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  • #121
  • Nov 28, 2012 12:00pm Nov 28, 2012 12:00pm
Hi everyone,

Sorry for the seemingly late update, but the recent cot report was issued Monday night…The latest Commitments of Traders review is out (here).

Russel-2000
COT Change (52W) / C-30%, LS25%, SS-42% /
COT Index (3 year lb.) / C-37%, LS-72% /
The large changes in positions are indicating a bullish move in prices, but let’s not forget about the cot extreme that we saw not long ago.

Soybean Oil
COT Extreme / LS-All Time extreme /
The extreme is still present and we can witness prices climbing higher this week.

Japanese Yen
COT Extreme / SS-All Time extreme /
The COT extreme is growing, stress levels are getting higher --> the picture is getting more and more bullish!


I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Report47_russel-2000.png Size: 73 KB
Click to Enlarge Name: Report47_russel-2000_3yr.png Size: 90 KB
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Click to Enlarge Name: Report47_jpy.png Size: 102 KB
  • #122
  • Dec 3, 2012 3:22am Dec 3, 2012 3:22am
Hi everyone,

The latest Commitments of Traders review is out (here).

Swiss Franc
COT Change (52W) / C-26%, LS-25%, SS-24% /
The 26% change in commercial’s position was large + the fact that only small speculators are net long add up to a bearish picture. It would be nice, if all this was happening during a cot extreme, but it could still be a winning game.

Crude Oil
COT Change (52W) / C-24%, LS-26% /
COT Index (3 year lb.) / C-81%, LS-25%, SS-26% /
Although we are a bit away from those clearly large cot extremes, the ones that are close to all time levels, if we read the cot index (based on a three year lookback period), we can see that a relative extreme exists in this market. Together with the change signal, we can state that the picture today in crude oil is more bullish than bearish.

Japanese Yen
COT Extreme / C-282 report, LS-279 report, SS-All Time /
COT Index (3 year lb.) / C-100%, LS-0%, SS-0% /
The extreme is still widening in this market, and judging by the past similar cases, we are getting closer and closer to a nice bottom in prices.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Report48_CHF.png Size: 197 KB
Click to Enlarge Name: Report48_Crude Oil.png Size: 196 KB
Click to Enlarge Name: Report48_JPY.png Size: 246 KB
  • #123
  • Dec 3, 2012 3:41am Dec 3, 2012 3:41am
With the Yen, its clearly at an extreme, (short).
Alot of this is due to speculation about the elections and the new prime minister with a huge monetary easing policy.

I wanted to run this past readers and get some feedback. I see 1 of 2 things happening.
1) If Abe wins election, short positions remain and get stronger due to the eventual monetary easing
2)Abe loses election and Yen strengthens ferociously due to shorts being closed out.

1) is the likely option re the election, but I suspect the COT extreme on the Yen is due to the expected weakness in the Yen so therefore people are positioning for it??
Thoughts
  • #124
  • Dec 3, 2012 3:51am Dec 3, 2012 3:51am
Quoting Dunstan
Hi everyone,

The latest Commitments of Traders review is out (here).

Swiss Franc
COT Change (52W) / C-26%, LS-25%, SS-24% /
The 26% change in commercial’s position was large + the fact that only small speculators are net long add up to a bearish picture. It would be nice, if all this was happening during a cot extreme, but it could still be a winning game.

Crude Oil
COT Change (52W) / C-24%, LS-26% /
COT Index (3 year lb.) / C-81%, LS-25%, SS-26% /
Although we are a bit...
Is this the right time to buy JPY?
  • #125
  • Dec 3, 2012 4:04am Dec 3, 2012 4:04am
Quoting ronald_fsm
Is this the right time to buy JPY?
Hi Ronald,

It wouldn’t be wise from me to answer ‘yes’ or ‘no’, since cot analysis – as anything else - is not a trading tool that is capable of pinpointing exact bottoms or tops, but it is wise to say that shorting the market at this time would be a more riskier decision then staying on the sidelines.

One thing is for sure and you can count on it: stress levels in this market are building up to extreme levels. If you look at the past 10-15 years of the chart, at such extremes, sooner or later a bottom developed in prices. The chances of a bottom are continuously getting higher and higher as the extreme is widening.

Since there are many tactics and strategies in trading, I always say it best to integrate cot analysis in an existing trading system. If your system says “Buy” for any other reasons as well (ema, macd, fib…. etc…) than your decision of buying would be backed by the cot report also.

All the best,
Dunstan
  • #126
  • Dec 10, 2012 4:03am Dec 10, 2012 4:03am
Hi everyone,

The latest Commitments of Traders review is out (here).

Russel-2000
COT Change (52W) / C-44%, LS-45%, SS-34% /
COT Index (3 year lb.) / C-9%, LS-95%, SS-78% /
The large changes, the extreme the COT Index shows us and the fact that only SS are long all give us a bearish picture.

Australian Dollar
COT Extreme / C-85 report, LS-All Time /
We have an All Time COT Extreme in Large Speculators, a pretty significant extreme in Commercials also. Small Speculators could be a bit more extreme, but the general COT picture that we have today is a clear bearish picture.

Japanese Yen
COT Extreme / C-283 report, LS-280 report, SS-All Time /
COT Index (3 year lb.) / C-100%, LS-0%, SS-0% /
The extreme is still widening in this market, and judging by the past similar cases, we are getting closer and closer to a nice bottom in prices.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Report49_Russel-2000.png Size: 235 KB
Click to Enlarge Name: Report49_AUD.png Size: 239 KB
Click to Enlarge Name: Report49_JPY.png Size: 236 KB
  • #127
  • Dec 10, 2012 4:21am Dec 10, 2012 4:21am
Good update.
With the Yen I still think its positioned for what the market is expecting in the coming weeks/months. Some serious money printing --> debasing.
Bare in mind that the Yen has been in a 20 year downtrend and now its at a critical stage, so not sure the COT report reflects that.
This weekend (16th December) has elections and while the winner seems to already be known its the policies of the new leader that will count.
  • #128
  • Dec 10, 2012 4:29am Dec 10, 2012 4:29am
Quoting Zac
Good update.
With the Yen I still think its positioned for what the market is expecting in the coming weeks/months. Some serious money printing --> debasing.
Bare in mind that the Yen has been in a 20 year downtrend and now its at a critical stage, so not sure the COT report reflects that.
This weekend (16th December) has elections and while the winner seems to already be known its the policies of the new leader that will count.
Hi Zac,

Thanks for sharing your view on the Yen. It is interesting what you are saying… To be honest, I don’t follow the news; I’m not a fundamental trader. Watching the patterns suggests to me that we are close to a bottom, but we will see in a few weeks/months what happens. I would not be surprised if this extreme continues to widen for a few more weeks... It is hard to tell when stress levels reach the peak point.

For now, I think there is a really nice risk/reward potential in AUD/JPY, could be a good trade!

All the best,
Dunstan
  • #129
  • Dec 16, 2012 2:15pm Dec 16, 2012 2:15pm
Quoting Dunstan
Hi Zac,

Thanks for sharing your view on the Yen. It is interesting what you are saying… To be honest, I don’t follow the news; I’m not a fundamental trader. Watching the patterns suggests to me that we are close to a bottom, but we will see in a few weeks/months what happens. I would not be surprised if this extreme continues to widen for a few more weeks... It is hard to tell when stress levels reach the peak point.

For now, I think there is a really nice risk/reward potential in AUD/JPY, could be a good trade!

All the best,
Dunstan
Is there any statistical data on the reliability of the COT report forecasting bottoms or tops ?
  • #130
  • Dec 17, 2012 3:06am Dec 17, 2012 3:06am
Quoting TheBodyguard
Is there any statistical data on the reliability of the COT report forecasting bottoms or tops ?
Hi Bodyguard,

I don’t know of any. Since cot data is not a technical indicator derived from price data, each and every market has its own characteristics. For example, a change size of 20+% in lumber or oats has a different significance than in a currency --> in lumber or oat, these changes are not unusual, but in a currency, they are considered pretty large. Every time you have a specific signal on a specific market, you need to research to examine similar cases in the past, when such signals occurred and find out how price reacted to it then.

You are talking about bottoms and tops. These are usually signaled by cot extremes in the market. The COT index indicator could be a tool to do a research. You would need to determine a time horizon (for the cot index), then check every %level and see for each level how often could it generate a top or a bottom. For example: We take a 5 year period and “pull” an imaginary string (horizontal) at the level you are interested. I would suggest between 75% and 100% / 0% and 25% each 5% perhaps. This would mean, you would have statistics for 36 cases (12 for each market group – C, LS, SS). Your question would be in each case: How often was there a bottom/top at x% cot index? You would need to do this for each and every market. Of course at All Time extremes (in these cases we always have 0 or 100% cot index) you could have the same signal for many weeks before the bottom or top develops.

All the best,
Dunstan
  • #131
  • Dec 17, 2012 3:31am Dec 17, 2012 3:31am
Hi everyone,

The latest Commitments of Traders review is out (here).

Copper
COT Change (52W) / C-21%, SS-32% /
If we look at the 5 year chart of Copper, we can see that we don’t really have a clearly large COT extreme in the market. It is mainly the change size that could affect prices. As the review correctly suggests, if we look at a shorter time period, then we arrive at a relative extreme in the market. I have indicated the two last cases, when we had such a large extreme. I’m not saying that it is Copper that is the most exciting trade this week, but for anyone trading it regularly, it is wise to look at it this way.

Australian Dollar
COT Extreme / C- All Time, LS-All Time /
The extreme we saw last week in AUD has widened more, now Commercials are at their All Time levels too. It is a definite bearish picture that we have.

Japanese Yen
COT Extreme / close to All Time level everywhere /
The extreme has stopped widening in this market, which could easily mean that we have reached the extreme --> we should be witnessing higher prices soon.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Report50_Copper.png Size: 236 KB
Click to Enlarge Name: Report50_AUD.png Size: 246 KB
Click to Enlarge Name: Report50_JPY.png Size: 247 KB
  • #132
  • Edited 11:53am Dec 17, 2012 10:29am | Edited 11:53am
Quoting Dunstan
Hi Bodyguard,

I don’t know of any. Since cot data is not a technical indicator derived from price data, each and every market has its own characteristics. For example, a change size of 20+% in lumber or oats has a different significance than in a currency --> in lumber or oat, these changes are not unusual, but in a currency, they are considered pretty large. Every time you have a specific signal on a specific market, you need to research to examine similar cases in the past, when such signals occurred and find out how price reacted to it then....

Thanks for the explanation. I figured that I would have to go back and check the data & charts myself. My interest in this right now is for the Jpy crosse's. All across the board. looks interesting to me right now mainly because all the JPY crosse's are at major points on the charts ie 50% Fibs @ round #'s & the fact that COT shorts are at extreme levels. Look at this NZDJPY chart http://screencast.com/t/K2TSBAXmTB20 Look at what happened in 2007 when the net shorts were at extremes. Also notice the 50% FIB @ 71.500 & the 100 moving average. All this tells me there will be a good size pullback on all the Yen weakness.
  • #133
  • Dec 18, 2012 2:07am Dec 18, 2012 2:07am
Quoting TheBodyguard
Thanks for the explanation. I figured that I would have to go back and check the data & charts myself. My interest in this right now is for the Jpy crosse's. All across the board. looks interesting to me right now mainly because all the JPY crosse's are at major points on the charts ie 50% Fibs @ round #'s & the fact that COT shorts are at extreme levels. Look at this NZDJPY chart http://screencast.com/t/K2TSBAXmTB20 Look at what happened in 2007 when the net shorts were at extremes. Also notice the 50% FIB @ 71.500 & the 100 moving...
No problem! It is nice to see that you are utilizing cot analysis in your system. When these cot signals are accompanied by other, more classical technical indicators that are also supporting the trade, you have a very nice set up.

Wishing you great profits on these trades,
Regards,
Dunstan
  • #134
  • Dec 18, 2012 2:47am Dec 18, 2012 2:47am
Quoting Dunstan
Hi everyone!

This thread I’m just opening, would like to share ideas about trading in the futures market using a simple but very effective tool, the Commitments of Traders report. I would be very much interested in your experiences and thoughts about this data and how it has helped your trading!

Personally I have first seen this data set roughly five years ago, and “fell in love with it” right away! The concept that amused me at the time was that with this COT report you get a legal inside look in the markets --> you get to know what the...

unless your an insider these reports mean little. you have know what they say before they come out to use them to make money.
The best indicator is price.
  • #135
  • Dec 18, 2012 2:56am Dec 18, 2012 2:56am
Quoting scfx
unless your an insider these reports mean little. you have know what they say before they come out to use them to make money.
Hi scfx,

A lot of people, who first see the cot report and get to know that there is this few days’ time lag tell me the same thing… I’ve been trading for over 12 years now, using cot analysis for 6 years now. In my experience this time lag is negligible. We are talking about stress levels in the market, something that develops over many months or even years. Trading as a swing trader, I don’ care at all if this insider information gets to me a little late. If you follow my thread and examine the examples I show you, you will understand the concept of cot analysis and how to use it. It is not the Holy Grail, but since it is not derived from price, it is a unique separate indicator that very much helps you filter out some bad trades from you system or that will draw your attention to trading opportunities that otherwise you don’t know of.

All the best,
Dunstan
  • #136
  • Dec 18, 2012 5:17am Dec 18, 2012 5:17am
Quoting Dunstan
Hi scfx,

It is not the Holy Grail, but since it is not derived from price, it is a unique separate indicator that very much helps you filter out some bad trades from you system or that will draw your attention to trading opportunities that otherwise you don’t know of.

All the best,
Dunstan
Well said Dunstan,
I like your take on it all and look forward to your words of wisdom
  • #137
  • Edited 2:57pm Dec 19, 2012 1:57pm | Edited 2:57pm
Duncan, thanks for this thread. When I first saw this thread I subscribed to the COTbase service - it seemed a reasonable price to have access to the pre-digested data instead of downloading the weekly report in raw form. This data when combined with volume adds valuable signal to trade decisions and fundamental / tech analysis.

The BodyGuard, while the COT analysis and the extremes we see for Yen might signal a coming bull market, bear in mind that the signal can (and sometimes does) stay at extreme for a few weeks before the reversal. A good example is the recent week after week AUD strength. It showed an extreme signal two weeks ago but AUD has only today started reversing properly (if you ignore the 13th) . We still don't know if this reversal will continue but I'm already cautiously building an AUD short position. It looks like it might break out of the range tomorrow in which case I'll add to my shorts. The Yen could stay at extreme for a while depending on news from Japan. The market has already priced in the new government's monetary policy, but Abe could always surprise with a new move that sends the Yen lower (there are some big news announcements due in the next 12-24 hours). So, despite the extreme we're seeing in the COT, I'm waiting for some other signal before going long on the Yen.
  • #138
  • Dec 19, 2012 4:44pm Dec 19, 2012 4:44pm
Well said WideEyed.
With the Yen being at such extremes, it seems any sneeze of bad information makes some trigger happy and you can see some of the explosive moves to the downside.
ie look at the Yen in the last 30 mins.
  • #139
  • Dec 19, 2012 10:59pm Dec 19, 2012 10:59pm
Quoting Dunstan
Hi scfx,

A lot of people, who first see the cot report and get to know that there is this few days’ time lag tell me the same thing… I’ve been trading for over 12 years now, using cot analysis for 6 years now. In my experience this time lag is negligible. We are talking about stress levels in the market, something that develops over many months or even years. Trading as a swing trader, I don’ care at all if this insider information gets to me a little late. If you follow my thread and examine the examples I show you, you will understand the concept...
nice reply, very good points... appreciate your insight.

Good trading to you.
The best indicator is price.
  • #140
  • Dec 21, 2012 2:00am Dec 21, 2012 2:00am
Quoting scfx
nice reply, very good points... appreciate your insight.

Good trading to you.
Thanks scfx! I hope you stick around. Just let me know if you have any questions!

I agree with every skepticism about a rally in yen, but the Risk/Reward potential is huge, so it is all a matter of correct risk management – I think. You could get stopped out, but if the COT signal is right and we do see a rally in Yen, it could be hell of a good trade! Especially if we choose a correct pair… let’s see now, would AUD be a good match? Since we’ve got a COT extreme signal pointing in the opposite direction in Aussie, it might just be a well-chosen vehicle. I’m not saying that it will drop, but there are some very decent resistance levels not far if you look at the 3-year chart I’ve attached --> relatively short stops making a really nice R/R (>5:1).

All the best,
Dunstan
Attached Image (click to enlarge)
Click to Enlarge Name: AUDJPY.jpg Size: 135 KB
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