COT Report Analysis - a thread on market sentiment

Hi Team,

we have an interesting day out there even if half of the world has banking holiday. On one side we can say risk on sentiment is out there today and the three comdolls are gaining on it. What is strange though, the one currency which should lose big time (JPY) in these market conditions; is holding pretty good to its’ levels. I wait for your observations guys because I am not getting exactly how both these moves are possible at the very same time. (I know Mike said JPY is dropping, but I think comparing in what speed and how much JPY earned lately, the loss is only a minor loss).

Mike,

I was missing your screen shots in the morning. I see you posted them later. Good luck with your trade, I am also in with AUD but not vs. JPY. I am in vs. EUR and CHF. But I have to admit you made me think to jump in. Looks like a good long term setup.

Balazs,

good explanation and charts on OI and Price. Really nice work there. If I examine the price levels with the OI readings, and then look at the successful trade ratio (assuming I was always entering the trades on the signal), well it would not have made a great result. It was still possible though to make the signals you mentioned to a good revenue source. Some of the biggest market moves were right on spot. This means, entering all the trades you posted with a very tight stop loss would have worked I think. We would have been stopped out very often, however some great moves would have been caught and these trades make up easily for the many small losses. What is interesting, silver is more on a high level, which would suggest a selling signal now. At these levels I just definitely do not have the guts to sell. It does not mean it is not the right thing to do, but for sure not for me (I know you did not say to trade it).

FE

Hey guys.
I don’t know if your aware, but the NZD had prices come out Monday. Wasn’t good. But…have you seen them today? Are up. Along with their sister AUD. Comms definitely have it today.
But anyway, take a look.
New Zealand Food Prices Drop 0.8% In September
Interesting.
Who needs good news? Bad news will do just fine for them, apparently.

Hey fellas.
I got another one. Interesting article on the Russia/China currency swap deal. I don’t know what it means to us, but maybe have an effect on the USD sometime.
Maybe someone real smart out there (BabyPips old guys) have something to say about that.
Well, take a look.

Mike

Keep in mind that the chart is a Weekly chart. If we would zoom in, we might spot some great setups at the highlighted points, probably with a nice R:R ratio.

Huge spike on EUR/USD and some other EUR crosses, fear re Ebola in Boston, USA.

My test system had me exit my short on Eur/Usd with 32 pips, it took me long and then I exited with 2 pips profit just before the huge spike. (wrote in my journal - not much movement likely, has ran out of steam)

Still happy with the exit decision regardless, but just shows how wrong it is possible to be.

The system has indicated a short on Nikkei so took that is evening, also long on Eur/Jpy on a buy stop (probably triggered by the surge, pending orders long on Aud/Jpy and short Usd/Jpy,.

Will update later.

BTW strong correlation on Silver with many currencies at present.

Update; apparently a false alarm at Boston, thank goodness, now the interesting thing is will the move fade?

Hey guys.
Monday results.

AUD: +6 -0 1///+4 -0 1
CHF: +5 -0 2///+2 -0 1
EUR: +5 -1 1///+2 -1 0
NZD: +4 -3 0///+3 -2 0
JPY : +3 -4 0///+1 -2 0
USD: +1 -5 1///+0 -2 1
CAD: +0 -5 2///+0 -3 2
GBP: +0 -6 1///+0 -2 1

Comms took it today, not by much though. +2

The 00 shot, beginning of Tuesday.


We’ll chat in the am guys.

Mike

Morning guys!

I’ve been watching the flow of things since yesterday morning. Its been an interesting day. Thanks Mike btw for updating us on the dairy auction.

I’ve learned not to short NZD when AUD is up they go hand in hand and so does EUR and CHF, Mikes stats confirmed just that. I don’t know what it is but I’d like to know :45: in the absence of dollar bulls I think it is a safe bet to long AUD against yen or euro this was my conclusion for the day. And I actually have opened short EURAUD took profit yesterday and long AUDJPY. There’s going to be few data to be released for euro today if euro reacts negative on the news I’m thinking of shorting EURAUD once again. Its early into the asian session and dollar bulls are nowhere in sight.

Morning fellas!

Yesterday, we concluded that with the help of OI, we are able to find trading opportunities. Now, that is and edge, hands down. But I wonder whether Commercials got anything to do with the phenomenon or not.


What you see here is the chart from yesterday, but I attached the Longs of the Commercials. (How much of the overall OI Commercials own)

Okay, here is something mind-blowing.


Each and every time the masses had no appetite to participate, the Commercials were going long. I’m talking about massive positions. Now that is something the watch out for. Here’s something else. There were two instances when our Commercial Long / OI reached 100%. See what happened next? A BADASS RALLY.

Should we keep an eye on this relationship? You bet!

I’m currently working on a formula that would convert OI into a percentage.


Now, it’s my time to ask you guys about your role in the group. Since I’m new here, I don’t really know the ‘old-timers’ here. So I’d appreciate if you told me something about yourself, your trading method, etc.

  • How long have you been following the thread?
  • Do you have your own COT database or gather the intel from a site?
  • Are you into fundies or TA?
  • How long have you been trading?
  • etc.

Good morning guys!
Before I forget, here’s the shot. 0730


[B]Fed officials say global slowdown could push back U.S. rate hike[/B]

(Reuters) - Federal Reserve officials on Saturday took stock of a slowdown in the global economy and said it could delay an increase in U.S. interest rates if serious enough.

Fed officials are worried about growth around the world, there are downside risks than upside risks and Fed will have to think about in policies. Chicago Federal Reserve Bank President Charles Evans said a strengthening of the dollar and weak growth abroad could mean slower inflation in the United States, and less justification for the U.S. central bank to raise rates.

Large developing nations like India and Brazil have been concerned a rise in US rates could suck investment away from their economies just as they earlier criticized the Fed’s bond-buying stimulus as a “currency war” that caused a fast increase in their currency values.

Fischer spoke in part to calm concerns among developing nations about a potential tightening in U.S. monetary policy, saying the Fed would only move rates higher if the U.S. economy was ready for it. Overall, he said, rising borrowing costs in the United States were unlikely to disrupt flows of capital and investment around the world.

“In determining the pace at which our monetary accommodation is removed, we will, as always, be paying close attention to the path of the rest of the global economy and its significant consequences for U.S. economic prospects.”

Morning BB!

You’ve been posting analysis after analysis since this past weekend I have yet to catch up with all that been busy lately but I will.

As for me I only trade currencies on a live account been demoing since a year ago , studied on and off since 4 years ago but been taking it seriously from April this year. I have joined this group in July , so I have been a member of this group for a little over 3 months, I bet most of us are except for Peter and FE. Thats how I’ve gotten around trading with COT and fundamentals. I don’t have that much of a database just yet but I wouldn’t mind if you’d share yours with us :13:, my COT data goes back 3 months, roughly. How about you BB?

This was disappointing.


Dollar index had an impressive run for the past few weeks and now looks like DXY is in for some correction on weekly TF. But will it find support on previous resistance ?


I have my eyes on these numbers



If they turn out bad I’m going to go on board with AUD the underdog. I’m not sure about you guys but I don’t see why you’d want to be bullish on pound. I’ll have some write ups on UK soon.

PS: I’m off work today btw :59: so I had the privilege of watching the market since morning from asian session. Its been an interesting watch. AUD and NZD came on top during asian session now that we’re onto london dollar seems to be coming back up on top while euro and franc is beaten down. I went short again this morning on EURAUD and and closed my AUDJPY long from yesterday in total of about 80 pips. My NZDUSD short that I opened on monday is still going with a loss I just have placed one short order. We’ll see how it goes. I’ve been going with the flow.

Well, I’ve been trading for about 3 years now, roughly 1 years live. I’ve stumbled upon everything from automated trading to Chaos Theory. I follow COT for about 6 months now, my database goes back to 2010 with various instruments. I don’t follow Fundamentals because frankly, they confuse me. I might dive deeper into the subject but I think the COT report is my edge so I have to focus on that.

Hey guys.
BB.

Well, this is my story.
I’m old enough to recognize the difference between something serious or just a fad. And when I learned about this business, (trading in financial instruments), back in Jan of ‘13, I new it was the thing missing in my life, up to this point. I knew it back then. After researching for a month, in Feb, I found the forex market, and since then it’s been the most enjoyable journey I’ve ever been on. I’m hoping someday I can venture out to the other markets to become well versed in. It only makes sense to start with the forex since it is the heart and soul of all money matters.
The wheels started turning for me in Jan. of this year. And that’s after eating, sleeping, thinking, stumbling over the forex market. At least I have my head wrapped around the game. And by no means am I successful.
I have been demoing the whole time. I refuse to go live until I can see consistent results, for at least 3 months. And the key there is [B]consistent[/B]. I know everyone has their views on the difference between demo and live. But…I’m sure that no one out there places the value of consistency, and proven results on paper, more than I do. If I get so bent out of shape because I cannot be successful with my documented results on paper, then it makes no sense to go live for me. I just won’t lose money while developing my trading strategy, trading plan, [B]MY BUSINESS[/B] through and through. I don’t even care about money. I’m in it because I love the game, to become successful in a business, and to be compensated for making right decisions.
So when am I going to go live then? Well, that has changed many times this whole entire year. I keep moving it further and further away. And right now the latest time frame is Jan. coming up. But not until I see it on paper first.
Being apart of this group is the best thing that has happened to me on my journey. Because the way I look at the market is starting from the big picture and coming in, which entails looking at the fundamentals, sentiments, and then technicals. Oh, and by the way, if it’s not being a trader I’m becoming, it would be an economist. More of a macro economist. Because I [B]love[/B] seeing the economies’ ins and outs. Money flows…oh man, what fun to track.
And that’s what we do here. I love these guys. I’ve come along…sometime just before the summer started I think. (I forget) But we all here are very serious about learning why the market moves the way it moves. And I can’t think of a better thing to learn in life than this stuff. Talk about interesting.

I have such a long way to go, (very very long way), but I’m enjoying this to no end.

I hope we will have you around for a long time BB! I think very highly of your work, which reflects on what kind of person you must be. Serious, and smart!

Mike

Back awhile I mentioned the relationship between the Yen and Nikkei.

Suppose a trader was bearish Usd/Jpy, and suppose this morning he took the break of 106.75, say maybe at 106.70

He could have avoided the current drawdown by looking at the Nikkei, it was double bottoming at the same time, likewise the FTSE100 (the big one to watch during London) and of course the DE30.

Those 3 duly reacted bringing on the drawdown with the short break on USD/JPY

Just thought I’d mention - simply because I exited my shorts on the DE and FTSE at dbl bottom and of course forgot about the Sell Stop on the USD/JPY - you live and you learn :slight_smile:

Now if there is some selling at the open on the S&P then I’m ok.

I bought Natural Gas.

COT Index


Commercials are more bullish than they were anytime in the last 3 years.

Movement Index

Nothing to see here. Current value is 13.

Open Interest


We are at our lowest point compared to the last 3 years. Commercials are adding longs while reducing their shorts.

CP/OI


Longs -> Increasing
Shorts -> Decreasing

CP/OI Index (Willco)

The reading is at 100%


Chart


I took the trade near the rising support line.

Just to update, when there was no selling at the S&P open, I then hedged with a long on S&P, when that went into profit I just closed the Jpy trade at minus 27 pips. the S&P trade has worked out ok, one way of using the correlation I suppose.

Hi BB,

here are the answers:

  • I have been following the thread quite early, sometime in May. Ok, I guess you do not want to read here jokes… So, the reason I started the thread was to start a discussion between people who think market sentiment is their edge on the market. I found the COT and knew “it is the simplest” way to get out from the market with winning in the long-term. As you see, some guys have found the thread and we have work to do but since the beginning we made some good steps in the right direction. The thread serves the purpose what I thought off in the beginning. I also try to pay attention not to get too far away from the original market sentiment topic. This also means COT is not the only topic, but that is the main topic. You apperance in the thread increases the goal of the thread and also the quality of COT report analysis.
  • my database goes back until May, I know however that I cannot make trades based on this. Until I get the needed 3 years historical data, I use oanda website, timingcharts.com and cotbase.com (this last is not so good) to provide me enough historical data.
  • I download the COT report every Friday from the CFTC website.
  • my main reason to enter a trade if my COT bias lines up with my fundamental bias. I agree with you that it is confusing and I do follow the news as I find it very interesting to understand what is going on, still I do not care for most of the individual news. As Mike said, I also look for the big picture. The weakest part of my trading is TA.
  • I am mostly interested for forex, gold, silver and S&P500.
  • my goal (besides the most important goal of getting successful) is the same as Mikes, getting to know more markets; I do learn a lot from Peter
  • my personal opinion: Peter has the longest and most experience. You do not see him posting as often as many of us, but as longer you stay here the more you see that his 1 sentence has the value of 10 sentence from most of us. He really knows what he is talking about. I really respect him.
  • I also respect all other members, we all have our strength and weakness. The most important strength of ours is dedication and hard work. This cannot be replaced. Everything else can be studied.

I did not answer for all your questions. Not because I do not trust my colleagues here, we are a great group. But this is a public thread and I do not intend to give information out here on my financial or live account issues. I always answer for any of my friends here in private messages and keep the provided information between the person and me.

FE

And everyone else,

I am very sorry that I do not answer too much now. I told you these days are very busy. I just had the time to read through all posts, I go to sleep right away. Thanks Peter on your posts, I will definitely think about during the day tomorrow. Rookie, nice writeups, Mike good daily sentiment and a nice story of yours. Good to know. Philip and flows are also busy these days as I see, just like me.

I took only a short time to answer BB, I think he conrtibuted very hard and great resources in his first week and would have not been fair not to answer him.

FE

Morning guys!

So dollar index is seem to be finding support on previous resistance

Weekly chart

Daily chart

Like I said CRB is nearing a major level as well, I’m wondering what happens here now

Weekly chart


Daily chart