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Soybeans:

January soybeans advanced 12.25 cents on volume of 179,284 contracts. Volume was the lightest since December 1 when January soybeans advanced 1.00 cent on volume of 169,814 contracts and total open interest increased by 3,474 contracts. On December 4, total open interest increased by a strong 7,401 contracts, which relative to volume is approximately 55% above average meaning that new longs were entering the market and driving prices higher (10.16 1/2). The January contract accounted for loss of 2,566 of open interest, which makes the total open interest increased more impressive (bullish).

As this report is being compiled on December 5, January soybeans are trading 28.50 higher and has made a daily high of 10.40, which is the highest print since 10.51 1/2 made on November 28. On December 3, January soybeans generated a short-term sell signal, and typically after the generation of a sell signal, the market has a tendency to rally from 1-3 days. December 5 is the 2nd day of the rally, and the sell signal would be reversed if January soybeans makes a daily low above OIA’s key pivot point for December 5 of 10.33 1/4.

On December 1, OIA recommended writing out of the money calls, and these positions should continue to be held until the sell signal is reversed. Atypically, soybeans are far stronger than soybean meal on December 5. This is extremely unusual.

Soybean meal:

January soybean meal advanced $4.00 on volume of 62,894 contracts. Total open interest increased by 720 contracts, which relative to volume is approximately 45% below average. The December contract accounted for loss of 724 of open interest and there were open interest increases in January 2015 through October 2015 contracts.We are surprised by the tepid increase of open interest on December 4 considering that soybean meal has been the leader and has not yet generated a short or intermediate term sell signal. As this report is being compiled on December 5, January soybean meal is trading $8.80 higher and has made a daily high of 367.40, which is the highest print since 368.90 made on December 1.For the rally to resume, January soybeans must make a low above OIA’s key pivot point for December 5 of 367.90.

Corn:

March corn advanced 7.75 cents on volume of 238,888 contracts. Volume increased sharply from December 3 when March corn advanced 0.75 cents on volume of 141,865 contracts and total open interest increased by 5,421 contracts. Additionally, volume was the highest since November 26 when March corn advanced 4.25 cents on volume of 402,004 contracts and total open interest declined by 17,091 contracts.

On December 4, total open interest increased by a massive 11,427 contracts, which relative to volume is approximately 75% above average meaning that aggressive new longs were entering the market in large numbers and driving prices higher (3.90 1/2), which is the highest print since 3.91 made on December 2. The December contract accounted for loss of 2,969 of open interest, which makes the total open interest increased more impressive (bullish).

As this report is being compiled on December 5, March corn is trading 4.25 cents higher and has made a daily high of 3.96, which is the highest print since 3.96 1/2 made on November 17. In order for the rally to resume, March corn must first make a daily low above OIA’s key pivot point for December 5 of 3.87 1/4. The second pivot point is 3.91 1/2, and March corn must make a daily low above this.¬†Conceivably, corn may rally to OIA’s longer-term pivot point of 4.03. March corn remains on a short and intermediate term buy signal.However, we think seasonal factors will kick in and corn will begin a downward trajectory.

Chicago wheat:

March Chicago wheat advanced 0.25 cents on volume of 88,373 contracts. Total open interest increased by a massive 4,246 contracts, which relative to volume is approximately 85% above average meaning a battle ensued between longs and shorts and longs were able to move the market just fractionally higher. The December contract lost 231 of open interest, March 2015 -168. As this report is being compiled on December 5, March wheat is trading 0.50 cents higher and has made a daily high of 5.95 1/4, which is above yesterday’s high of 5.91 3/4. As we have said in prior reports, the rally in wheat is all about Russia. In order for the rally to continue next week, March Chicago wheat must make a weekly low above OIA’s key pivot point of 6.03 7/8.During the current week, March wheat was unable to make a weekly low above OIA’s weekly pivot point of 5.98 1/8.

Live cattle:

February live cattle lost 15 points on volume of 34,902 contracts. Total open interest increased by 585 contracts, which relative to volume is approximately 35% below average. The December contract lost 2,227 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on December 5, February live cattle is trading 2.25 cents lower and has made a daily low of 1.64425, which is the lowest print since 1.64000 made on October 20. On December 3, February live cattle generated a short-term sell signal, but remains on an intermediate term buy signal. Usually, after the generation of a sell signal, the market has a tendency to have a counter trend rally lasting 1-3 days, and in the case of live cattle, the market has continued lower. We advise against chasing cattle because a rally can occur at any time.

WTI crude oil:

January WTI crude oil lost 57 cents on volume of 459,073 contracts.Total open interest declined by 5,511 contracts, which relative to volume is approximately 45% below average. The January contract accounted for loss of 8,013 of open interest. As this report is being compiled on December 5, January WTI crude oil is trading 35 cents lower after making a daily low of 65.17, which is the lowest print since making its contract low of 63.72 on December 1. Stand aside.

Natural gas:

January natural gas lost 15.6 cents on volume of 313,145 contracts. Total open interest increased by 4,301 contracts, which relative to volume is approximately 40% below average. The January contract accounted for loss of 7,299 of open interest, which makes the total open interest increase more impressive (bearish). During the past 4 days beginning on December 1, January natural gas has fallen each day while open interest has increased each day.This is bearish.

The market is massively oversold and has been due for a rally, and this is occurring on December 5 as the January contract is trading 15.7 cents higher. After generating a short and intermediate term sell signal on December 1, the market headed straight down, and we are finally seeing the counter trend rally, albeit somewhat delayed. The market is acting counter seasonal by declining, and we are reluctant to recommend bearish positions due to the possibility of a cold snap, which could send natural gas prices sharply higher, if only temporarily.

Gold:

February gold lost $1.00 on volume of 122,806 contracts. Total open interest declined by 1,999 contracts, which relative to volume is approximately 35% below average. As this report is being compiled on December 5, gold is trading $17.30 lower and has made a daily low of 1186.40.Gold has made numerous attempts to generate a short-term buy signal, but has been unable to do so. In order for a buy signal to be generated, the low the day must be above OIA’s key pivot point for December 5 of $1203.60. The downtrend will resume in earnest if the high of the day is below OIA’s key pivot point for December 5 of 1182.30. Stand aside.

Platinum:

January platinum advanced $18.40 on volume of 13,165 contracts. Total open interest increased by a massive 961 contracts, which relative to volume is approximately 185% above average meaning that new longs were entering the market in large numbers and driving prices higher (1246.40). This was the highest print since December 1 when January platinum reached 1247.70. As this report is being compiled on December 5, January platinum has closed down sharply at 1219.50. In order for platinum to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for December 5 of 1238.00. Stand aside.

Silver:

March silver advanced 16.3 cents on volume of 35,784 contracts. Total open interest declined by 590 contracts, which relative to volume is approximately 35% below average. As this report is being compiled on December 5, March silver is trading 25.5 cents lower on the day. In order for March silver to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for December 5 of $16.607. Stand aside.

Coffee:

March coffee lost 1.20 cents on light volume of 14,628 contracts. Total open interest declined by a massive 1,048 contracts, which relative to volume is approximately 185% above average meaning that liquidation was extremely heavy on the modest decline. As this report is being compiled on December 5, March coffee has closed at 1.8010, down 2.35 cents. As we said in yesterday’s report, the market is wearing out longs and they are liquidating in large numbers. Once the liquidation has run its course, we expect prices to resume their uptrend. On October 23, March coffee generated a short-term sell signal and an intermediate term sell signal on November 5. Stand aside.