Corn: On November 11, December 2016 and March 2017 corn generated short and intermediate term sell signals. We have no recommendation.
December copper declined 4.20 cents on what appears to be exchange record-setting volume of 332,467 contracts. Total open interest declined by 2,878 contracts, which relative to volume is approximately 65% below average. On Friday, the December contract made a contract high of $2.7345, which is the highest print since 2.7670 made during the week of June 8, 2015.
We rarely report on copper due to its extreme volatility and because option liquidity is almost nonexistent, which makes copper extremely hazardous to trade. If you must trade copper, we recommend the ETF JJC. Much has been made about the massive rise in copper prices and from the October 21 close of 2.0885 through Friday’s high (2.7345), December copper has risen 64.60 cents. However, the cumulative open interest increase since October 21 has been less than impressive.
From October 21 through November 11, total open interest has increased by only a paltry 13,671 contracts. This tells us that much of the upside action in copper has been powered by substantial short covering; both longs and shorts have been liquidating on the way up. Based upon Friday’s huge volume spike along with the highest price in nearly 18 months, we think that copper has experienced a classic blow-off. We recommend a stand aside posture.
WTI crude oil:
December WTI crude oil lost $1.25 on volume of 1,248,814 contracts. Total open interest increased by a hefty 36,422 contracts, which relative to volume is approximately 10% above average meaning aggressive new short-sellers were entering the market in very large numbers and driving prices to a new low for the move of 43.03. The December contract accounted for a loss of 29,310 of open interest, which means there were large increases of open interest in the forward months that offset the decline in December and increase total open interest above average.
As this report is being compiled on November 14, the December contract is trading down 91 cents and has made another new low for the move of $42.20, which is the lowest print for the December contract since 41.58 made on August 3, nearly 3 1/2 months ago. On October 31, OIA announced that December WTI crude oil generated a short term sell signal and intermediate term sell signal on November 2. Stand aside.
Dollar index: On November 11, the December 2016 and March 2017 dollar indices generated short term buy signals. Both contracts remain on intermediate term buy signals.
The December dollar index advanced 27.6 points on volume of 34,142 contracts. Total open interest declined by massive 4,452 contracts, which relative to volume is approximately 425% above average meaning liquidation was extremely heavy on Friday’s advance. Accounting for this is the imminent expiration of the December contract, but it should be noted there were not enough open interest increases in the forward months to offset the decline in December.
As this report is being compiled on November 14, the December contract is trading sharply higher up 89.5 points and has made a new high for the move of 100.240, which is the highest print for 2016 and is approaching the November 2015 high of 100.255. Sharply higher interest rates in longer dated treasuries is supporting a firm dollar index. At some point if the dollar rally continues, the impact, whether actual or psychological will begin to take its toll on a variety of markets. We have no recommendation.
Gold: On November 11, December 2016 and February 2017 New York gold generated short term sell signals and remain on intermediate term sell signals.
December gold lost $42.10 on heavy volume of 514,460 contracts. Total open interest declined by 17,603 contracts, which relative to volume is approximately 20% above average. Liquidation was extremely heavy on Friday and as this report is being compiled on November 14 the December contract continues to fall and is down $2.30, on heavy volume and has made another new low for the move of 1211.00. This takes out the Friday print of 1218.70. We recommend a stand aside posture.
Silver: December 2016 and March 2017 New York silver will generate short term sell signals on November 14. Both contracts remain on intermediate term sell signals. Stand aside.