COT: The precious data ignored

Gold


First point, with producers open long that weak, it seems its expected to run up again.
Once producers will start to sell and hedge with longs (blue line needs to go up), then it could be the time to think about short
Second point, about the managed money, they are often wrong, and always wrong at the extremes.
If we look at their short position, its near 0, they are wrong so it could head down, but i'll wait for the producers to hedge long and it will be a good signal

It looks cocoa participants are very volatile

For now the fall is privileged. From a long producer point of view, prices would need to fall so they can accumulate long hedges.
From managed money point of view, the long side was high, and man.money are always wrong at extreme. Hence we see a retrace down
If the man.money open short fall below 10%, we could start seeing some buyers

From a producer point of view, their open long is holding up, while their open short is increasing a lot, hitting near 60% of overall open interest.
Meaning coffee could keep rising up, until their open long decrease.

From a managed money view, open long & short are diverging a lot. Usually they diverge ahead of a reversal moment.
It can keep diverging within the next few weeks, meaning prices will keep rising. Then we'll see a reversal

Conclusion is price should keep rising, until both producers & man.money agree for a reversal in prices

From a dealers view, they are nothing but short us dollars. Their open long is near 0% and have been this way since 2015
From a leveraged money view, we know they are always wrong at extreme, they buy tops and sell bottoms. For now they have been buying us dollars top at the beginning of the year (hence the fall) and they are still invested a lot as long

Its sell the rallies process for now

Only lev.money is being active, with retailers of course. Retailers are ALWAYS net long, so lets ignore them

From the lev.money view, they have increased their shorts and decreased their longs, we could expect a rise in coins

From a dealer view, a clear increase in their open long, and their short is near 0%. They expect a rise in the vix
From a lev.money view, always wrong as usual, they are more shorts, in a decreasing proces though, while longs are flat. lets see if they can increase their short and see a big rise of the vix as the dealers are saying

From a producer view, open short have been "flat" for 2 years. Within a small range of sellers. The open buys are very high, and decreasing which could lead to a correction
From a man.money, always wrong on top/bottom, open short are at their lows, the very lows. buys are rising strong as price goes up. Maybe too strong for such weak open shorts.

I would expect the price to correct down based on that

Subscribed, looking forward to hearing more on COT data, it has always fascinated me but never found a way of utilising it.

COT data is a tool like any other, but it can't be used alone. It guides you towards potential correction/reversal, sadly its not 100% accurate.
You need to add to that the market sentiment, price action, and any indicator you like.

COT is a long term investment, not for day trading, but i guess you knew it already

From a producer view, data is useless. Its a fight between longs & shorts. If we look at the overall net position, price of gas are falling when producers are increasing their net shorts, and rising when producers are increasing their net long (regardless if net position is positive or negative)
Since the end of 2018, producers have increased their net position.

From a managed money view, since the beginning of 2019, they have increased their open shorts from 3% to 29% and decreased their open long from 20% to 13%
Their net position is the lowest in 10 years. They are extremely short.
Usually when i see that, i like the prices to reflect the current positionning. And right now it is not. If only prices could make lower lows, it would help the cause for a big bounce up.
I still expect the price of gas to rise in a near future (like a 30 to 50% rise in price)
I would feel more confident buying gas at lower lows.

The long term strategy would be to start buying ETF and adding as it goes down, because managed money is that shorts they will have to suffer soon

Soybean market is a very comprehensive one. And its more or less symetrical between the producers and the managed money

They are the opposite most of the time.

By having a look at it, and historically, when producers are increasing their open long prices are falling until producers hedged sufficiently.
When their open long is very high (above 30% at least), it tends to show its the end of the fall

From a managed money view, open shorts have been very low for the past 10 years, and each time they increased their shorts (thinking price would fall), price went up.
Open longs are at their lows since 10 years, which could mean a rise is due for soybean

From a dealer's view, open longs are near 0, and have been this way for the whole year 2019. While open shorts are hitting highs near 70%
It clearly shows dealers are very short, and they expect the price to fall further

From a lev.money view, open longs are a bit higher than open shorts. Lev.money have been flat for the whole year, meaning they don't take any strong bias.
Hence the mexican peso (against USD for example) have been more or less flat for the year 2019.
We need them to take a strong bias, and go against them

If we pureley follow the dealer's view, its time to short it, until it goes lower enough so the dealer's open long will increase sufficiently enough to buy

I'd expect price to go lower, while the dealers increase their longs, and lev.money increase short, at the point it will reverse and go back up

From a dealer's view, its clear that open long are increasing their long, a lot. Hitting as high as 82% open long, while open shorts are hitting the 0 ground
Everytime it hits the 0% mark, while open long are high, its a phase of bounce up.
Whenever the open shorts are increasing, while open longs decreasing, its a falling phase for prices

Right now, we should be in a bounce up phase

From a lev.money's view, as a contrarian category, open longs are near the 0% mark, wile open short increasing
It favors the upside as the dealers are saying

We should expect a rally for the brazilian real currency

From a wheat's producers, their open longs are weak, while open shorts below 30% mark.
To make things clear and helpful, we can guess that producers accumulate wheat long as prices go down. Right now prices are high, hence longs are not being accumulated and are below 10% of the whole open interest

From a man.money's view, often (if not always wrong) wrong at the top/bottom/extreme move, their open longs are increasing and near the highs of 2019.
Open shorts are below 20%, decreased a lot from their highs

Prices would need to fall now, so the producers increase their longs, and managed money decrease their longs

From a producer's view, their open long are high but decreasing. Open shorts still low compared to history and the 2019 year.
Producers have been accumulating longs for the whole year while price decreasing (that's where sentiment, price action, indicator, timing come into play)

From a man.money's view, their open shorts are "high" above 40%, while open long are nearing the 0% mark
Man.money can be temporary right within a move. But always wrong at extreme moves

I would expect the current trend to reverse soon, as producers are accumulating longs, while man.money open longs are sleeping, which could help the long cause

From a dealer's view, open long are very low, looks like they don't expect a run up in euro
About shorts, they are coming up and down for the whole 2019 year, but nothing clear

From a leveraged money's view, open longs are the bottom for a year now. They don't expect any move in euro so far. Hence the big range (declining) for the past year.
Shorts are more important but nothing clear as well

What is possible ? a short side increasing, while dealers increase their long & leveraged money increase their shorts, until it reverses up

Its a tricky trade, even for the smart money

From a dealer's view, they have decreased all the longs they had after the big rise in the pound. Open shorts have increased from nearly 0% to 20% in a few weeks, it was quick.

From a lev.money's view, open longs are more important than shorts, as a contrarian indication, it could increase and see more fall in the pound currency

In order for the dealers to accumulate longs and clear their shorts, british pound needs to go down drastically. We could have a few weeks of down, along with the euro, before seeing a huge in the british pound and the euro, with the dollar fall as mentionned earlier

From a dealer's view, open short are at their lows, spiking up before a top happens. Lets not forget to mention dealers are good at spotting tops/bottom.
When the open shorts rise, dealers are increasing their short bet for a move down. Other way around for open longs.
Right now, open shorts are near the 0% ground, while open longs decreasing a lot.
What it could mean ? they are just clearing their long, but we have not seen a top yet.

Regarding the lev.money, always wrong on tops/bottom when they have lots of positions, they are still net shorts.
Open longs are being increased though, meaning the fall is not as strong as one could expect

As the british pound, euro, and other currencies, it could be a temporary fall until dollar breaks down and those currencies clear up the floor

From a producer's view, an increase of the open longs lead to rising prices, its a process though and doesn't happen in a day.
Right now, open long interest are cooling off, while open shorts are rising strong, but still weak

From a managed money's view, open short are going down the road, they are not believing in any fall

For now it's still a buy cotton, to make it a strong short we'd need open short on the managed money to go down near the 0%/3%

From a dealer's view, they increase their longs to accumulate the currency when they think it will rise. At this moment, open long for the dealers are cooling off, not showing anything at all, while the open short are going down as well. Overall net is still bullish though with both longs and shorts decreasing their positions.
Nothing clear there

From a leveraged money's view, longs & shorts are more or less at the same level, not suggesting a strong bias in the japanes yen
If we closely look at it, all positions have been decreased, hence japanese yen have been ranging for the past couple of months.

I would stay on the sidelines here, waiting for the smart money to take a strong bias