The first thing I want to talk about is the Commitment of Traders report which is published every Friday afternoon. Both March Corn and Wheat continued their down corrections last week.
Open Interest includes all months combined. Remember, OI is the total number of open contracts. It includes all traders, merchants and producers who have open positions in the market - they are interested in making money or hedging their bets against the physical inventory on hand.
The Wheat open interest decreased 41,728 contracts last week. By the way, I use the short form legacy report. Some people look at other iterations that include more categories of traders. Here is the short form I look at: https://www.cftc.gov/dea/futures/deacbtsf.htm
The Corn open interest decreased by 136,254 contracts last week. Both Wheat & Corn sold off during that time allowing us to determine that the down moves are only corrective - small short traders taking profits and weak longs getting blown out (stopped out) of their positions.
Therefore, the primary trend (flow of energy) on the weekly charts is still up in both March Corn and Wheat. Another way to look at it - traders are becoming less interested as price falls - energy is decreasing.
On the other hand, when a market is in a strong trend and open interest is increasing, it means energy is being pumped into the market, adding fuel to the fire, so to speak. Roger sent out those nice charts of Dec Corn and March Wheat.
I agree with him on both charts. Open gaps are always unfinished business. Once they are filled, that market can return to the main business at hand - for the corn weekly chart this business is up. The volume on Friday for both Corn and Wheat was way above average, indicating capitulation.
March Wheat support was 760, the September low (unfinished business) - Friday tested this area marking a nice double bottom. Therefore, the odds favor strong fund buying next week - it's very reasonable to think that we will see March Corn and Wheat rally next week.
Here are the Dec Corn and March Wheat charts, respectively.
Soybean open interest increased 11,527 while price increased last week, supporting the up move. Also yesterday, Jan Soybean meal broke out of it's triangle to the upside. Meal's strength will bleed over to Jan Soybeans and support higher prices overall - want to see some follow through buying in Jan Meal Monday and Tuesday. Check out the triangle breakout in Jan Meal.
Jan Crude Oil Update: Friday's correction is probably complete because it had a nice structured A-B-C - 2 legged. C bottomed at 79.65 and the close Friday was 80.34. This is a pretty good sized inverted Head & Shoulders pattern and higher prices next week are likely. Please study the updated more zoomed in Crude chart.
I will re-visit the Dec S&P next week - however, the uptrend appears to remain intact. Have a nice weekend!