January soybeans lost 9.25 cents on very light volume of 126,676 contracts. Open interest declined by 7,199 contracts, which in relation to volume is approximately 125% above average. On December 3, January soybeans is rallied to a high of $14.62 3/4 which is just slightly above the high of November 29 of 14.60. The market continues to look sluggish. Stand aside.
January soybean meal lost 90 cents on very light volume of 51,355 contracts. Open interest increased by a whopping 5,959 contracts, which in relation to volume is approximately 350% above average, meaning that longs and shorts had very strong ideas about the future direction of soybean meal prices. January meal made a low of $430.20, but closed at 434.90, which was $1.70 from the high. Stand aside.
January soybean oil. Closed 38 points lower on light volume of 118,639 contracts. Open interest increased by a massive 7,245 contracts, which in relation to volume is approximately 130% above average. Stand aside.
March corn lost 6 cents on light volume of 233,474 contracts. Open interest declined by 7,794 contracts, which in relation to volume is approximately 20% above average. On December 3, corn rallied to a high of $7.64, which is 3 cents shy of its high of 7.67 made on November 29. Stand aside.
March wheat got hammered by losing 24.50 cents on heavy volume of 148,241 contracts. Open interest declined by 9,334 contracts, which in relation to volume is approximately 120% above average, meaning that liquidation was heavy. Egypt, which is the world’s largest importer of wheat made a purchase of US wheat for the first time since the beginning of the season. Despite this, wheat sales are lagging badly, and it will not be clear until spring the condition of the wheat crop. It is likely that the USDA will reduce wheat exports in its December 11 report. Stand aside.
January crude oil gained 84 cents on volume of 426,847 contracts. Open interest increased by a whopping 26,049 contracts, which in relation to volume is approximately 125% above average, which means there was heavy buying by longs and they were in control. In the December 2 Weekend Wrap, we became neutral to slightly friendly to crude oil. As this report is being compiled on December 3, January crude oil has made a new high for the move at $90.33, which is the highest price for January crude since October 22, when it made a high of $91.77. Stand aside.
January heating oil gained .0038 on volume of 120,411 contracts. Open interest increased by 863 contracts, which in relation to volume is approximately 60% less than average. Nonetheless, November 30 was the 9th day in a row that price and open interest action has been acting in a bullish congruent fashion. As we indicated in the Weekend Wrap, heating oil needs to close over $3.08 and 3.10 before it would become a candidate for long positions. As this report is being compiled on December 3, heating oil is down 59 points after making a high of 3.0961, which is the highest price since November 23 when heating oil reached 3.1026. Stand aside.
Natural gas: On November 30, January natural gas generated a short-term sell signal.
January natural gas lost 8.7 cents on volume of 327,951 contracts. Open interest increased by 2,008 contracts, which in relation to volume is approximately 55% less than average. November 30 was the 2nd day in a row that open interest increased on the decline, which shows that the bears are in control. Stand aside.
February gold lost $16.30 on relatively light volume of 149,421 contracts. Volume was the lightest since November 19 when 142,242 contracts were traded and gold advanced by $19.70, while open interest increased by 15,286 contracts. On November 30, open interest declined by 7,162 contracts, which in relation to volume is approximately 90% above average, meaning that liquidation was heavy. This is very healthy considering the magnitude of the move, and the low volume on the decline also is positive. As this report is being compiled on December 3, gold is trading $6.10 higher. Stand aside.
March silver lost $1.152 on very light volume of 59,608 contracts. Volume was the lightest since November 23 when 54,505 contracts were traded and silver advanced 76.6 cents while open interest increased by 3,934 contracts. On November 30, open interest declined by 2,066 contracts, which in relation to volume is approximately 35% above average meaning that liquidation was relatively heavy, but not off the charts. Note the percentage open interest decline relative to volume was much more severe in gold than in silver. Silver is on a short and intermediate term buy signal, but gold is only on an intermediate term buy ignal. Clients, please note that on December 3, silver has a 17.6 cent gap between the low the day of $33.455, and Friday’s settlement price of 33.279. We bring this up because it is likely silver will attempt to fill this gap. This may provide another opportunity to get long, if not long already. Generally speaking, the smaller the gap, the greater likelihood it will be filled quickly. Another point regarding trading on December 3: The high thus far has been 33.93, which if it holds would be the 2nd consecutive day of lower highs. Another disappointment with regard to trading on December 3 is that volume on the rally is extraordinarily light.
The December Australian dollar declined by 10 points on volume of 104,227 contracts. Open interest increased by a mere 69 contracts. Stand aside.
The December euro gained 24 points on volume of 274,451 contracts. Open interest increased by 1,007 contracts, which in relation to volume is approximately 70% below average. Although we thought there was a likelihood the euro would find resistance at the 130 level, it has broken out and made a new high for the move at 1.3078. This is the highest price for the euro since October 23, when the euro reached 1.3082. It is highly likely the December euro will generate a new short-term buy signal, which will reverse the sell signal generated on November 5. Stand aside.
S&P 500 E mini:
The S&P 500 E mini lost 1.25 points on volume of 1,693,373 contracts. Open interest declined by 6,978 contracts, which is a minuscule number and dramatically below average. In the Weekend Wrap, we discussed our thinking about the E mini and why the implementation of long puts is advised. For further information, please refer to the December 2 Weekend Wrap. The risk of long puts appears to be low at this juncture, and if clients are long other commodities and/or stocks, the put protection will likely provide some cushion against correlated downside moves caused by the fiscal cliff issue. On December 3, the Shanghai Composite Index closed down to make another new low.