Posts Tagged ‘COT’

COT 4-01-11

Tuesday, April 5th, 2011

Hi Traders,

Well, I was swamped last week so I never got to the COT. No matter, with Non-Farm Payrolls out on Friday, I don’t think it was that big of a deal; and, the previous week’s report sufficed just fine.

About the COT and coming up-to-speed, Let’s get busy. The latest charts ae here: http://www.tradesight.com/wp-content/uploads/2011/04/COT-4-01-111.pdf

The commodity currencies have been climbing and the NZD has moved 5% in two weeks. That’s just ridiculous. But, the pair is at a .786 Fibonacci retracement level per the last daily chart high and low, and is pretty much overbought. I’m watching closely to see if it moves lower, retracing to a Fibonacci level of the last leg up. Correlate this with the COT chart, and you’ll find the kiwi WAS at extremes: the commercials and specs are 180-degrees apart, where the commercials had been buyers and specs sellers. But this changed two-weeks ago and the COT gave us a heads up. So, even with NZD at the current .786 Fibonacci level, if it does move lower from here, I believe it is temporary (and, again, will be a retrace of this last leg up). Also note the daily trend line hasn’t been so much as tested. Hence, the trend is still up.

The aussie is also at extremes, with the commercials net short and the specs net long. And, based on the COT and price charts, I’m looking for AUD to make a nice move down from these highs. CAD looks the same, but the inverse is true, i.e., I looking for is to move up. Like NZD, note the daily trend lines for both remain untested, at this point. So, conservative and/or longer term traders might want to wait for confirmation signals before taking a position. Just a thought and this totally depends on one’s style of trading.

The swissy and euro are in a similar, but inverse, situation. And, when looking at the USD Index, both appear close to a turn around. Note the commercials and specs are 180-degrees out on the Index, which, as I’ve mentioned in the past, presages a USD turn-around. Yes, I know everyone hates the greenback, but guess what?

I’m not “everyone” and neither are you. We’re a lot smarter and prefer to think contrarain, right?

Right ;- )

About the yen, well…. I’m not a fan of interventions, so I’m going to leave this one alone. Other than carry trades (playing the interest rate differential); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES one may very well be living on the edge by trading the yen. You just never know when you’ll get a price spike, which, if you’re on the wrong side of the trade, may feel like a spike in the forehead. I’m just sayin’….

Gold and silver? Momentum is slowing to the upside, but gold’s COT shows the commercials selling and the specs buying. As for silver, its COT is pretty much a plate of spaghetti. Yes, per the price charts, it’s still a long. But, we’ll see where it goes, as it is overbought and (as I already mentioned) momentum is slowing.

That’s it for this week. Feel free to comment.

Be well and good trading!

Clay

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COT 3-18-11

Monday, March 21st, 2011

Hi Traders,

A good Monday to you! I have to admit, it was an amazing Tampa Bay weekend; I mean, it was the perfect illustration of “why” this time of years our state fills-up with out-of-staters driving very large cars, doing below the speed limit and with one directional flashing on, then off, then on, then… for miles and miles on any Florida Interstate. Yes, we love them. And, yes, May will be here soon.

Okay, the COT charts are here: http://www.tradesight.com/wp-content/uploads/2011/03/COT-3-18-11.pdf

Everything we discussed previously (as in last time) has continued in the same direction this past week, meaning if a currency was at extremes between the commercials and specs then, it is more extreme now. If it was in the middle of a move toward extreme levels, the direction hasn’t changed. And, if it was in a state of confusion, like the yen, it still is.

I will note that if one is looking for dollar bull, you’ll probably have to pay a private investigator to find one for you. To excerpt one of my letters: “Everyone is bearish on the dollar. Many newsletter writers are bearish on the dollar. Magazine headlines scream warnings of a dollar disaster. Financial TV talking heads are universally gloomy on the greenback. And while I agree with them over the long term, we’re ready to see a big dollar rally (and a euro fall) in the short term.”

My point, exactly. So, I suggest one continues to note what the COT charts are telling us while keeping an eye the price charts for longer-term setups (i.e., daily and 4-hour).

Cheers and great trading,

Clay

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COT 3-12-11

Monday, March 14th, 2011

Hi Traders,

What an awesome weekend here in Tampa Bay… and that’s all I’ll say just in case it’s cold and nasty where you are. Okay, that and… Hold on, summer is coming!

Okay, the COT charts are here; feel free to grab a copy of the sheet music and sing along.

The commodity currencies AUD and CAD are starting to push the “extremes” limits, especially the latter. Remember, though, even when this occurs, it can take some time for the spot FX market to change gears; these readings are best used as a heads up. NZD, though a member of the commodity currency team, keeps getting sold by the specs and bought buy the commercials. And, it’s nowhere near extremes, so this could go on for a while. You might take a look at all three charts and note the difference.

The Swiss Franc and euro charts show the commercials 180-degrees apart; the commercials have been selling and the specs buying, though this may be changing soon, especially considering what’s going with the EU’s PIIGS. I mentioned this last week, so I won’t kick that dying horse–that said, I never understood why anyone would consider kicking a dying horse, anyway.

The pound is beyond extremes, having turned around a couple of weeks ago. The commercials are buying, though not with conviction, and the specs are selling, though not with any sort of conviction, either. GBPUSD bounced off a monthly pivot last Friday and made a nice move higher. Will it head to 1.6400? Absolutely… unless, of course, it doesn’t. GBPJPY and GBPCHF, like GBPUSD, found support (see daily price charts) and, by the looks of things, the market is considering where to take these pairs next. If the most recent daily highs are taken out, I anticipate this happen with less momentum, which is a signal for a turn (think “divergence)). Keep an eye on the daily highs.

The market is in a state of confusion about the yen. And, with the tsunami, it might take a little longer for conviction to enter the picture. Standby to standby.

The USD Dollar Index shows the commercials and specs180-degrees apart, which, when considering the swissy and euro charts, makes sense. Correlate these with the price charts and the extremely negative USD sentiment, and we’re seeing the makings of an about-face.

Gold and silver are an interesting couple. The small traders and specs are buying gold again, but with silver making these most recent highs, it appears they’re concerned and not sure what to do. That said, unless one’s an aggressive trader, shorting silver now would, in my opinion, take a lot of guts and the willingness to be wrong if the market continues higher. Remember the old adage, “The market is never too high to go higher, or too lower to go lower.” That, and, “Trade what you see.”

That’s it for this week.

Cheers,

Clay

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COT: 3-4-11

Saturday, March 5th, 2011

Hi Traders,

A good Saturday morning to you. It’s a little overcast here in the Tampa Bay area, but yesterday was FANTASTIC, so I’ll put up with some cloud cover. At least it’s warm enough to wear shorts and flip flops!

On to the COT but first, get this weeks charts HERE.

The small traders and specs have been buying the aussie and looney; as commodity currencies, it’s no wonder, especially with oil going through the roof this week… and the commercials were sellers (hey, the specs and smaller traders have to buy from someone). That said, the looney (i.e., CAD) is at extremes and the aussie is real close. Look for a 180-degree differential, which usually presages a turnaround. The kiwi, however, didn’t benefit, and small traders kept on selling.

Other pairs at extremes are the swissy and euro, and the pound has turned the corner. This is a good time to start looking for a longer-term move setting-up in the opposite direction. Depending on one’s risk tolerance and whether they’re an active, swing or position trader, entries might already be in place. But, especially for active traders, Friday was Non-Farm Payrolls, which creates some chop and, if stops are too tight, you run the risk of getting a whipped around. This next week may offer some good entry opportunities in the shorter timeframes. Keep your eyes open.

Note the US Dollar Index. Specs (green line) and commercials (orange line) are at extremes. AND, finding a dollar bull right now is about as easy as trying to find a politician you’d want take home to meet your mother. But I digress…. The point is, right now the consensus is 99% dollar bears. O’ to be contrarian ;- ) If you’re not sure what this means, please see my post this week covering the topic–or just post a message and ask. Anyway, take a look at the COT chart.

What can I say about the shiny metals? The specs and short term traders are buying, which means the commercials are selling. While I don’t know where the top is (especially with silver–though it did hit my target near $34.80); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES I have to ask: “If it’s the end of the world and, the commercials being the “smart money”, why would ANYONE be selling? I mean, if you knew there weren’t anymore macadamia nut white chocolate chip cookies, and you LOVED, LOVED, LOVED macadamia nut white chocolate chop cookies… I mean you just couldn’t live without ‘em… would YOU sell any of your stash?

Okay, maybe “insulin” is a better metaphor. Bygones. Still, you get my point.

That’s it for this week.

Be well and keep living large!

Clay

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COT 2-25-11

Saturday, February 26th, 2011

Hi Traders,

An awesome Saturday morning to you! For some reason, I was up at 7:15, today. I have no idea why, but I’m not complaining! Nope, I have tons to do, including preparing this week’s COT report for you guys. So, I better get busy ;-)

This week’s COT charts are here

Gold and silver climbed this week, with silver hitting highs. Who’s buying? The small guys and specs. Hmmm… what does that tell ya? It tells you the commercials, those groups with more money than the Fed can print in a month, are selling. They’re selling gold, too, while the small traders are buying it up like my ex-mother-in-law used to by Beenie Babies (she had boxes of those things… don’t ask me why).

So, are these to shiny metals at a top? If you look at the gold chart, not the specs (green line) and commercials (orange line) were 180-degrees out not too long ago, which often presages a turn-around. Silver isn’t showing the same thing, however. Instead, there’s plenty of room before the “180-degree” indication comes into play. So, keep watching.

When it comes to the commodity currencies, the CAD is at extremes, which, as you know, is a heads up (see above explanation). The aussie isn’t at extremes, and is sort of treading water. AUDUSD keeps hovering around parity and it appears the specs and small traders aren’t sure where to go next. I mean, it’s sort of a game of “Do or Dare”. It makes sense to; after all, after such strong run-up to parity, do you want to be the guy who bets the aussie will go EVEN higher… before a correction, that is? NZD is has the specs and commercials at a standstill. With all the bad news there, lately, a longer-term “watch and see” attitude just seems prudent. Not exactly rocket science.

The pound is coming off extremes between the commercials and specs. As I mentioned last time, we might see another push north to the 1.64 area (GBPUSD); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES although it’s really struggle at current resistance. Based on the COT reading, whether prices move higher or not, a change of direction is in the air.

Nothing new to report on the yen or euro, BUT a look at the US Dollar Index shows the commercials and specs are 180-degrees apart. As I’ve said before, there’s a better than good chance, in my opinion, that USD will gain strength as we head deeper into the year.

“Huh?”, say some. “But what about all the bad press and crazy stuff the gov’t is doing… you know, the out-of-control” spending and budget cuts and lay-offs and, and, and….”

Well, as you might have observed, whenever sentiments are at extremes, this is usually when markets turn. Remember internet stocks and real estate?

Okay, that’s it for now. I hope your weekend is rockin’.

Be well and live large!

Clay

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COT: 12-17-10

Monday, December 20th, 2010

Hi Traders,

Holiday greetings from a sunshiny Tampa Bay!

I hope all’s well and you haven’t lost your mind by visiting the malls and stressing-out over what to buy whom and where to get it for the very best price. And, with this in mind, I’m going to help make things simple and easy for you this year– I’d feel pretty darn guilty if I didn’t. So, know this: I love and appreciate gift cards to restaurants and even Starbucks. So, PLEASE don’t worry about getting me that “perfect” something; just pop that little card into the mail and, when it comes to me, you’ll be done. I thought you’d appreciate this selfless consideration and, yes, you’re very welcome ;- )

Okay…

It’s a week from the normal two-week break see usually see this time of year, but, as in the past, we’ll likely see activity thin in prior to Friday. This doesn’t mean the market won’t move; if fact, if history is any indication, there’s a great chance we’ll see plenty of tradable swings. It’s just that there will be fewer participants. Here’s what’s happening regarding the COT:

(Get this week’s COT  charts here)

As I mentioned last week, the specs were buying AUD and might take another shot at the November high vs. USD. And we saw some buying, but nothing to get excited about. Same goes for CAD. Remember, both of these are commodity currencies and China and India need what they’re selling. So, as long as this relationship is in place, it’s good news for CAD and AUD. New Zealand, NZD, on the other hand, another “commodity” currency, hit extreme levels (i.e., the commercials and specs were 180-degree out from each other) and is continuing its slide. For anyone trading the kiwi, this shouldn’t have been a surprise, especially if you followed what I’ve written.

The euro is dealing with its five little PIIGS (Portugal, Ireland, Italy, Greece and Spain); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES and keeps getting the snot kicked out of it. Overall, the specs are selling, even though we witnessed a pullback and some consolidation. Based on the charts, it looks like the euro will continue to nosedive. The same goes for the pound, which (like the kiwi); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES was extremes not too long ago.

The US dollar has been the benefactor of all the bad news coming out of Europe, so, while its COT chart is a little muddy, I expect we’re going to see more strength as we head into the New Year.

The shiny metals, gold and silver both hit highs not too long ago, but haven’t made new ground recently. When it comes to silver, the commercials are buying and the specs are selling—remember, these two were 180-degrees apart not too long ago, which indicated price would likely turn. Have tops been made in both? Well, if you listen to 99.9% of the population, the answer is a resounding, “NO WAY”. But, personally, I try not to pay too much attention to what everyone is saying, because “everyone”, that is the general public, which includes the media (which includes CNBC); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES has amassed quite a track record when it comes to being wrong. So, thankfully, we have the charts. And, as you might agree, “a picture is (or can be) worth a thousand words”.

That’s it for this week. Whatever you celebrate, please enjoy the magic and the spirit of the season. Across the miles, I wish you and yours my very, very best!

Be well and keep living large,

Clay

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COT 12-10-10

Monday, December 13th, 2010

Hi Traders,

It’s “Brrr cold” here, in Tampa Bay: a balmy 44-degrees… and it’s not even 7:00 pm. Yes, it may be time for a move south. And, that’s about all I can say about that. Okay, let’s stop messing around and get to the COT.

Click on this link for the latest COT charts.

The US dollar has lost a little footing, but overall, the markets only look like they’re correcting, meaning, I believe the dollar will continue to move higher. From a fundamental view, while the US economy isn’t exactly on solid ground(the understatement of the year?); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES Europe, with Greece and Ireland having already been thrown a life jacket, Spain, Portugal and Italy are off the boat and furiously treading water. And, this is what everyone is looking at. So, the US is kind of “off the hook” for the moment, or at least not in the spotlight. Note the specs are selling the euro and the commercials are buying right now (this is not just euro vs. USD, but all other currencies).

Two commodity currencies (AUD and CAD) can’t really get traction, especially CAD, which is flummoxing, as neither the commercials nor specs appear certain about what to do. The aussie is a little less confused, but not much. After hitting parity with USD, and with little surprise, it moved south. Currently, though, the specs look like they’re gunning for the November highs. That said, it doesn’t look the same for the USD vs. CAD. The third commodity currency, NZD, has behaved perfectly. When the commercials and specs where 180-degrees apart, price reversed and the move has been very clean so far.

The swissie had turned, with the commercials buying and specs selling, but the current charts show a shift in sentiment. The yen while not as pronounced, is in the same position. The pound is another story; the specs are selling and the commercials are buying. pretty clear, according to the charts

Gold and silver are trying to move higher, though, with silver, the specs and commercials are holding right now. The chart shows the specs buying gold last week and the commercials selling it, and I’m watching to see if the last highs will be broken. The double top (November’s high and December’s high–so far); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES came with bearish divergence; so, momentum is declining as price approaches these highs, telling us that specs are skittish.

That’s it for now.

Stay warm, and trade to trade well,

Clay

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COT: 12-03-10

Monday, December 6th, 2010

Hi Traders,

Well, I don’t know what it’s like in the rest of the civilized world, but it sure is cold here in Tampa Bay. Believe it or not, I actually wore socks on both Friday AND Saturday night. And, today, while I’m not wearing ‘em, I probably should be. But, I’m loving the weather… it’s apropos for the Season: Kind of “merry”, which is putting me in the holiday mood.

About this week’s COT:

Interesting, but no surprises. The US Dollar has gained strength as the specs have been buying it, especially against the euro and pound. And, I say “no surprises” because we saw the turn setting-up on the charts as the commercials and specs were recently 180-degrees out from each other. Personally, I’m glad, as who really wants to see their home currency get the tar kicked out of it? Of course, fundamentally, dollar strength makes little sense, but I’m following the charts:

They never lie.

The New Zealand kiwi, aussie and swissy are being sold but the specs, currently, which, again was foreshadowed by the COT charts, while the Canadian dollar is in a gray area. Still, I’d expect the dollar to gain strength against it, too. Are these long term moves? I don’t believe they are. Remember, fundamentally, US Dollar strength makes little sense when compared to the commodity currencies, such as New Zealand, Australia and Canada, whose countries actually produce and export something.

Gold and silver are at all-time highs, but I have to keep asking, with all the attention they’re getting, is a top (even if just in the shorter term) coming? Remember, markets top on enthusiasm and there’s certainly a lot of that for both of these shiny metals. I say, keep an eye on momentum, which looks to be waning.

Go here to see this week’s charts:

http://www.tradesight.com/wp-content/uploads/2010/12/COT-12-3-10

That’s my take on the COT for 12-03-10, until next time…

Be very well,

Clay

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COT 11-19-10

Tuesday, November 23rd, 2010

Hi Traders,

What an awesome weekend here in Tampa Bay. I mean, the weather couldn’t be any better! 80-degrees, sunny, low humidity… geez, it’s no wonder this place will be packed with out-of-state license plates next week and what normally is a 20-minute drive will take 40.  Oh well. I’m not complaining. Bring it on!

Okay… the COT.

The euro and pound have come off of their extremes between the commercials and specs. And, you might have noticed both EUR-USD and GBP-USD moving south. This is because the specs are selling and commercial are buying; based on past discussions, this shouldn’t have been a surprise. We’re seeing the same thing with the yen, silver and gold.

The looney (Canadian dollar) and Aussie dollar are off of their extremes after beating the tar out of USD. While NZD is still at extremes, which presages a turn-around. Interestingly, the US Dollar index is sort of in a knot; but, the dollar is gaining some strength which is clearly seen in EUR-USD. Is a dollar rally coming? Maybe. Based on the current price action, it appears this is the case. We need to hold on and pay close attention, especially swing and position traders. Intra-day, there have been and I believe there will continue to be good trade setups, regardless of whether a longer-term rally materializes, or not.

View this week’s COT charts here.

Be very well!

Clay

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