Hi Traders,

The first week back from the holiday break was somewhat uneventful; but, historically, it takes a couple of weeks for money flows to pick-up this time of year. Of course, there was the Non-Farm Payrolls report (NFP) on Friday, which so many of us look forward to—almost as if it’s some kind of celebration: “Happy NFP Friday!” we exclaim as we swap presents and raise our glasses for a toast….

Okay, maybe not. But you get the point: the markets tend to pay attention to this, the mother or all reports. And this past one was interesting, but only because there were those in DC and the media saying that 103,000 jobs and an alleged drop from 9.7% to 9.4% was real “progress”. Of course, even though it’s not reported, half of the .4% can be attributed to those who fell off the unemployment rolls (that’s what happens after six-moths) and those who just stopped looking for work. Oh brother. And…
Just in case you’re wondering, according to ShadowStats.com, the real unemployment figure in the US is about 23%. But I digress.

(Get this week’s COT charts here.)

About the COT charts, the specs have been buying AUD, CHF, NZD, and JPY. That said, the specs and commercials have been clearly, and more or less decisively, taking AUD and CHF in opposite directions and toward extremes.

Remember, we like when the specs and commercials are at polar opposites, as this often gives us a heads up on a pending major market turn. Also, the specs have been buying JPY and NZD, too, but the commitment to sell the JPY and NZD by the commercials isn’t as well-defined as with AUD and CHF (JPY Is clearer than NZD).

The picture for USD is a bit muddy; obviously no group is overly excited about buying the US dollar, at least not yet. Can we blame them? Still, the almighty dollar (or is that “once mighty”?) stands to make more gains in the future… the shorter term future, that is–more on this another time. Regardless, a USD rally is welcomed, even if the reasons for it happening don’t make much sense fundamentally.

The specs are still buying the shiny metals, gold and silver, and the commercials don’t appear to be overly-committed to selling it. No “extremes” here, so I’m not looking for the bottom to fallout. That said, it doesn’t mean one or both might experience a selloff. Watch your daily price charts and pay attention to the divergence between rising or maintained prices and momentum (I use MACD for this).

That’s if for now.

Trade to trade well,

Clay

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