November soybeans advanced 27.50 cents on surprisingly light volume of 158,904 contracts. Volume declined from August 12, the day of the USDA report when 232,018 contracts were traded and total open interest declined by 4,254 while the November contract lost 2.25 cents. On August 15, total open interest declined by 1,191 contracts, which relative to volume is approximately 60% below average. The September contract accounted for a loss of 1,815 of open interest.
Yesterday’s total open interest decline on a strong advance is bearish and this continues the pattern of open interest declines on price advances that we have seen for the past couple of weeks. As this report is being compiled on August 16, the November contract is trading unchanged and has made a daily high of 10.15 3/4, which is above yesterday’s print of 10. 11. November soybeans remain on short and intermediate term sell signals. Stand aside.
From the August 8 research note on soybeans:
“During the past two days, the November contract has gained 28.25 cents while total open interest has declined by 4,724 contracts. In summary, short-sellers are powering the market higher and longs are liquidating on the way up. This is exactly the scenario we have been discussing during the past couple of weeks as soybean prices have continued their decline while managed money remains heavily net long.”
WTI crude oil: On August 15, September and October WTI crude oil generated short term buy signals and remain on intermediate term sell signals.
September WTI crude oil advanced by a strong $1.25 on volume of 1,035,512 contracts. Volume increased from August 12 when the September contract gained $1.00 on volume of 980,804 contracts and total open interest declined by 12,331. On August 15, total open interest increased a measly 78 contracts. The September contract accounted for a loss of 41,361 of open interest, which means there were barely enough open interest increases in the forward months to offset the decline in September and increase total open interest by a minor amount.
For the past two days, the September contract has gained $2.25 while total open interest has declined by 12,253 contracts, a troubling statistic. As this report is being compiled on August 16, the September contract is rocketing higher again, up 64 cents and has made a new high for the move of $46.55. This is the highest print since 46.84 made on July 18. Now that WTI crude oil is on a short term buy signal, a pullback should begin and the correction could last from 1-3 days before resuming the uptrend. Our concern is the very negative open interest action seen on two days of strong trading activity. We have no recommendation to make at this juncture.
Gasoline: September and October gasoline will likely generate short term buy signals on August 16. For the September contract to generate a short term buy signal, the low of the day must remain above OIA’s key pivot point for August 16 of 1.3684 and the low thus far and trading has been 1.3880.
December gold advanced $4.30 on light volume of 132,938 contracts. Although, volume was light, the total open interest increase was heavy, up 10,214 contracts, which relative to volume is approximately 210% above average meaning that aggressive new buyers were entering the market in large numbers and driving prices higher (1349.10). As this report is being compiled on August 16, the December contract is trading higher, up $7.10 and has made a daily high of 1364.30, which takes out the August 12 print of 1362.50.
Ever since the December contract made its contract high of 1384.40 on July 6, the market has been consolidating its gains and now appears poised to test the July 6 print. Although, we have not gotten a confirmed signal to enter new bullish positions, clients should begin to position themselves on the bullish side of gold. The December contract will resume its uptrend when it makes a daily low above OIA’s pivot point for August 16 of $1354.50.