January soybeans gained 3 cents on volume of 184,189 contracts. Volume declined approximately 30,000 contracts from November 12 when January soybeans lost 46.25 and open interest increased by 2,019 contracts. Open interest declined by 1,009 contracts, which in relation to volume is approximately 70% less than average. Soybeans made a new low for the move at 13.91 1/4. The crop progress report showed that 96% of the soybean crop has been harvested.
Tomorrow is the export sales report, and we will see whether the cancellation of sales continue. Undoubtedly, lower prices will significantly reduce farmer selling, and as indicated in the November 11 Weekend Wrap, the questions remain about whether lower prices will result in more cancellations, and whether these will be offset by new buying. Also, will countries buy on a hand to mouth basis while waiting for lower prices after the harvest in South America late in the 1st quarter. For the month of October, 153.3 million bushels of soybeans were crushed, which is up 12.4 million bushels from last year, and above trade estimates of 147 million. This indicates that bean consumption is robust. We don’t think a bottom is in yet, and anticipate a retest of the November 13 low. Stand aside.
December soybean meal gained $1.70 on volume of 79,497 contracts. Open interest declined by 3,362 contracts, which in relation to volume is approximately 60% above average, meaning that liquidation was fairly heavy. Stand aside.
Corn: On November 13, December corn generated in intermediate term sell signal.
December corn lost 5.25 cents on heavy volume of 449,435 contracts. This is the 3rd day in a row that corn volume has been above 400,000 contracts. Open interest declined by 8,936 contracts, which in relation to volume is approximately 10% below average. The December contract lost 25,717 contracts of open interest. December corn made a new low for the move at 7.10 1/2, but we expect this to be taken out as well as the September 28 low of $7.05. Stand aside.
December wheat lost 6.75 cents on large volume of 156,240 contracts. Open interest increased by 234 contracts, and the December contract lost 7,159. The crop progress report was released yesterday evening and reported that 22% of the crop was poor to very poor, and only 36% of the crop was rated good to excellent. These are the lowest ratings since record-keeping began in 1986. It is likely that wheat will generate a short and intermediate term sell signal on November 14. Stand aside.
December crude oil lost 19 cents on huge volume of 829,142 contracts. Volume exceeded the 828,091 contracts traded on September 14, and ranks as one of the top 10 volume days so far in 2012. Although volume was higher than September 14, the average true range on November 13 was $1.38 versus the average true range of $2.38 on September 14. In other words, there was much more activity within a smaller trading range on November 13. On November 13, open interest declined by a massive 55,900 contracts, which in relation to volume is approximately 170% above average, meaning that liquidation was off the charts. Previously, we mentioned that crude oil has been trading in a consolidation range for the past 3 days. With the market being as oversold as it is, a rally is likely, especially since managed money has one of the lowest long to short ratios in many months. Stand aside.
December heating oil lost 3.84 on volume of 159,706 contracts. Open interest declined by 4,171 contracts, which in relation to volume is average. During the past 4 days, heating oil has been trading under its 200 day moving average of $3.03. Stand aside.
December natural gas gained 16.9 cents on volume of 401,421 contracts. Volume was the highest since October 25 when 402,921 contracts were traded and natural gas made a high of $3.835, and closed at 3.781. Unfortunately, open interest increased, but only by a meager 600 contracts. The overall structure of the market is bullish, and it looks to go higher, but the question remains; with supplies more than adequate, how much higher can the market move considering current stockpiles. Stand aside.
December copper gained .0030 on volume of 73,220 contracts. Open interest increased by 3,480 contracts, which in relation to volume is approximately 90% above average, meaning that both buyers and sellers felt strongly about the direction of prices, but participants were unable to move copper based upon the nearly unchanged closing price. The copper market looks terrible, but there is no reason to be involved on the short side unless copper rallies significantly. Stand aside.
December gold lost 6.10 on light volume of 169,182 contracts. Open interest increased by 1,378 contracts, which in relation to volume is approximately 60% below average. During the past 3 days, the daily highs have been lower and the daily lows have been lower. Gold continues to trade in a sluggish fashion, and until the market has a catalyst for the upside, we recommend a stand aside position.
December silver lost 3.5 cents on volume of 57,236 contracts. Open interest increased by 2,171 contracts, which in relation to volume is approximately 50% above average. Like gold, silver needs a catalyst to improve its performance. Silver’s 50 day moving average is $33.27, and silver must close above it, before mounting a sustainable move higher. Stand aside.
The December euro lost 8 points on volume of 309,706 contracts. Open interest declined by just 4 contracts. The market made a new low at 1.2665, which is the lowest price since September 7. The euro has not yet generated in intermediate term sell signal, but is on a short-term sell signal. Stand aside.
S&P 500 E mini:
The S&P 500 E mini lost 7.25 points on volume of 1,953,116 contracts. Open interest declined by 13,715 contracts, which in relation to volume is approximately 65% below average. Since breaking below 200 day moving average on November 8, the Dow Jones Industrial Average has not been able to touch the 200 day average, even on an intraday basis. The weakness in the DJIA is ominous because the index is composed of high dividend stocks, which have been the darlings of the investment community. Additionally, Apple is showing consistent weakness. The E mini is showing persistent weakness, and intraday rallies fade. This indicates the market will continue to move lower. Maintain long puts.