Hi guys,
quick question: who thinks there is at this very moment a good short-term possibility to go [I][B]long[/B][/I] with JPY vs. EUR and CHF? Thinking is easy: JPY lost a lot today and there has to be a correction, maybe to 38.2% or to 50.0% Fib level. It is easiest vs. the two weakest currencies. I know it sounds suicide but with good timing we can make a brave and good call there. Only short-term, for today. I would appreciate some fast answers.
Thanks,
FE
S&P500 may go in for some correction soon
Weekly chart
Daily chart
Gold is down ahead of commodities, dollar index stayed flat almost while S&P5oo did enjoy some move up. I wonder if dollar index will move higher if S&P500 heads down for a correction ? Where else would investors want to place their bets but dollar ? If gold does break the major support , on daily its already broken and heads down.
Thatâs not entirely accurate. Check Williamsâ book, page 177.
EURJPY. Its going to be a risky one FE.
But before you pull the trigger have a look at dollar pairs, i think its something to do with gold breaking major support. Dollar is looking strong. All of a sudden.
Well that was last night, the DJIA futures only waited a few hours and have made that new high.
I referenced the transports re Dow Theory, presuming that the Dow opens high today then that confirms the bull run - there were a few traders watching this relationship.
Sure, there may be a pullback but with the new high then a trend reversal becomes less likely.
FE is right re the feeling of a bubble, I was inside that last major bubble on the Nasdaq back 14 years ago, the thing Iâve learned since is how difficult it can be to see itâs existence.
There is a major difference though in that commodities are so low and earnings numbers are reasonable.
The reality is that, unlike 14 years ago, we are now in a low interest rate environment, investors find it increasingly difficult to get decent returns and so the stock market becomes a choice.
The sad thing FE is that when you decided to long gold I had a technical signal to sell gold. I did not take that signal as I commit myself to opening two new trades at once, I chose USDJPY and USDCHF. My Gann analysis had today and November 21 as major days for gold.
I think what you need more is a bit of trade management. Your mental stops for gold and silver surely have been reached, close these positions now. The JPY trades you have some room to run and make up for the profit. There is some bullish divergence in Gold but I think its better to accept the loss on this one.
I also think you should change your bias on Gold to bearish until we get a signal to start buying.
You will have a chance to make up for these losses in coming weeks.
Also send me a private message telling me how you normally enter a trade. I might be able to help you sharpen a technical system that helps give you a filter of your fundamental biases.
Hi team,
many interesting answers, thanks everyone! I entered the long JPY trades. It wasnât a long move though. It went my direction, I put SL 1-2 pips above my entry and a little later it turned back. I made altogether +3 pips with the two trades 
With Gold and Silver I am not done yet, it started rising the last hours, then I thought I still look the COT on the weekend, wait for BBs analysis and I discuss the situation in private mail with Philip on the technical side.
Rookie, the chart is good again, on USD there was something funny again today. The sudden strength happen at the moment of the news in the afternoon at 13.30CET. Now I say funny because the news were mostly negative and USD jumped strong again. The move is partly faded by many currencies.
Guys, I will watch (definitely do not enter at this point) from now on the RUB. If you check the web, the Russians made another rate rise, now it is 9%(!!!). In this year there is a 4% rate rise to stop the weakening currency with no success, so there might be further raising. A good entry there might bring a lot of money for a very long term trade with great carry possibilities. That could be a bet the holds maybe for years. Of course a good entry point is crucial as the currency lost more than 25% of value this year. They say: no risk no fun! Well, here there is a possibility for both
So good night guys and c u all tomorrow!
FE
I am always looking for leading indicators, one which often goes unnoticed but a very powerful tool on stock index is the Advance Decline tool.
What it does is measure the number of⌠well here is a description:
http://www.masterdata.com/Reports/Combined/ADLine/Daily/$SPX.htm
If you look closely at that site you will notice something important, you can just about see where the AD line does not make a higher high in mid Sept, whereas the S&P did. This meant that the S&P was rising on fewer stocks, the generals were leading - the troops were say no way jose.
The above chart is not great so I use Stockcharts again simply because I can write on the free chart.
You can see from my chart that not only was Sep signalled, but also the previous pullback, and brilliantly two different signals for the recent path back up.
So we had two independent signals for the market turns, the Russell 2000 and now the AD line.
Thanks go to John J Murphy yet again for these two little nuggets written about over 2 years ago.
And here is a video on how to set the chart up:
Edit: S&P is on the bottom, Advance Decline on top
Hi guys,
I will only look a bit later to analyse COT report. I do Crude oil again with the nem method and I try to analyse a new commodity. Of course not what BB makes.
BB,
I am interested now especially on your analysis that I am involved in trades. As I mentioned I am a bit sceptical because I do not think the moves are in COT, but still. I took a quick look at COT from yesterday. Gold looks bad for first look, but silver seems turning soon (there does not seem to a signal but I always try to visualize where the âlive COTâ is with adding the last three days in my mind). Interesting is also Copper, it turned back down again - good for us - and net position is on an extreme. We should look into it, where is the best buying point.
FE
I need to understand something about the AD line. How is it calculated exactly? More specifically, do we include volume? Is it each advancing stockvolume-each declining stockvolume?
Or simply if we have a 100 companies I subtract those that were up from those that were down. It was not clear in the video.
Yes Philip, itâs just the quantity of stocks that are rising less those falling, so you are monitoring breadth, and not just the actual value of the index.
The principle is exactly the same as the use of the small caps
Investors, when they get nervous tend to do move out of small caps first because they are more risky - likewise they move out of more riskier stocks that are in the larger index and tend to remain in the more âsecureâ companies until the last or switch from riskier to more secure as a risk control measure.
The net effect is the same, small caps stop rising, measured by Russell 2000, and the larger index may continue to rise, but only the larger stocks (the Generals) in the main index are rising - A/D measures this.
Here is the quick formula:
Hey guys.
I figured Iâd pick up from last weekends post. Now we can look back and see what the results are, for the month end play.
Hereâs what happened this week.
USD: +971
AUD: +790
CAD: +721
GBP: +349
CHF: +3
NZD: -40
EUR: -318
JPY : -2476
Comms took the week being up +1471 pips against Majors. (Friday was completely even)
Last weeks running total///Months end total
JPY : +1073///AUD : +1199
AUD: +409////USD : +942
NZD: +358////CAD : +431
CHF: +149////NZD : +318
USD: -29//////CHF : +152
EUR: -191/////EUR : -509
CAD: -290/////GBP : -1130
GBP: -1479////JPY : -1403
So, to compare the notes from last weekend:
[B]JPY[/B]âThey did a complete turn around. From first to last, all in the last week of the month.spot on
[B]GBP[/B]âThey did come up. So the determined trade of GBP/JPY collected +550 pips. spot on
[B]CAD[/B]âThey did continue their run up. Are strong!
[B]AUD[/B]âThey are the strongest. We know how much they have been losing lately. âunderdogâ theory did come to pass. Their run began in the beginning of the month and just continued to the end. (is it the end?)
[B]USD[/B]âThey have the same story as the AUD. Everyone started to count them out with the huge correction. The only difference is that their correcting started in the middle of the month.
[B]NZD[/B]âThey did continue the drop. AND ARE, VERY SLOWLY, OVER TIME.
So, where do we go from here?
Well, to me, (of course we need all kinds of confirmations) it looks like the AUD, and USD are on the up. Meaning it could be the beginning of where they left off some weeks ago. They both do have lots of room to still catch up, and continue their domination. In fact, (I just checked my records now) back in the first and second week of Sept. is when AUD, USD, CAD were all tied for first (strongest and dominated all). Then by the third week of Sept. thatâs when AUD dropped out of the race. They were the first to falter, hard and quick. Then CAD started to drop some at the end of Sept. Meanwhile the USD stayed on top that whole time. And even though US did do some losing, they were technically the strongest. What changed things was the JPY run up (risk off scenario). That skewed all domination from those three. And now it seems like we are right back where we left off. The question is will this continue?
Well, thatâs what I see. Just some sentimental history for you there, combined with facts.
What are you guys seeing?
Mike
Hi Mike,
interesting results. Very one balanced, almost JPY took the whole hit and made all others in positive!
Yes, risk on sentiment pushed comdolls quite up. Slowly though I think it might happen what Philip also said that NZD comes up. I agree that the time comes slowly. Carry trade is good and they lost enough, more than that many economies face deflation. So AUD and NZD seems better for me now. Congrats for your month end trade, the +550 had to help a lot.
What I do not understand and someone might explain, is it logical or sustainable that comdolls are rising so strong when the commodity prices are declining the whole time? Or is this relation not so important with currencies?
FE
Ofcourse there is a relationship, until Australia diversifies its economy. Gold though is the leading indicator in that relationship.
Hi Philip,
yeah, that is exactly what is in the babypips school I think and what I have read. That is why I do not know exactly how come AUD is beating the board lately and gold goes down. Shouldnât AUD go down then?
Silver
Okay, I have my database updated. There is not much to say about metals in general, except for Silver. As I pointed out last week, according to the COT Index, the values are at extreme levels.
COT Index
Commercials are a shy 7% away from being the most bullish in the last 3 years. We have to be careful with buying just yet though.
Open Interest
One thing is for certain. People find this market interesting enough to participate. OI is at 3 years high, while Commercials are loading up on long contracts. At this point, I had to look up what Mr. Williams has to say about the phenomenon.
According to his book, falling prices with increasing OI (more contracts) and increasing Commercial longs is a bullish sign. It makes sense, if you think it through.
As you are aware, Open Interest rise by one, if a long and a short contract hits the market (zero sum). Since the price of Silver is falling heavily while the interest in the market is picking up, that means that somebody has to match the long side of the short contracts being added. That would be the Commercials, because they are adding longs like thereâs no tomorrow.
So the increase is not the doing of the uninformed masses, but the smartest money in the game.
CP/OI
There, you have it. Shorts stagnate while longs are increasing.
Willco
The indicator is still in extreme bullish territory.
As for the chart, I would need more evidence to go long. Maybe the retest of the Friday low. Notice how bullish the close was.
Hi folks,
Iâve been trawling through the tutorials and feeds as Iâm trying to get a formula for WILLCO. What I understand by WILLCO is from p105 of Larryâs book:
âStochastic Custom (COT commercials/Open Index, vara)â
But some posts and the tutorial it seems that WILLCO is also being referred to as âCP/OI Indexâ, calculated as
((current weekâs value-lowest value of last 3 years)/(highest value of last three years-lowest value of the last three years)) * 100. This formula comes from p34 and is what Larry calls the [B]COT Index[/B].
Please could someone help me calculate the WILLCO stochastic using Excel.
Thank you.
It is calculated the same way as the COT Index, except instead of using the Net Positions, you are using the Net Position/OI. Larry Williams, the inventor of the indicator calls it Willco. I call it CP/OI Index.
Formula: (Current weekâs value - Minimum value of the last X years) / (Maximum value of the last X years - Minimum value of the last X years)
[B]Value[/B] = Commercial Net Position / Open Interest
See post #1726 for the calculation.
This week I analyze Crude oil as last week. I only had to update my database. I also thought to analyze a second market to practice. As I was not sure which market to choose, I decided to do stock index as we talk about them a lot. As BB already made an analysis on S&P, I thought I do Nikkei, especially since it made a huge jump this week, so when I analyze it now and compare it to next weekâs result, there will be a huge difference. It could be nice to follow it live. There was one problem though, BB or Peter could say if I did it right. There are two Nikkeiâs in the COT report: Nikkei Stock Average â Chicago Mercantile Exchange and Nikkei Stock Average Yen Denom âChicago Mercantile Exchange. I did not know which one to do, but for an exercise maybe it is not important. I chose to analyze the second one because of a simple reason: there is more OI in it, meaning there is more interest out there for the âYen Denomâ Nikkei index.
I also had a second problem, for sure Peter finds an answer and can explain it. I was really uncertain when I made my report if I read the numbers right, but I think I did. In the last week of the year there is a huge jump in positions and OI before the first week of next year. Is it contract expiry or what is the phenomenon?
As I want to get better in the analysis, critics are welcome.
Crude oil
Just like BB, I think I do not post many charts when nothing happens. That is the case with crude. There is a steady change in the positioning, Commercials are longer every week and Non-Commercials are the opposite. It will take some time though until we gets to our watchlist.
Nikkei Stock Average Yen Denom
Now the analysis show a very interesting result, I cannot really explain what is going on. I first thought the numbers are false but apparently they are not. To understand at least that they are not wrong numbers, I had to put the non-reportables on the net position chart since it would have not make any sense. They balance out the commercials and non-commercials together which is more than strange. Peter and BB might look into the issue and explain us what is happening there. I post all 6 charts because of the strange results. As I said, I am more interested on the process of the analysis and the meaning of it, if we do not find this index important then I just choose another product. This is more still to learn. The very low OI makes me wonder how is it possible to have such low OI for a so much traded product.
Commercials position themselves long while Specs and Retailers short. Willco is very bearish, besides that there are no signals. The COT index has the strangest values.
Conclusion: the Nikkei data I chose (and if all analysis good is) is useless for signals if we only look at the Commercials and Non-Commercials. Maybe the low OI makes it that Retailers have such a large market share. I just checked the net positions on timingcharts.com. The balance is the same as in my post, the values are however different.
PS: next week I can maybe make a complete analysis on one of the US pairs. I will start working on currencies.
It is useless because of the Yen denomination. I suggest you try the the other Nikkei.
I first thought that you miscalculated something, so I checked it. You were right, it is impossible to make heads and tails of the NP graph.
PS: Iâll post the S&P 500 tomorrow.
