January soybeans advanced by 4.25 cents on volume of 237,474 contracts. Volume declined slightly from November 22 when the January contract gained 9.75 cents on volume of 244,694 contracts and total open interest increased by 15,367.
On November 23, total open interest increased by a massive 15,034 contracts, which relative to volume is approximately 140% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of 10.35 3/4. As this report is being compiled on November 25 the January contract is trading 5.50 cents higher and has made a new high for the move of 10.46 3/4, which easily takes out the July 20 print of 10.38 1/4.
The open interest action in soybeans for the past three days has been nothing short of spectacular. Beginning on November 21 through November 23, total open interest has increased by a massive 60,732 contracts while the January contract has gained 40.50 cents. Soybeans are overbought, but this does not mean that prices cannot continue their advance. We recommend for those not involved in the market not to chase this rally because the pullback could be rather sharp.On October 18 January soybeans generated a short term buy signal and an intermediate term buy signal on October 24.
February live cattle advance 62 points on volume of 47,011 contracts. Total open interest increased by 1,071 contracts, which relative to volume is approximately 10% below average. However, the December contract lost 2,660 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in December and increase total open interest. As this report is being compiled on November 25, the February live cattle contract continues to advance, up 1.275 cents and has made a new high for the move of 112.525, which is the highest print since 112.725 made on August 22, For recommendations on how to trade live cattle, please call or email.
Natural gas: January and February 2017 natural gas will generate short term buy signals on November 25. Both contracts remain on intermediate term buy signals.
January natural gas advanced 4.7 cents on lackluster volume of 330,433 contracts. Total open interest increased by 970 contracts, a major disappointment and is approximately 85% below average. The December contract accounted for a loss of 7,181 of open interest.
During the past three days beginning on November 21 through November 23, natural gas has gained on each trading day for a total of 16.7 cents while total open interest in this time frame has declined by 9,477. In summary, the advance is being fueled primarily by short covering rather than new buying. Now that natural gas is on a short term buy signal, the market should pullback for 1-3 days and this would be the opportune time to initiate bullish positions if you are so inclined.
December gold lost $21.90 on heavy volume of 513,986 contracts. Total open interest declined by massive 37,676 contracts, which relative to volume is approximately 185% above average meaning that liquidation was extremely heavy on Wednesday’s decline.
On Wednesday, the December contract made a low of 1181.20 and this has been broken on November 25 with another new low for the move of 1170.30, which is the lowest print since $1150.00 made on February 5. On November 11, OIA announced that December 2016 and February 2017 New York gold generated short term sell signals. Both contracts remain on intermediate term sell signals. We recommend a stand aside posture in gold.
December copper advanced 6.15 cents on strong volume of 163,353 contracts. Total open interest declined by 2,889 contracts, which relative to volume is approximately 25% below average. As this report is being compiled on November 25, the December contract is trading 6.70 cents higher and has taken out the November 23 print of 2.6350.
The moving average setup for copper is bullish: the 50 day moving average is above the 150 and 200 day moving averages. Everything in copper revolves around China. However, as we have pointed out in prior reports the open interest action in copper leaves much to be desired. We have no recommendation except to say copper prices are highly volatile and this makes it a difficult contract to trade. The options market in copper is almost nonexistent due to his lack of liquidity.
10 Year Treasury Note:
The December 10 year treasury note lost 11 points on very heavy volume of 4,489,541 contracts. Total open interest increased by 52,780 contracts, which relative to volume is approximately 45% below average, however and the open interest increase on Wednesday’s sharp decline confirms that new short-sellers continue to enter the market and drive prices to new record lows. Wednesday’s low of 124-275 has been taken out with another new print of 124-255. The market is massively oversold and due for a multi-day counter trend rally. Do not chase this market lower.