Follow the Smart Money / COT Analysis

Hi everyone,

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

Rough Rice
COT Change (52W) / C-40%, LS-56% /
COT Index (5 year lb.) / C-81%, LS-18%, SS-35% /
I can’t agree with the review this time. Thomas didn’t look at the 5-year chart, which tells us a very different story… This is why I recommend all of you, to always open a longer term chart, besides the default one year, since the cot extreme can only be checked on those. While the one year long chart suggests that a good sell opportunity is in formation, the 5 year long chart shows that we are at a COT extreme. Of course there is no question to the fact that the cot change was large – we may see a decline in prices in the near term (or maybe not) – but on the other hand, the long term picture to me is definitely bullish.

RBOB Gasoline
COT Change (52W) / C-21%, LS-25% /
COT Extreme / C & SS-All Time COT extreme /
Both signals, the COT change and the COT extreme are talking about a bearish picture. Although I agree, I wouldn’t be surprised if this cot extreme widened a bit more. I’ve told you before a couple of times, that COT analysis can be used best, if combined with regular technical analysis. I don’t really see – TA speaking – anything against the continuation of this rally. Consequently I would stay aside until the situation changes, but it’s definitely good to know – and that’s why following the COT report is useful – that stress levels are high in this market.

Metals
Platinum & Palladium: COT All Time extreme levels (bearish)
Copper & Silver: COT Extreme levels (bearish)
Gold: Relative COT extreme (bullish), Volume & Open interest score is -11 (bearish)
It is a mixed picture in metals these days… Since these markets strongly correlate with each other, taking the All Time COT extreme signals in Platinum and Palladium and going short would be a risky trade – in my opinion. If the picture in Gold, Silver and Copper where undoubtedly Bearish (for example if Small speculators in Gold were at net long >60.00 contracts) it would be a more comfortable trade. It’s not a question that the long term picture is more bearish than bullish, but the timing of a potential short trade is the key question. As the review tells us, the widening of the cot extreme in Platinum and Palladium could go on for weeks before prices start to react.

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

the original COT report --> here
COT charts --> here

Hi everyone,

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

Coffee
COT Change (52W) / C-45%, LS-41% /
COT Index (3 year lb.) / C-97%, LS-3%, SS-58% /
Both signals, the cot change and the cot extreme (LS and C are near their all-time extreme levels) are pointing upwards this time, the picture is bullish. As always, the question is: would we see the rally starting now or only much later. I would say that if we find other technical indicators supporting a long trade, we could feel a bit more comfortable taking it knowing that the cot data supports it.

Rough Rice
COT Change (52W) / C-24%, LS-32%, SS-10% /
COT Index (3 year lb.) / C-74%, LS-29%, SS-29% /
It seems that last week’s large cot change had an effect on prices. If we look only at the past one year’s picture, then we shouldn’t be surprised at all. If prices continue to decline, I’m guessing commercials and large speculators would return to their extremes shortly, which would be another strong bullish signal.

Palladium
COT Extreme / C & LS-All Time COT extreme /
I’m guessing the picture talks for itself

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

the original COT report --> here
COT charts --> here

Hi everyone,

(sorry for the late post, but I was out of town for a few days…)

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

Gold
COT Change (52W) / C-21%, LS-21% /
COT Index (3 year lb.) / C-99%, LS-0%, SS-21% /
I think Gold is the most bullish from all metal markets, but it’s not at an unquestionable bottom. Looking at Silver for example, where we also had large changes in the recent report, we can see that we have more space left for the decline to continue, not to talk about Platinum, Palladium, where it is quite visible, that we have a very bearish picture.

Cotton
COT Extreme / LS-All Time COT extreme /
It looks that the rally triggered by the signals a couple of months ago (commercials net long) has come to an end. The extreme suggests that we should be looking at shorting opportunities.

Coffee
COT Extreme / LS-482 report COT extreme /
It’s interesting to see two markets from the same group to have such opposite signals… while in Cotton Commercials have moved back to deep short territories, here we can see that they are still net long --> bullish picture.

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

the original COT report --> here
COT charts --> here

Hi everyone,

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

Heating Oil
COT Change (52W) / C-34%, LS-34%, SS-28% /
Another example, when we have the COT extreme and COT change indicating opposite signals. Which one should we listen to? Well I think if we look at the intensity with which prices have started their decline (after last week’s cot extreme), we should expect a bigger chance for the continuation of the decline, then a significant reversal.

Canadian Dollar
COT Change (52W) / C-29%, LS-31%, SS-22% /
COT Index (3 year lb.) / C-100%, LS-5%, SS-0% /
COT Extreme / C-236, LS-57, SS-297 report extremes /
We are witnessing a significant extreme in the market, signaling a bullish picture in the near (?), medium time horizon.

Feeder Cattle
COT Extreme / LS-All Time extreme /
I don’t think I can add any smart words here, the picture is pretty clear

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

the original COT report --> here
COT charts --> here

Hi Dunstan,

First I like to say thank you for this great post.

I have question, I try to create a Commercial Net Position chart using Excel but chart is not same as the one you are showing.

Here is what I did:

Data from COT Legacy Report.
Currency

Comm_Positions_Long_All - Comm_Positions_Short_All = Commercial Net Position

And Create a "CAD" chart using Commercial Net Postion data but the chart is different compare with your CAD chart, mine is up side down.

What did I do wrong? Any Ideas?


Thank you again.......

Thanks for the updates, Duncan.

To return to something we spoke about earlier - I had reason to test out COTBase's customer services recently and I must say they were excellent in their response.

Hi seanpark7,

Honestly, I don't know what mistake you made... I'm not really good at putting data sets together, never really tried I know that the cot charts I look at on cotbase.com are showing net positions and the way they do it is discribed in this video (around 2:00):

If I understand well, they do the same as you did --> the two charts should be the same.

Sorry I couldn't help you...

All the best,
Dunstan

Hi WideEyed,

I'm glad that you are following these updates, you are welcome!
I've always had a very good experience with customer service at cotbase.com, it's good that you are also satisfied.

All the best,
Dunstan

Hi everyone,

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

Nasdaq-100
COT Change (52W) / C-22%, LS-22% /
COT Index (3 year lb.) / C-40%, LS-67%, SS-45% /
A larger than average change size in a cot extreme neutral environment --> the last larger extreme was a few months ago, successfully pushing prices higher, but we are not at an opposite extreme yet that could put an end to the rally.

Cotton
COT Extreme / C & LS-All Time COT extreme /
In a couple of months’ time we got from a large buy signal cot extreme to a large sell signal cot extreme --> interesting. The last major sell cot extreme was in 2010, but it was one of those rare cases (commercial capitulation) when prices without any reaction, skyrocketed up. Would commercials fall in the same mistake and build up such large short positions that they cannot hold? If they’ve learned their lesson and have plenty of margin left, then we can expect a top in prices soon.

Soybean Oil
COT Extreme / C & LS-All Time COT extreme /
Beautiful all time cot extreme in one of the best markets --> cot analysis is quite effective in soybean markets, so the signals are more reliable here than in other markets.

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

the original COT report --> here
COT charts --> here

Hi everyone,

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

Sugar
COT Change (52W) / C-23%, LS-21%, SS-19% /
COT Index (3 year lb.) / C-75%, LS-25%, SS-41% /
Not long ago, Commercials were ne long signaling a bullish cot extreme (the last time they were net long, was back in 2007). As they are “retreating” back to short levels, prices have started to incline, seems as if this cot extreme has affected prices. The sell signal we are getting from the COT change should not get too much attention, in my opinion, it is the extreme that has a stronger influence on prices --> I’m expecting prices to go higher.

Palladium
COT Extreme / C & LS-All Time COT extreme /
Another All Time COT extreme in Palladium. I think before anyone starts to jump on it and starts shorting it, we should look at other metals first to see if we have a similar case there. Palladium could easily rally for another few weeks/months --> in this case we would experience the widening of the cot extreme.

Cotton
COT Extreme / C & LS-All Time COT extreme /
To tell you the truth, my guess is that we will experience the same situation we had back in 2010, when commercials could not hold their positions and the rare, so called “commercial capitulation” happened --> prices rallied through the sky as commercials were forced to exit their short contracts.

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

the original COT report --> here
COT charts --> here

Hi everyone,

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

Rough Rice
COT Change (52W) / C-42%, LS-53%, SS-18% /
COT Index (3 year lb.) / C-95%, LS-3%, SS-18% /
All COT indicators are pointing in the same direction, suggesting that taking a long trade may be a good decision.

Soybean Oil
COT Extreme / C & LS-All Time COT extreme /
All Time COT Extreme in a market, where cot analysis is really effective. We are getting this extreme at a point, where the Risk/Reward of the trade can be really favorable.

USD Index
COT Extreme / C & LS-All Time COT extreme /
Similarly to Rough Rice, we’ve got the cot change signal and cot extreme signals pointing the same way (down).

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

the original COT report --> here
COT charts --> here

Hi everyone,

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

Natural Gas
COT Change (52W) / C-29%, LS-35% /
COT Index (3 year lb.) / C-14%, LS-90%, SS-55% /
A pretty large change in Natural Gas that may take prices lower. We can’t really talk about an extreme, so I would say that the rally could easily continue for some time.

USD Index
COT Extreme / LS-All Time COT extreme /
Such levels of extremes in the near past could put a pause in the rally of USD Index.

Copper
COT Extreme / LS-194 report COT extreme /
A bullish picture in copper, although we are not at an all-time extreme level yet. I think it’s important to look at the rest of the metals before one decides to take a trade in this market.

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

the original COT report --> here
COT charts --> here

Hi everyone,

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

Palladium
COT Extreme / C & LS-All Time COT extreme /
Prices have started their decline, although I would feel more comfortable stating that we are in for a serious price decline, if we could break support levels at around 700. Otherwise we can easily expect the continuation of the rally parallel with the widening of the extreme.

Copper
COT Extreme / C-42 report, LS-214 report COT extreme /
Here we see a bullish signal in the report that might stop this recent decline.

Soybean Meal
COT Change (52W) / C-24%, LS-15%, SS-47% /
If we look at the longer picture, than we can see that a real shift in the trend could come, if we reach a large cot extreme (Commercials net 0 or long / LS net 0 or short). We may still see a rebound in prices (as we did several time during this decline), but I don’t think that is would be a long lasting one.

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

the original COT report --> here
COT charts --> here

Thanks for your time Dunstan

You are welcome!

Hi everyone,

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

RBOB Gasoline
COT Change (52W) / C-34%, LS-43% /
COT Index (3 year lb.) / C-35%, LS-65%, SS-56% /
Since our last major extreme, prices are in a decline mode. This large change in positions may stop it for a short time, but I think the cot extreme signal is still in place. We can expect – judging from the last couple of cases – a relative extreme in the report, so if Commercials reach 50-60.000 contracts net short, prices may continue their rally.

Soybean Oil
COT Extreme / C & LS-All Time COT extreme /
We’ve got a very nice, All Time cot extreme signal in Soybean Oil, so we should expect prices to rally soon.

Copper
COT Extreme / C & LS-All Time COT extreme /
Although in the past few weeks, we did not see a reaction in prices to the cot extreme levels that we see in copper, looking at the history of the chart, we should be prepared that prices will increase 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

I find Daily Fx's SSI index which they post twice a day better than the COT report. It seems to be quite accurate.

Hi ReyesWhite,

The indicator you were referring to deals only with currencies as I see, but only shows position on FXCM platforms. I haven’t used it before, but it does seem useful. I don’t think that you can compare the two data and I don’t think it is reasonable to choose between the two (SSI – COT data). If you are a Forex trader (I guess you are) and your experience is that SSI is valuable information, then of course you should use it, but you may want to consider looking at the cot report also. I know it is only a weekly data, but it measures well the stresses in market, which is very valuable information and predicts shifts in trends accurately.

All the best,
Dunstan

Hi everyone,

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

Coffee
COT Change (52W) / C-23%, LS-20% /
COT Index (3 year lb.) / C-98%, LS-5%, SS-36% /
I think one of the nicest markets these days is Coffee. We’ve got a significantly large extreme and this week an also big change in traders’ positions. Both of these signals are bullish signals.

New Zealand Dollar (NZD/USD)
COT Extreme / C & LS-All Time COT extreme /
We’ve got a very nice, All Time cot extreme signal in NZD and if we look at the historical charts, we can see that these extremes were always very accurate signals. (we have a bearish one now)

Canadian Dollar (CAD/USD)
COT Extreme / C-327 report, LS-323 report COT extreme /
It’s always nice to see opposite signals in currencies, cause it can give us the opportunity to trade the pair. We’ve got a very large cot extreme in Canadian dollar that suggests, prices will stop their decline, and we’ll see 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

Hi everyone,

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

Coffee
COT Change (52W) / C-43%, LS-35% /
COT Index (3 year lb.) / C-86%, LS-5%, SS-16% /
Seem that it’s not the end of the decline yet. Anyhow, the wider picture seems very optimistic, so it may be a good trade in the end.

Soybean Oil
COT Extreme / C & LS & SS-All Time COT extreme /
All major trader groups are at their all-time extremes. Prices have not reacted yet, so anyone just tuning in can still find a good Risk/Reward trade.

Heating Oil
COT Extreme / C-All Time, LS-436 report COT extreme /
COT extremes in Heating Oil seem to be effective signals, so having such a buy signal is pretty valuable.

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

the original COT report --> here
COT charts --> here