oil gained $1.89. The COT report showed that managed money added 4,752 contracts to their long positions and liquidated 4,894 contracts of their short positions. Commercial interests added 10,443 contracts to their long positions and also added 11,333 contracts to their short positions. As of the latest report, managed money is long crude oil by a ratio of 9.03:1, which is up substantially from the previous week of 7.44:1, and up by 60% from the ratio of 2 weeks ago of 5.67:1.
Heating oil:
For the week, March heating oil gained 11.17 cents. The COT report showed that managed money added 5,649 contracts to their long positions and also added 1,165 contracts to their short positions. Commercial interests added 468 contracts to their long positions and added 4,216 contracts to their short positions. As of the latest report, managed money is long heating oil by a ratio of 2.75:1, which is up slightly from the previous week of 2.61:1, but down substantially from the ratio of 2 weeks ago of 3.31:1.
Gasoline:
For the week, March gasoline advanced 16.38 cents. The COT report showed that managed money added 7,294 contracts to their long positions and liquidated 214 contracts of their short positions. Commercial interests liquidated 8,549 contracts of their long positions and liquidated 47 contracts of their short positions. As of the latest report, managed money is long by a ratio of 9.73:1, which is up from the previous week of 8.77:1 and the ratio of 2 weeks ago of 8.62:1.
Natural gas:
For the week, natural gas lost 16.2 cents. The COT report showed that managed money added 5,001 contracts to their long positions and also added 7,497 contracts to their short positions. Commercial interests liquidated 3,747 contracts of their long positions and added 1,910 contracts to their short positions. As of the latest report, managed money is short natural gas by a ratio of 1.28:1, which is about the same as the previous week of 1.27:1 but down from the ratio of 2 weeks ago of 1.38:1.
Copper:
For the week, March copper gained 13.25 cents. The COT report showed that manaaged money liquidated 194 contracts of their long positions and added 1,796 contracts to their short positions. Commercial interests added 1,179 contracts to their long positions and also added 928 contracts to their short positions. As of the latest report, managed money is long by a ratio of 1.70:1, which is down from the previous week of 1.87:1 and the ratio of 2 weeks ago of 1.82:1.
Gold:
For the week, April gold gained $11.80. The COT report showed that managed money liquidated 10,682 contracts of their long positions and added 10,714 contracts to their short positions. Commercial interests added 7,181 contracts to their long positions and liquidated 2,328 contracts of their short positions. As of the latest report, managed money is long gold by a ratio of 3.21:1, which is down substantially from the previous week of 5.10:1 and the ratio of 2 weeks ago of 4.33:1.
Platinum:
For the week, April platinum lost $7.60. The COT report showed that managed money added 2,606 contracts to their long positions and also added 366 contracts to their short positions. Commercial interests added 340 contracts to their long positions and also added 1,680 contracts to their short positions. As of the latest report, managed money is long platinum by a ratio of number 16.27:1, which is down from the previous week of 17.76:1 and the ratio of 2 weeks ago of 18.11:1.
Palladium:
For the week, March palladium gained $15.40. The COT report showed that managed money added 3,756 contracts to their long positions and also added 317 contracts to their short positions. Commercial interests liquidated 479 contracts of their long positions and added 1,713 contracts to their short positions. As of the latest report, managed money is long palladium by a ratio of 11.25:1 which is about the same as the previous week of 11.16:1, but up dramatically from the ratio of 2 weeks ago of 9.19:1.
Silver:
For the week, March silver gained 75.2 cents. The COT report showed that managed money added 2,050 contracts to their long positions and liquidated 901 contracts of their short positions. Commercial interests added 194 contracts to their long positions and liquidated 2,996 contracts of their short positions. As of the latest report, managed money is long silver by 7.43:1, which is up substantially from the previous week of 5.82:1 and the ratio of 2 weeks ago of 5.12:1.
Every day is becoming more apparent that gold is getting weaker, especially compared to the industrial precious metals such as palladium, platinum and silver. See the table below.
Performance January 1 through January 31
April platinum +8.94%
March Palladium +5.54%
March silver +3.47%
April gold -0.69%
Canadian dollar:
For the week, the March Canadian dollar advanced 1.09 cents. The COT report showed that leveraged funds liquidated 11,106 contracts of their long positions and added 9,403 contracts to their short positions. As of the latest report, leveraged funds are long by a ratio of 2.79:1, which is down dramatically from the previous week of 7.76:1 and the ratio of 2 weeks ago of 17.45:1.
Australian dollar:
For the week, the March Australian dollar gained 2 points. The COT report showed that leveraged funds liquidated a massive 19,642 contracts of their long positions and liquidated 7,071 contracts of their short positions. As of the latest report, leveraged funds are long the Australian dollar by a ratio of 3.35:1, which is up slightly from the previous week of 3.26:1 and the ratio of 2 weeks ago of 3.13:1.
British pound:
For the week, the March British pound lost 82 points. The COT report showed that leveraged funds liquidated a massive 11,975 contracts of their long positions and added 2,252 contracts to their short positions. As of the latest report, leveraged funds are long by a ratio of 1.56:1, which is down from the previous week of 1.97:1 and dramatically down from the ratio of 2 weeks ago of 2.71:1.
Swiss franc:
For the week, the March Swiss franc gained 2.22 cents. The COT report showed that leveraged funds liquidated 2,064 contracts of their long positions and also liquidated 952 contracts of their short positions. As of the latest report, leveraged funds are long the Swiss franc by a ratio of 2.24:1, which is down slightly from the previous week of 2.33:1 and drowned dramatically from the ratio of 2 weeks ago of 4.81:1.
Euro:
For the week, the March euro gained 1.96 cents. The COT report showed that leveraged funds added 8,417 contracts to their long positions and also added 5,274 contracts to their short positions. As of the latest report, leveraged funds are long the euro by a ratio of 1.30:1, which is up slightly from the previous week of 1.27:1 and the ratio of 2 weeks ago of 1.06:1.
The currencies listed in this report provide good example of how relative strength can be used to compare performance and the long to short ratio. For example, the long to short ratio in the euro is 1.30:1,is below the British pound (1.56:1), Canadian dollar (2.79:1), Australian dollar (3.35:1). and Swiss franc (2.24:1). Yet, the performance of the euro is far superior to the three aforementioned currencies. For example, the euro/aud and the euro/cad crosses are at the highest level since December 2011. The euro/pound cross is at the highest level since October 2011. The Swiss Franc has held it own due to its peg to the euro. To put the performance of the four currencies in perspective, we have calculated their performance during the COT reporting periods of January 15, January 22 and January 29. The time frame for the calculation of the three reports is from January 9 through January 29. The table below shows that managed funds remain in underperforming currencies. From the stats below, we conclude there is considerably more selling to come in the Canadian dollar, British pound and Australian dollar. It is clear based on performance, that managed funds have not bought into the bullish euro story. This tells us that the euro move has farther to go, although it is significantly overbought relative to its 50 day moving average of 1.3180.
Performance January 9-January 29 Long to Short Ratio (January 8) Long to Short Ratio (January 29)
Euro/USD +3.24% 1.16:1 (short) 1.30:1
March Swiss +0.38% 2.39:1 2.24:1
Aud/USD -0.27% 3.25:1 3.35:1
Cad/USD -1.43% 11.24:1 2.79:1
Gbp/USD -1.61% 2.94:1 1.56:1
Performance Year to Date Against USD:
March euro +3.42%
March Swiss +0.68%
March Aud +0.50%
March pound -3.25%
SP 500 E mini:
For the week, the March S&P 500 E mini gained 11.00 points. The COT report showed that leveraged funds liquidated 33,645 contracts of their long positions and added 1,338 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 2.00:1 which is up slightly from the previous week of 1.86:1 and the ratio of 2 weeks ago of 1.96:1.
American Association of Individual Investors survey
Recent wk 2 wks ago 3 wks ago
Bullish 48.0% 52.3% 43.9%
Bearish 24.3% 24.3% 27.3%
Neutral 27.7% 23.4% 28.7%
As the table below shows, the performance of the S&P 500 cash index (SPX) was the 13th best performance during the past 63 years (1950-2013). Additionally, it exceeded the performance of January 2012 when the S&P 500 gained 4.4%. However, the most revealing stat is how the S&P performed for the remainder of the year. During months when January shows gains, the advance in the S&P 500 index averages 16.5% for the year. In January 2012 the S&P 500 gained 4.4% and the return for the entire year was 13.41%. The gain for January 2013 of 5.0% was the highest since 1997 when the index advanced 6.1%. For calendar year 1997, the S&P 500 gained 31%.
From January 1, 2012 through February 29, 2012, the S&P rose 8.59% to a high of 1378.04 before correcting to 1340.03, after which the move higher continued until April 2. In short, if the S&P 500 follows the pattern of 2012, the S&P 500 could see a further rise of 3.5% from February 1 into late February or early March. If this were to occur, the S&P 500 would be trading very close to the highs of October 2007 and of March 2000 of 1576.09 and 1552.87 respectively. This coincides when many of the economic issues that have been on hold, will begin to surface again.
