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Corn:

March corn advanced 6.75 cents on volume of 261,561 contracts. Volume was the strongest since November 27 when the March contract lost 5.50 cents on volume of 267,195 contracts and total open interest increased by 9,532. On December 3, total open interest increased by 5,468 contracts, which relative to volume is approximately 20% below average, but the December 2015 and September 2016 contracts lost a total of 5,136 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in the two delivery months and increase total open interest.

Yesterday’s performance from a volume and open interest stand point was one of the more positive that we’ve seen during the past couple of weeks. As this report is being compiled on December 4, the March contract is trading 3.00 cents higher and has made a daily high of 3.80 1/2, which is the highest print since 3.84 1/4 made on November 9. For the March contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for December 4 of 3.79. March corn remains on short and intermediate term sell signals. We have no recommendation.

Soybeans:

January soybeans advanced 5.25 cents on volume of 209,554 contracts. Volume was the weakest since December 1 when the January contract gained 8.25 cents on volume of 198,640 contracts and total open interest declined by 2,590. On December 3, total open interest increased by 5,963 contracts, which relative to volume is average. The January contract accounted for loss of 5,591 of open interest and there were sufficient open interest increases in the forward months to offset the decline in January and increase total open interest to an average number.

Yesterday’s performance was the best that we’ve seen during the rally, and may signal that January beans are finally able to go through corrective action. Ever since January soybeans generated a short-term buy signal on December 1, the market has not had its typical 1-3 day pullback and clients should expect this.

As this report is being compiled on December 4, the January contract is trading nearly unchanged after making a new high for the move of 9.02, which is the highest print since 9.03 1/2 made on October 23. For January soybeans to generate an intermediate term buy signal, the low of the day must be above OIA’s key pivot point for December 4 of 8.95. We have no recommendation.

Soybean oil:

January soybean oil advanced 30 points on heavy volume of 191,775 contracts. Volume exceeded that of December 2 when the January contract gained 49 points on volume of 186,329 and total open interest declined by 4,301. On December 3, total open interest declined again, this time by 5,299 contracts, which relative to volume is average. The December contract lost 749 of open interest, January 2016 -9636.

Remarkably, December 3 was the fourth day in a row in which prices advanced and open interest declined each day. From November 30 through December 3, the January contract has advanced 1.79 cents while total open interest has declined by a cumulative 13,399 contracts. This is incredibly bearish, especially since soybean oil is the leader of the complex. On November 27, OIA announced that January and March soybean oil generated short and intermediate term buy signals. We have no recommendation.

WTI crude oil:

January WTI crude oil advanced $1.14 on volume of 818,279 contracts. Volume declined from December 2 when the January contract lost 1.95 on volume of 927,927 contracts and total open interest increased by 1,689 contracts. On December 3, total open interest declined by 2,373 contracts, which relative to volume is approximately 85% below average. The January contract accounted for loss of 14,810 of open interest.

Yesterday’s performance confirms the bearish set up with an open interest decline on yesterday’s advance. As this report is being compiled on December 4, the January contract is trading $1.16 lower, or -2.85% and has made a new contract low of 39.60. However, the continuation contract low occurred on August 24 when the October contract printed $37.75. Clients should be focusing on the continuation low to see if the market finds support at this level.The OPEC meeting was a disappointment for anyone looking for a bullish surprise and Saudi Arabia reaffirmed their desire to continue pumping oil at a breakneck pace. We have no recommendation.

Dollar index:

The December dollar index lost 2.386 points on extremely heavy volume of 150,195 contracts. Volume was the strongest since March 12, 2015 when 192,589 contracts were traded and the March 2015 contract closed at 99.411. On December 3, total open interest declined only 104 contracts, which was a huge surprise to us. The December contract lost 1,998 of open interest, which means there were sufficient open interest increases in the forward months to offset most of the decline in December. This indicates that pressure was coming from short-sellers rather than massive liquidation of long positions.

As this report is being compiled on December 4, the December contract has reversed course and trading 93.6 points higher on the day on substantial volume. For the December contract to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 4 of 97.853. For the rally to resume, the low of the day must be above OIA’s key pivot point for December 4 of 98.552. The December dollar index remains on short and intermediate term buy signals. We have no recommendation.

Euro:

The December euro advanced 3.55 cents on huge volume of 799,551 contracts. Volume was the strongest since March 11, 2015 when 823,804 contracts were traded and the March 2015 contract closed at 1.0535. On December 3, similar to the dollar index, we were very surprised by the minor decline of open interest, of 1,479 contracts, which is minuscule and substantially below average. The December contract accounted for loss of 6,067 of open interest, which means there was sufficient buying in the forward months to offset a good portion of the decline in December.

With managed money massively short the euro, the dramatic move yesterday did not shake most of these players out of the market. Yesterday, during the overnight session, the December contract made a new contract low of 1.0490, but on the continuation chart this is above the continuation contract low of 1.0463 made by the March 2015 contract on March 13, 2015.

As this report is being compiled on December 4, the December contract is trading 1.09 cents lower after making a daily high of 1.0959, which is below yesterday’s print of 1.0984. For the December euro to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for December 4 of 1.0943. For the downtrend to resume, the high of the day must be below OIA’s pivot point for December 4 of 1.0837. The December euro remains on short and intermediate term sell signals. We have no recommendation.

S&P 500 E-mini:

The December S&P 500 E-mini lost 30.25 points on heavy volume of 2,710,421 contracts. Volume was the strongest since 2,851,683 contracts were traded on September 17, 2015 when the December contract closed at 1987.75. On December 3, total open interest increased by 35,181 contracts, which relative to volume is approximately 45% below average, but an open interest increase on yesterday’s price decline is bearish.¬†Also, the heavy volume on the decline is a another indicator the path of least resistance longer term is lower.

As this report is being compiled on December 4 after the release of the employment report, the December contract is rocketing higher, up 33.00 points or +1.62%. Whenever there is a favorable employment report, the market has a distinct tendency to rally strongly on the day of the report.

In the November 30 report written on December 1, we recommended the initiation of short call positions in the December 2015 S&P 500 E-mini contract. We recommend that clients continue to hold these positions and we see today’s rally as a temporary phenomenon usually associated with days of employment data releases.

For the rally to resume and possibly take another leg higher, the low of the day must be above OIA’s key pivot point for December 4 of 2088.65. A short-term sell signal will be generated if the daily high is below OIA’s key pivot point for December 4 of 2063.10.