[B]Morning guys![/B]
I decided to let the tutorial rest for a while. At least until somebody finish the latest volume.
I’m trying to make it a habit of mine, to make a study once or twice a week related to the COT report. It is a great exercise, and gives you a general idea of how responsive different markets to the report.
In my last study, I examined the [B]relationship between OI readings and price[/B]. We came to the conclusion, that market[I] bottoms[/I] (highs) usually came hand-in-hand with [I]low[/I] (high) OI readings.
[B]Today, I’m taking the study one step further to see how Willco fared in 15 years. My test subject is once again, Silver.[/B]
[I]Here is the chart of XAGU/USD from 2000 to 2014[/I]
I calculate Willco with 1,5 years (80 weeks) variable, so that is what I’m going to use here too. If anyone wants to experiment with different variables, be my guest.
I have marked the instances with green line when Willco stepped over the 90% line. As you can see for yourself, almost 100% of the time Commercials became extremely bullish, the price of Silver skyrocketed.
Interestingly enough, they are just as precise with short positions.
Let us add the Net Positions and mark only those instances when both indicators flashed an extreme condition. Longs are right on the money, that is obvious. Despite the fact that silver was in an uptrend for a prolonged period, Commercials were picking tops pretty good as well.
[B]Conclusion[/B]: [B]Commercials rock![/B] The 2 indicators combined together might warn us about major trend changes/continuations.
Off-topic: [I]It would be nice if some of us used pictures as illustrations. I really liked Peter’s Russel 2000 and S&P 500 comparison. I believe that the matter deserves more attention.[/I]
[B]Edit: I used new pictures because in the last 3, I accidentally used Silver chart from 1998 to 2014 instead of 2000 to 2014. Sorry about that.[/B]
I have no idea how the last pic got here. I cant remove it -_-