COT Report Analysis - a thread on market sentiment

Silver

Now, we’re talking!

According to the COT Index, the Commercials are 2% away to reach extreme readings. But wait, what have we here? That’s right, the Funds are at an extreme!


What does that mean? Nothing at the moment. Situations like this (extreme readings) serves a signal for me to apply Technical Analysis to find potential entry points. But let’s not get ahead of ourselves.

Whoa! Another signal from the Movement Index!


Question: What does a +40 reading means in the case of Silver?

If your answer is anything other than nothing, than I managed to trick you! That’s right, since Silver is currently down, we are looking for at least a -40 value. So no signal here :13:

Open Interest: Seems like Silver is HOT at the moment. People want their piece of the action! In fact, OI rose to it’s 3 years high!


I need further studies on high OI with falling prices to make an accurate statement. Anyway, I would not put too much emphasis on the phenomenon. It simply means that there are more contracts in this market than in the last 3 years.

CP/OI: That is a bummer! Nothing exciting here. CL & CS rose by 1%.


How about the CP/OI Index (Willco)?

Commercials are buying like mad! The value of the indicator is currently at 90%, which means that they have a bullish bias.


To Summarize: I’m staying out for now for the lack of extreme Commercial COT Index reading.

Yep, but apparently, I can only attach 5 images / post :frowning:

I’ll upload that analysis of Platinum, Palladium and Cooper afternoon.

I’m sorry to trouble but since no one else does WILLCO. It would be great if you do the WILLCO for currencies, and report if there is something significant.

I’m working on my report as well now.

So, let’s see what the COT Report tells us this week. Very important that the percentile factors and net positions will always show the non-commercial speculators vs. data from the previous week:

[B]AUD[/B]: 35.23% current vs. 48.85% previous. Net position: -26 486 current vs. -2 017 previous. The difference in net position change is huge.

[B]CAD[/B]: 45.65% vs. 46.76%. Net position: 100 900 vs. 89 376. Nothing special.

[B]CHF[/B]: 35.70% vs. 32.82%. Net position: -11 789 vs. -12 557. Nothing special.

[B]GBP[/B]: 49.42% vs. 51.71%. Net position: -1 075 vs. 3 589. Nothing special.

[B]NZD[/B]: 49.75% vs. 50.15%. Net position: -100 vs. 64. With the net position change from positive to negative, the last bastion has fallen vs. the USD. This fact is more interesting than important.

[B]EUR[/B]: 22.83% vs. 24.68%. Net position: -146 212 vs. -141 965.

[B]JPY[/B]: 15.31% vs. 16.55%. Net position: -112 551 vs. -120 878. Nothing special.

[B]USD[/B]: the USD index lost from extreme value, maybe Peter can say something about that.

[B]Silver[/B]: the COT index gives a buy signal, and open interest is high, meaning many are looking at the market and there is a lot of interest at the current levels. Still, the COT net positions reading are not at extreme levels. With [B]gold[/B] we are also not on extreme levels, although COT index gives also a buy signal. What is important to mention is that with gold we do not have so much OI compared to the last years. I believe we have to wait with those market bottoms yet and see when COT reaches the extreme reading. I am looking forward to see what Balazs has to say about it. Actually I see that at the time of my writing Balazs is already done with his analysis, I only have to read it. Well, you definitely attached more pictures than all of us together :slight_smile: What here I have to say is that since I follow the report, we have the most negative reading again on [B]MXN[/B] and [B]BRL[/B]. I think these lines up great on the concerns about economic slowdown in the world with geopolitical risk on again and investors take their money away from exotic currencies and put it into safe havens.

[I]Trade setups and analysis for the week[/I]:

[I]Actually I do not plan to enter new trades. My long-term view of the markets did not change. I am bullish on USD and GBP and mostly bearish on EUR, CHF and JPY. The JPY is at the moment strong but only because of geopolitical risk and stock weakness. Once these problems are not there, I think there will be a rally vs. JPY. As I said yesterday, I am looking at the action and these are the only setups I am looking for but it can easily be that these moves will not happen the next week. I will then short JPY vs. all others. I also think that the worst part of the retracement is behind us and USD will advance again, or at least ranging still but not losing anymore. Probably you have seen how often I wrote “Nothing special” for the currencies. I know that is boring but that is how it is. As there was a USD retracement, all currencies moved a step back and did not continue their movement to extremes. I will look out for S&P day trading and also my great interest goes on silver and gold, which I will check every day.[/I]

I see that you guys were extremely busy and I am happy to read all those great stops out there. Still it will take some time as I leave for a couple of hours and today are Euro 2016 qualification games. This means…

FE

Ok I’m done with my report. Well there is something interesting, [B]GBP[/B] was the only one that produced a signal (buy signal). The thing is though I’m not sure it is a signal. The 52 MA has to be greater than the value of the previous two weeks. This week however, the value is greater than last week’s but equal to the value of two weeks ago.

When I looked at the currencies, all GBP crosses produced a buy signal with the exception of GBPUSD. that means buys are valid for GBPJPY, GBPAUD, GBPCHF, GBPCAD, GBPNZD and short EURGBP.

Personally I’m going to consider this an [B]invalid[/B] signal for now. Because I prefer that the MA Value be higher than the previous two weeks. If it is a real signal GBP will rise and next week we can have a valid signal.

Important to note though there was no sell signal for [B]USD[/B].

Well look who’s a star: CFTC COT Positioning: Are Forex Trends Overdone?

It is the second time that the thread get plugged in on the blogs.

[QUOTE=Mike Wolski;659960]Hey guys.

Monday///////////Tuesday////////Wednesday/////Thursday///////////Friday//////
NZD: +7 -0 0//JPY : +7 -0 0//NZD: +7 -0 0//JPY : +7 -0 0//JPY : +7 -0 0
AUD: +6 -1 0//AUD: +6 -1 0//EUR: +4 -1 2//USD: +6 -1 0//CAD: +5 -1 1
EUR: +4 -2 1//CHF: +5 -2 0//CHF: +4 -1 2//GBP: +4 -2 1//USD: +5 -1 1
CAD: +3 -3 1//EUR: +4 -3 0//CAD: +3 -2 2//CHF: +4 -2 1//CHF: +4 -3 0
CHF: +3 -4 0//GBP: +3 -4 0//GBP: +3 -2 2//EUR: +3 -4 0//GBP: +3 -4 0
JPY : +2 -5 0//USD: +1 -5 1//AUD: +2 -5 0//NZD: +2 -5 0//NZD: +2 -5 0
GBP: +1 -6 0//NZD: +0 -5 2//USD: +0 -6 1//CAD: +1 -6 0//EUR: +1 -6 0
USD: +0 -7 0//CAD: +0 -6 1//JPY : +0 -6 1//AUD: +0 -7 0//AUD: +0 -7 0
COMMS: +12//////MAJORS: +6/////COMMS: +5/////MAJORS: +15//////MAJORS: +6

Majors took the week. So for the last 6 weeks in a row it’s just been going back and forth consistently.

I’m coming back right now. Just want to see if I messed something up on this post.
I have more data coming.

Hey fellas!
Good weekend and good morning! I feel left out, cause you are all just throwing out some good reports! Good job! I will have to digest all this stuff this weekend.
I’ll do my best to put into perspective what happened this week.

Strong to Weak.
Total pips against everyone.//Pips against the other side. (Majors vs. Comms)

JPY : +1157 //+420
NZD: +302 // +157
CHF: +273 // +137
EUR: -41 // +38
CAD: -150 // -173
GBP: -284 // -45
AUD: -549 // -381
USD: -708 // -153

Majors’ total pips against Comms was +397.

Notes:

----------(long term, short term) means (weekly chart determination, daily chart determination)---------

[B]USD[/B]: This was a correction week. It was the first time for a correction in 3-4 weeks. So, I think we need to remember that. The biggest correction (this week) was against the JPY. I have determined no trend changes taken place regarding both long term and short term trends against anyone.
[B]CAD[/B]: Strongest Comm. The only change in trends was with JPY, pretty sizeable from ++ to R- ///means CAD was trending both long and short terms, and now CAD is ranging long term and trending low short term against JPY.
[B]GBP[/B]: Biggest trend change against JPY. +R to R- ////was trending high long term and ranging short to ranging long term and trending low short term.
Against the CHF----from ++ to RR. Went lower.
Against the AUD—from +R to ++. Went higher.
[B]CHF[/B]: Trend changes with JPY from RR to - -, went lower. Against GBP from - - to RR, went higher.
[B]EUR[/B]: Only change is with AUD from R+ to ++, went higher.
[B]JPY[/B] : Well much changes. But I want to put this out about the JPY. They have had a string of runs now. And the question is this…When did the risk off happen? As I see it (check the charts yourself to confirm) this all happened 3 weeks ago.
3 weeks ago against these ones, along with the amount of pips since then and up to date. This should be a gauge of who was weaker against them.

NZD: +475
EUR: +406
AUD: +404
CHF: +356
CAD: +167

That is how many pips JPY was up on them (weekly candles) from 3 weeks ago to present.

Now 2 weeks ago they started on the GBP and up to the present.
GBP: +481

And this past week they started on the USD.
USD: +221

I wanted to get some perspective on risk off sentiment. And we know that JPY is only moving up because of that. Right? And now we can see the strong versus the weak in regards to risk off sentiment, (for the most part). Which is this. Comms take the most hit. And with both EUR and CHF. (their just weak period) Then the GBP gets taken out a week later (for 2 weeks in a row now). And then the strongest currency (USD) gets hit this past week.

[B]NZD[/B]: No trend changes taken place.
[B]AUD[/B]: Went lower against JPY, EUR, GBP (trend changes).

Well, that’s all I got.
Hope any of that helps.

I’ll be in touch.

Mike

Copper

I’ve been keeping an eye out for Copper for a while now.

COT Index

Commercials’ value is 91% -> Extreme Zone
Funds’ value is 18%


COT Movement Index

Current reading is 49%. SIGNAL! Copper has been moving sideways for about 2 years now. In a case like this - according to Briese - the Movement Index can pinpoint reversal zones.


That does not mean of course, that the downside movement has come to an end. Since I like to see both parties (Hedgers & Funds) to reach extreme COT Index readings before putting on a trade, I’m staying on the sidelines for now.

Open Interest

OI is rising while Commercials increasing their longs & reducing shorts.


CP/OI

CL remains unchanged for the 4th week now (53%) -> Commercials own 53% of OI.
CS reduced from 33% to 32%.

CP/OI Index (Willco)

It’s in extreme territory with 89% reading.


Conclusion: So, after my little examination, I think the instrument setting up to be a good buy. I’m not eager to pull the trigger just yet though.


As you can see, price is approaching a nice support level located around 296.00$-298.00$. I like to keep my TA simple, so I’m using mainly S/R zones, trendlines and CS patterns.

Hi Team,

Peter,

you were shouting very loud, the market heard you and reacted accordingly! You should have entered short on the DAX, what a fortune you would have made.

flows,

thanks for your writing on the silver gold ratio, tell us when you find out something! This topic is very interesting.

rookie,

yes, I do wait with JPY as I am already in many positions. I just shared my idea what I will do if the time comes. I do believe we have a great chance there to grab pips. I printed out the new version of your system and will get back to you. But for me environmental protection is important so please do not make a new version of every day, I do not want to print it out every time:-) Now it was no problem because I printed ont he other side of the paper, unfortunately no one invented a three sided paper until this point. I will definitely read the link you posted.

Balazs,

I am just out of words. I will reread your comments, learn the charts again and think all what you have written. I have one question for you. As you said for gold OI, usually on market bottoms we usually have low OI. I have read this everywhere. However silver is very interesting as it is the opposite of gold. We are waiting for the bottom but OI is at an extreme high. Do you find it ok that a market bottom should most likely occur for both metals but the OI positioning is completely different? I expect silver to bottom first, but still, one is at an extreme high and the other is hitting the bottom. This is interesting. It is also nice what you wrote on Copper. Peter was giving us already some information but we have not had a COT analysis on it. Please tell us when you see a signal there so we can analyse it live.

Philip,

hmmm as I am already in with GBP, it is good to see that the system gave the signals. It is a confirmation. What an interesting result with the draw out there! Can you say what do you exactly mean with no sell signal for USD? Is it no sell signal for all currencies or only vs. GBP? By the way, I also read the article (also commented on it on the bottom) where ForexNinja gave again a link to us. I thought we have to get slowly used to it. We have to prepare ourself for such things before Financial Times, Bloomberg etc. will give a link to us and try to find out our real names (ok, they will chase down Mike quite fast). The links always come to our first post. Do you think that I should change the very first post for a bit more description? The thread has changed quite a bit since it was started. Maybe another explanation would be needed.

Mike,

JPY and NZD made me crazy in your analysis. On Monday, JPY „must” be worse. It is not possible to win a day 3rd time in a row! What do you think? I think your analysis made a huge step this week. I see „you wanted to talk to us”. Especially I mostly like your analysis on JPY. Good stuff out there. The one part I do not take into consideration from your analysis are the trend changes for the JPY. And you described all the reasons yourself. I noticed them but it does not change anything for me.

Very nice work again everyone. It is a lot of fun to be a member of this team!

Hi rookie,

I read your system and strategy. It is a good summarize and has clear rules. I cannot write much about your third point as I use currently Philips’s technical setup. You said you have read this entry technique on the attached site. How is it working out for you?

There are actually only two questions (the second is more a doubt and not a question) to be answered about your system.

  1. It is not clear from the description: which currencies/commodities do you trade? From what you have written I would assume you only trade the 7 USD pairs, but there is not clear definition.
  2. I am not a technical expert but Stochastic and RSI has the disadvantage that most of the move occurs in the overbought/oversold. This is not a problem if someone knows how to react. If you close your trades as soon as the overbought/oversold territory is reached, you might miss very many pips.

FE

Lol, FE, you are right - but was way more important to me that you guys didn’t go long.

Told you that that person with the Irish name is the one to watch, he was the one doing the shouting, I was just the echo.

More to follow :slight_smile:

Well regarding the sell signal for USD:
We were all slightly worried about the retracement over the last two weeks. The first thing I wanted to see if there was a sell signal detected by the system, so that we can quickly adjust our sentiment or at least not buy USD. But I saw there was no sell signal for USD in all currencies, which means the dollar rally should remain going, even if not as strong as it was a month ago for example.

The other good sign was that GBP produced buy signals against all other currencies [B]except against USD[/B] which I took as a sign of dollar strength and a confirmation of our bias as dollar and pound bulls.

I think you should take the time to adjust the first post in accordance to what we do. I also think you should mention COT in the title if that’s possible. Because I actually found this post when I searched for ‘commitment of traders’ and not when I first read the title. That remains up to you though.

Morning guys!

Hope you’re all having a great weekend. I was going to get my 8 hour sleep. But lately this thing has been my everything. I’m on it 24/7 whether I like it or not. I think I’m going to have dreams about this soon :30:. The challenge never ends. There’s always something to learn.

And Mike, everyone of us contributes to this thread in our own way. We’ve already come a long way. While I do believe we must improve the quality of our work its not about taking credits or who’s doing a better report. Your stats do provide us current sentiment, happenings during the week. And I’m sure its already a lot of work. If you really needed improvement trust me , FE or some of us /Philip/ would have pointed it out.

Someones been occupied lately and I was wondering if he had some secret project going on the side besides our thread… you’re getting very creative about paper not having 3 sides FE, maybe you’ve had too much of that project :20:

COT report as of 7 Oct’14


The commdolls
AUD, CAD and NZD

Non commercials: Specs have been net sellers of AUD and CAD for the 2nd consecutive week since their net position reading changed from positive to negative. Last week specs have added on their net position /shorts/ on both AUD and CAD. AUD net position /shorts/ had quite a jump from -2017 to -26486.

As for NZD specs have turned net sellers since last tuesday and its first net negative reading since 8 Oct 2013. NZD has had net negative readings in the past , all time high net negative reading was at -7979 in 2009. However this was after global financial crisis while US was still struggling much has changed since, what was an extreme in 2009 maybe not be an extreme in the future or in present.

Commercials: Commercials have been net buyers of commdolls AUD, CAD for a while now. And last week they have added on to their net position /longs/ across the board. Commercials are now net buyers of NZD.

AUD down to 0.8748 from 0.8823, NZD down to 0.78 from 0.7956. CAD up 1.1163 from 1.1095.

The majors
GBP and EUR

Non commercials: Specs have changed their net position from positive to negative last week on GBP. And they have been indecisive on pound for the last 4 weeks. As for EUR they have added on to their net position /shorts/ for the 2nd consecutive week. Current euro net negative position readings is quite far from all time extreme.

Commercials: Commercials have been net buyers of GBP and EUR for a while now and last week they have added on to their net position /longs/.

GBP down to 1.6151 from 1.6323 and EUR down from 1.2773 to 1.2656.

The safe havens
JPY and CHF

Non commercials: Specs have reduced their net position /short/ on both yen and franc however they still remain net sellers of JPY and CHF. Specs all time extreme readings are quite far for the moment.

Commercials: Commercials have been net buyers of both franc and yen for a while now. Last week they have sold some of their yen longs and added more to their CHF net position /longs/

JPY up to 109.2085 from 109.04, CHF up to 0.9559 from 0.9451.

Conclusion

AUD - bearish
CAD - bearish
NZD - bearish
GBP - neutral
EUR - bearish
JPY - bearish
CHF - bearish

I’m going to scan through my charts and will share my setups for the week. I’ll be most likely going long on dollar across the board. And from this week onwards I’m going to go by my system, I’ll test it out. Hopefully it will prevent me from jumping in early in the midst of correction and maximize the profit and keep losers minimal.

I’ll be back in the evening!

The system will be for trending ‘dollar’ pairs only. Hence why I called it trend following system for dollar pairs. I’m actually planning on developing a different system for crosses /Philips been working on it/ and for other instruments but I’ll take it step by step.

Since the system is for dollar pairs I’m going to be using DXY and CRB index and gold spot charts /throwing in intermarket correlation/ to prevent any false signals than if I were trading my charts alone. I just thought this would be it , I’ve been jumping in early lately.

As for indicators, I know they lack and there isn’t any indicator that doesn’t lack in that sense I have DXY, CRB and gold charts plotted with these indicators to exclude false signals. I have been using RSI since I started demoing back almost a year ago and I do actually find it helpful, I’m mostly going to be using it for guidance. I’ll mostly be relying somewhat heavy on intermarket analysis and price action more than any indicator.

Good work BB!

I’m impressed by your analysis on copper! Our transition into other markets might come a lot sooner and smoother than we /I/ had thought thanks to BB…

I see that you wait for extreme signals both from commercials and specs, hows that working so far ?

You are a good person, Peter. Sometimes I have the feeling you are not here to make money but only to pay attention on us.

Have a nice Sunday!

Hi Philip,

thanks for you writing and tips. Unfortunately it is not possible to change the title of a thread. You can change for example your username (as far as I know), but not a thread name. People might not find their way back if someone could change that. I mean we would for sure but still, that one does not work here. And good to read your thoughts on USD.

rookie,

Hmmm. I also dream sometimes about forex. At least its good to know I am not the only one. Well I also think we did some good steps. The next would be I think to read Balazs’s analysis and produce something like that for our own. The problem is that we do not follow all the indicators what he does, so this might be a bit difficult in the beginning. You also pointed out AUD, I am very surprised about that huge net position change to the negative side. Ok so as I see, you will have a different system, most likely based with the COT currency index for the crosses. I like your saying that you rely more on price action and not on indicators. Somewhere I have seen a good thread about that :slight_smile: The intermarket part is really interesting, I am waiting for your results there.

Platinum

I’m sorry for not posting on Platinum & Palladium yesterday, I was quite busy. Anyway, here they are :slight_smile:

COT Index

I thought last week that the index would flash some extreme readings. Well, it did not.


It is important to note though, that 2000 & -2000 values are seems to be important enough to produce market turns.


COT Movement Index’s value is 37 from 52.

Open Interest is falling, along with CS positions.


CP/OI

It’s obvious that commercials are abandoning their short positions while slightly increasing their longs.


CP/OI Index (Willco)

It’s still in bullish territory with the reading of 77% from 80%.


Conclusion: With the fresh numbers out, I usually take a peek at the chart. Price is currently sitting at a 4 years low (1260.00$). I’d be careful with longs at the moment. I need to see more evidence of bullish strength.

Well, the emphasis is on [I]“Usually”[/I]. I want to make a study of my own, with 10 years of data to see the relationship between OI and prices. Low OI simply means that the market has few active participants at a particular time. It is important, because Commercials are there (they has to be there day in and day out). In other words, that is a Commercial market. Price can and sometimes certainly will bottom on high OI readings. You can see that commercials own about 50% of Long & Short Contracts which is compared to the caliber of those guys, is not really significant. That means that Funds and Non-Reportables must own the rest (Zero-sum).