Hey guys.
Wednesday results.
USD: +7 -0 0///+3 -0 0
CAD: +6 -1 0///+4 -1 0
JPY : +5 -2 0///+2 -1 0
EUR: +2 -3 2///+2 -1 0
GBP: +2 -3 2///+2 -1 0
CHF: +1 -3 3///+1 -1 1
AUD: +1 -5 1///+0 -4 1
NZD: +0 -7 0///+0 -5 0
Majors took it. +6
I just can’t believe how CAD is so strong. Why doesn’t the COT report show that about them?
Mike
Morning guys!
FOMC was surprisingly ‘somewhat’ hawkish than I had expected. Its all done. For now. If dollar pairs manage to get out of consolidation zones only then I will conclude that it isn’t speculative and that dollar rally is back on for real. Until then I will still be playing it safe. I’m with Peter.
I was looking to long AUDJPY and NZDJPY if FOMC turns out dovish, but looks like the pairs are headed down at a major resistance after somewhat hawkish FOMC minutes of meeting. Is it safe to assume then commdolls take on the drivers seat when dollar steps back and the other way around ? I guess this is where inverse correlation between CRB index and DXY comes in.
And here’s an update on kiwi
RBNZ Signals Extended Interest-Rate Pause on Benign CPI - Bloomberg
PS: I’m already up with USDJPY and down with NZDUSD.
Morning guys!
Today, I want to share my historical Copper analysis. It is useful for us, traders, to see how responsive different instruments are to the COT report.
My main focus is on Willco, because I doubt that anybody made extensive research on the indicator.
Here’s the chart from 2000 to 2014.
Chart + Willco
As you can see it for yourself, Commercials were right most of the time, although they were a little early.
Here’s the chart of OI.
Conclusion: Copper is responsive to Willco, although I’d need more confirmation before taking a position than just an extreme Willco reading.
Hi guys,
I feel sometimes that I see the market always from the other side as many. But if I even see it a bit other than rookie then it tells me to share my thoughts because I might be dead wrong. Here comes our COT watchlist and also a Fundamental thought.
[B]COT watchlist:[/B]
The FOMC results gave us another good entry for commodities. I mean here [B]silver[/B] which made a huge fall since yesterday. I will definitely enter the market today for a long term setup. I do not know if it goes more down but it is in the middle of the range of our entry wish (16.50 to 17.00). My position will not be big but I find it is a cheap level to buy and I can sit it through if it goes more down.
[B]Copper[/B] also turned down yesterday, but we have to wait more for good entry levels.
[B]Gold[/B] is falling like a stone. Here is more tought to say if an entry is in place. I will not enter it today.
[B]Fundamentals:[/B]
I do not like to trade indexes anymore this week. Just to start with. Besides that I see the situation other than you guys do. I was bullish the whole time with USD, made nice pips and every hour I am going to more to the direction of closing my trades before the GDP reading in 2.5 hours. Everyone is optimistic everyone expects something good so it is dangerous. A good reading might be already priced in so I think it can more surprise to the downside. If it is a strong reading and it goes up, then it will be the game deciding reaction for me. But do not get me wrong. I do not decide on the reading. What I look for is what the reaction of traders will be after an initial USD gain after a strong report. If USD holds on to the gains then everything is ok, if it is faded, that will ring all red alarm bells.
I am making my game plan ready for the afternoon. Why I am so worried when I was bullish the whole time? Well, I checked now all net positions for currencies. NZD is almost on a complete extreme level, just like MXN and the USD Index is on a complete extreme level. More than that: what is this hype on FOMC statement? All they did is finishing taper. But that was their very last bullet I think. The rate hike would be of course something strong but we know that they are dovish lately. So this tapering news gave the USD a boost but I do not see any other reason why USD should rally further on. It was the last shot IMO. The rally was there because of good reports. Well we saw USD weakness lately which could be a correction of course but if we look at the reports lately, they are not as good anymore. This does not mean of course that we might not see a good GDP today, but it is more of a short term act I would say.
Looking away from the currencies, we should observe USD from the commodity markets. Silver, gold, copper, oil etc. are at very cheap levels. It will be tough to push them a lot more down and as we know the COT extreme is coming there too. This is another main reason (because of the inverse relationship with USD) why I think the USD rally might be over. Of course I still think that the US economy is a lot stronger than the EU economy. That is not a question. It might continue to win against the EUR or JPY but only very slowly. Ok guys, if you reached this point of the post, you get a very small exercise. [I]Click through the daily charts for the 7 USD pairs and check what happened yesterday and today.[/I] Does it ring a bell? I do not think commodity currencies are beating the USD today because of risk off sentiment or last day of the month. Commodity prices go down but commodity currencies are still rising. Wow what is out there? Well, I just think the USD is shooting with an empty pistol at them. This empty pistol is scary enough for the other 4 currencies at this moment but not again the comdolls anymore.
As always guys, I do not know what happens and if any of this is right. This was my perspective on the market and what we see. Either way the GDP report turns out, if the fading of a good report does occur, it is more me a clear signal of a reversal. My USD longs end their journey in 3 hours.
FE
PS: Mike, I hope your NZD coming back occurs today! Those are the only trades where I do not do too good. I see what rookie wrote, I am still bullish. All central banks are bearish now, so leaving the rates at 3.5% is still better for me than all others having 0%. We will see what happens.
Edit: closed all US trades half an hour ago already. It did not look too good to hold them.
I’m with you on this [B]FE[/B]! I don’t understand all the hype either and I don’t want to. Fundamentals are just not my thing. Silver seems like a bargain for me as well, especially with the COT Index + Willco combination. It worked like a charm in the past.
Hi BB,
as always, nice analysis. You picked a good commodity as we are watching copper anyway these days.
What we have to look at the OI table is that both the high and low extreme readings are increasing as there is just generally more OI out there as time passes. What an extreme high reading was 10 years ago, it would be an extreme low reading now. It is very interesting to observe on the last chart.
FE
Hey guys…
FE… I’m not sure if dollar rally is overextended. It may well be. The only way to tell or to be sure is to watch price action like you said. I’m not guessing or taking any chances. But I’m not as confident as I was a month ago on USD. The index may be showing extremes but fundamentals shouldn’t be passed up I think especially for commodities.
There could be more decline for oil price : Why Does Saudi Arabia Seem So Comfortable With Falling Oil Prices? : Parallels : NPR
The only entity that could push the oil price higher is OPEC by cutting down production but it looks like they aren’t looking to cut production anytime soon. They’re scheduled meet on 27th Nov : OPEC’s Badri sees little output change in 2015, says don’t panic on oil drop | Reuters
Before you go long on silver you may want to look out for these ETFs FE , Peter has already posted this yesterday just in case. You preferably want to see a bullish sign on these etfs before you go long. Thats how I would do.
Gold etf (-10%), SLV etf (-25.14%) and Global commodity etf (-7.35%) - track the price of gold, silver and commodities.
Hi Rookie,
Whose charting package are those, they look good.
Hi Rookie,
thanks for the answer! The beauty of trading are the great discussions and the different views! I think the difference between us is not really our main big view, but you are still looking more on fundamentals and for me still COT is the most important. So I just leave discussion because it is endless.
I think the most important is our believe, discipline and confidence. I might be wrong of course but if I do not trade USD then it does not matter, does it? Still, I am not confidence anymore so I stay away from it. I wrote my reasons, that is how I see. I also see actually the reaction which I hoped to happen. A positive reading but a negative reaction. With such a reaction it will be tough for USD to break all the important levels it is facing in currencies and commodities. I opened a position with gold and silver which just shows that I was not disciplined as silver broke through the main support level 
Unfortunately I cannot analyse much your nice charts. As I said I have not studied ETFs yet, so I rather not say something stupid, I wait until I know these things better. Your call was good, but too late for me and I wouldn’t be able to analyse it anyway.
I have to go now guys, but I share my thoughts which came to my mind in the morning. It was one of those weird and funny moments. The original idea comes from Peter of course. He posted a couple of hundreds posts ago a short story which I liked a lot. Unfortunately I do not know exactly where the post is and I do not remember who was the person of it. So this starts pretty good, I know but I try to share the important part of it with my own words:
“There is/was a successful stock trader who liquidated his positions just before the stock market crashed. They asked him later how did he spot the moment when the crash will occur. He said: the postman came to me the other day and said he bought stocks. I knew in the very moment that it is time to get out.”
Well these were my thoughts. Murphy has a similar story in the beginning of his TA book. This is of course not a great argument to liquidate my USD longs but it hit me in the moment. We made some nice pips in the summer when many retail traders went against the trend. We found it early. A lot later the retailers started to liquidate their positions. Now even the “slowlest retail traders” know that it goes good for the US. Even they spoted the trend. So it is time for me to leave. When everyone knows something then there is a problem: who is going to take the other side of the trade? Maybe everyone is already long and no one has money to push it higher. This is another option. If there is a pullback I might buy it, or if it breaks some important levels in currencies. But that takes time. We will see when they break those lines.
All the best for everyone,
FE
BTW guys were are many people here and no one took advantage on the trade of the day. I read the story (not important here) and when I checked the charts my mouth stayed open. Check some Ruble charts out.
Here is a little thought provoking chart - note the absence of a new high in the DJIA, so keep an eye on that, it ‘should’ make one in the next week, if not then another ‘reaction’ on index.
The red line is the transport
YHOO Interactive Stock Chart | Yahoo! Inc. Stock - Yahoo! Finance its for free :-))
Its under interactive chart. I think it only works with the latest version of chrome. I can’t make it work with internet explorer older version.
Do you use CCI Peter ? from what I read it seems to be an enhanced version of CRB index.
Gold is just about to re test previous weekly support. I wonder if buyers will come in at this level or sell it off at the break. If gold breaks this major level, I’m slightly bullish towards dollar I’ve got two positions running currently NZDUSD and USDJPY.
Hey guys.
Thursday’s results.
AUD: +6 -0 1///+2 -0 1
NZD: +6 -0 1///+2 -0 1
CAD: +3 -2 2///+3 -0 2
USD: +3 -2 2///+0 -2 1
GBP: +3 -2 2///+0 -2 1
EUR: +1 -5 1///+0 -3 0
CHF: +1 -5 1///+0 -3 0
JPY : +0 -7 0///+0 -3 0
Well, Comms took this one alright. +13
Monday: M+5
Tuesday: C +14
Wednesday: M+6
Thursday: C +13
So the moral of the story is that when the Comms take it…they take it, unlike the Majors.
Mike
Quote “We made some nice pips in the summer when many retail traders went against the trend. We found it early. A lot later the retailers started to liquidate their positions. Now even the “slowlest retail traders” know that it goes good for the US. Even they spoted the trend. So it is time for me to leave. When everyone knows something then there is a problem: who is going to take the other side of the trade? Maybe everyone is already long and no one has money to push it higher. This is another option. If there is a pullback I might buy it, or if it breaks some important levels in currencies. But that takes time. We will see when they break those lines”
Good reasoning FE!
You want to fade those
I don’t feel good about my NZDUSD short but I’m learning to take it without any panic. Good thing. I suppose. I’ll close it at breakeven. And see what happens. I’m with you on that one FE.
ETF stands for exchange traded funds when I say gold etf it tracks the price of underlying commodity gold that is. To simply put, they tend to change direction prior the underlying commodity. So therefore ETFs can be used as a leading indicator.
There is nothing fancy about the chart that I attached. The yellow line represents gold etf, blue global commodity etf and gray line silver etf. As you can see they usually move in tandem. And are still in a downward move silver at the bottom with -25% and commodity etf at -7.34%. Once they turn up gold and silver futures may start changing direction to an upside. Since gold drives the price of silver. You want to look for gold etf rise followed up with gold futures rise before you long silver.
Well I know that FE and Rookie are shorting Yen across the board, great call you guys!! I’ve been in USDJPY since Thursday and am 151 pips in profit. My S&P trade is rocketing as well, 65 points in profit. I’m looking to enter CAD/JPY long at the right time and will share my trading idea on the weekend.
Hope the rest caught the move as well.
I wonder how the Commercial Net Positions are doing right now. Might be a nice long opportunity.
To be honest I really think it will be a while before we can buy gold and silver (I will look to buy them physically, but I will not trade them online.) We know that precious metal appreciate with inflation and we are living at a time of disinflation so there is no reason for them to pop now. This could be the era of stocks.
Hi guys,
very nice thoughts out there. I was away some time from computer and when I woke up I had to see that there were some major happenings and had to look after what happened. I share what all those happening meant to my trades:
[I]The good[/I]: well as I said earlier, I shorted JPY quite aggressive on low levels and we know what happened tonight. It was luck for my trades, but still: they just exploded. The same is true for my long AUD and NZD trades. I made mostly with these trades profit with the carry trade, now I even moved SL high as many trades just rocketed.
[I]The bad[/I]: needless to say the silver and gold trades were/are blown in my face. As the pip value is large, they are balancing out all my winnings grrrr. Despite rookies and Peters suggestion, I entered the trade. I think with silver it is not even that bad, but gold I should have waited. Looking from the positive side of things at least I did not scale in to the losses like with exotic currencies earlier. The currency winnings balance me out.
Saying all that, I see many good posts out there, here are my thoughts:
Rookie,
your thinking on gold is great, also the charts. I like the connection with the USD. I think it is reasonable so if the level breaks, I take my losses there. Until it holds, I am in. And thanks for the explanation on etf. I see the importance, I still do not see though why do they change price earlier than the spot price.
BB,
funny, I was thinking during my running yesterday something very similar. I wished I could see at the very moment a “live COT Report” to understand more what is going on. Poor us, this weekend’s COT Report does not have much value in my opinion. The time period it shows us (from last Wednesday to this week Tuesday; explanation for new readers) is not much of a help since the main moves in every market started on Wednesday night and continued on Tuesday. To get answers for our questions, we have to wait one more week.
Philip,
I need your TA help a bit. I liked you inflation thinking on gold. This makes me uncertain about my trade setup. Now, what happened often earlier, I lost I lost and I further lost with trades until I decided to exit the trade. And shortly after that a pullback occurred. Something like this happened even more often with entries. Just two examples: with my exotic currencies I found a nice spot to cut losses after a pullback, but made a horrible entry (like some of you too) with entering GBP trades right at the top of last month’s movement, just before a pullback. I think it would be stupid now to close my trades as a pullback has a good possibility after such a fall (not even saying that we might still be at a COT extreme, meaning that a reversal happens). Can you suggest something?
Also interesting is your thinking on stock rallies. I do not have as long experience as you with it so I also have a question here. I understand the reasoning what you wrote and intermarket correlations if stocks rise metals falls and vice versa. What I do not understand is the economic performance behind this crazy stock rise. Technically ok, but fundamentally? I mean the economies are really not doing good? Why do people invest in stock? If the economies have deflation, bad numbers etc. this would mean to me that main companies of the economy (which are traded on the stock markets)are also not doing that good. But stock indexes are rising and rising. I find this situation critical; maybe something like a bubble? Can you please explain so I better understand it?
Good luck team for the last afternoon of the week,
FE
Did you went long on Gold? Why? Silver is not a good buy just yet, I’m still waiting a valid bull signal to go long. Commercials are usually early, there’s no need to rush into the trades once they reached their extreme.
Edit: Take a look at the COT levels in S&P 500 Consolidated. I’ll post the values tomorrow, but it seems like Commercials were loading up on long contracts last week.
Congrats on your S&P trade Philip!
I agree with Philip on gold that its a little too early to go long and that price could decline more. However if the weekly support holds I think it would be a decent set up to go long only on short term. Whereas waiting for a complete reversal you could hold that position longer, and scale in on the way up.
I was long with USDJPY only, it was luck agree with FE. I didn’t want to go long on AUD and short NZD at the same time. Even with good GDP reading dollar didn’t do well in their session and indecision continued throughout asian session. I lost 70pips on NZDUSD short and ending the week with net +70pips. Live and learn I guess. I have trouble with entries FE… i just don’t get to work it properly. And I do understand how tempting it can be not to jump on a setup like that, we’ll always need to keep our discipline checked. Or think about it this way, whenever you enter a position don’t think about how much you’re going to make or how you’re getting in on a bargain price think about how much you would lose if things go wrong. That way even if you were tempted you’ll be able to walk away at a low probability setup.
Are you seeing this guys!!
FE: Hows your gold and silver positions are you in still ?
