COT Report Analysis - a thread on market sentiment

Trading Discussion News and Economy
2267

Hey FE,

Aside from the gold theory I’ve been watching news how iron ore price decline is finally starting to have an adverse effect on its economy. I have two AUD long positions against the EUR and CHF floating with a loss. Now I have yet to buy the whole fundamental reasoning just yet. I have been enlightened by Murphys book. Lol. That macroeconomic and fundamental factors almost always tend to lag. More often than not the market has already reacted according to the possible outcome or the future outlook way before. The commdolls had already suffered a huge decline against dollar, so does EUR by the way so now the question remains how far can it go down ?

I’ve been closely monitoring AUDUSD and EURUSD for my two cross positions. Mikes theory. I’ve been on it lately. Its pretty accurate. I use it as a timing tool. But I have failed to follow my plan for these two positions :eek:. Hopefully. I’ll get better at this.

PS: You’ll love the book BB. Its a must read! I see that there’s going to be an another scheduled maintenance. Looks like FE will be left alone once again while the rest of go on a mini vacation.

2268

Hi Mike,

actually BB mentioned the Murphy book yesterday and I thought I tell you to maybe get it from your wife for Christmas. I think you would be a big fan of it. I am also only in the beginning, but it looks like an interesting and economic read. So exactly what you are looking for. It is not full with pips, entries, exits etc. It is more about how you can take advantage of the economic situation in the trading world.

You can think about it,
FE

2269

Hey guys.
What’s the title of the book. I’ve been looking back and cannot see where he first talked about it.

Thanks!

2270

Hi Mike,

it is called: Trading with Intermarket Analysis, by John J. Murphy. Important is however to get the right edition! You want to get the “2013, Wiley edition”. It should be about 250 pages.

Hope you find it,
FE

2271

Hi Team,

I think it is a safe bet to say USD is overbought at the moment. The NFP had an unbelievable positive reading and the CAD had a very bad reading at the same time. Altogether USD made +30 pips on these two news. Conclusion: this was the last confirmation for me not to buy the USD for longer term trades at the moment.

FE

2272

It’s on the way.
Thanks guys!
Looks good so far, by the contents.

Mike

2273

Hey guys.

Got this weeks results.

CAD: +963///+658
GBP: +758///+248
USD: +755///+202
CHF: -116///-55
NZD: -158///-88
EUR: -433///-272
AUD: -547///-312
JPY : -1222///-381

Comms had +258 pips more than the Majors.

Mike

2274

Mornin’ guys! :44:

Another week, another analysis. Luckily, we had our report delivered in time, so we don’t have to sit around wondering about the numbers :slight_smile:

Oh, and on more thing. As I currently have 25 instruments in my database, I’ll report any signals I happen to come across (except for Currencies).

Copper
According to the COT Index, Commercials are being the most bullish in the last 3 years. On top of that, the value of Willco is also 100.

A bullish picture, don’t you agree?

1.jpg700×538 43.4 KB

Chart: I will be looking for the retest of the descending support line before initiating a long position.

Gold & Silver: Readings are neutral, nothing to report. Same goes for Platinum & Palladium.

Sugar
Now, that is an interesting situation. First, let me show you the chart. You can see that the last time the Commercials were bullish (COT Index > 90%), price simply skyrocketed (green circle). Well, they are at it again (COT Commercial Index = 90%), plus we have a pretty obvious ProGo divergence to reinforce the signal.

3.jpg700×535 39.8 KB

Conclusion: I’ll probably buy Sugar on Monday.

2275

Hi everyone,

here is my COT analysis for the week.

[U]Silver[/U]
I always say this is BB’s territory; I just share my thoughts as I am very interested in this market. If I look at the updated charts, they all confirm that we either see a strong retracement or a reversal. Net positions and COT Index go with high speed away from the extreme readings.

[U]Crude oil[/U]
Net positions turned back a bit but I do not think it is anything important as price falls further down. I think it is only short term, probably has to do something with the very strong up day, after the falling based on the reaction after OPEC meeting.

[U]Soybean[/U]
As you know last week I pointed out a Soybean trade and a Wheat trade. Soybean would have been a loss and Wheat would have been a nice win if I had taken them. This week, soybean turned down and shows nothing interesting.

[U]JPY[/U]
Nothing to mention. The free fall goes on.

[U]RUB[/U]
Well, we know the fundamentals of the Ruble. COT report turned back to its extreme readings. I do have a small long position with RUB. This can be justified with the fact that now even the Russian Central Bank stepped up to give some strength for the currency. It is another thing that it did not work out good. Maybe they will step in again.

[U]EUR[/U]
Well, Rookie was also talking about AUD weakness and EUR strength lately. This can be seen in the COT report too. Although European economy is still not good, but in the forex world the very strong rally against the European might come to an end for a while. I will watch EUR, just like Rookie, and if this strength will go on I have to think about closing my positions. Let’s observe if it is a shorter term retracement or there is more in it.

[U]NZD[/U]
Commodity prices falling (dairy prices are important for NZD) also influence the NZD. We have seen extreme readings some weeks ago and there was a reversal but the recent commodity prices falling also had an effect on the NZD. There is a pause in the reversal, no main changes in net position and cot index readings. NZD is basically floating. Compared to comdolls, it had a worse weak than CAD but a stronger than AUD.

Ok guys, these were the 7 markets I observe, now I will cruise for a new market and post it later… It is not easy to look for a new market. We see that indeces do not work good with COT. I have done analysis on cross currency and it also did not work very well so I just wait for Rookie there. I am interested in live stocks but I cannot trade them at the current broker so until I have a broker where I can trade them, I will not include it in my analysis. There are many commodities which I find interesting but I can also not trade them. BB covers most of the other markets. If I do not find anything what I can trade but BB does not cover, then I choose an agricultural product that BB also does so I can compare my findings with his.

FE

2276

Hi BB,

can you please tell the whole list for the thread which 25 products you check on a weekly basis?

I agree with Copper, I bought it this week with a tight SL, it moved to positive, I put right away SL to BE and got stopped out. Trend is still down but it does seem like one of the best opportunities out there. I am also cautios there but keep a close eye on it.

Sugar, hmmm interesting. I have never dealt with it. I tell you honostly, the chart does not show me any sign of a reversal. However the Commercial positioning and your Progo analysis does give a good return to ratio. I think I might trade it with a very tight SL so I either lose small or win big. BTW, do you have some seasonal knowledge on sugar?

Philip, can you say something on oil and on sugar, too?

FE

PS: I thought I will show you guys a good example to make those analysis early and being first again. Just when I started was getting ready to upload my findings on babypips, I got an email that BB posted his analysis… I lost with 16 minutes :slight_smile: Good and fast work BB. Now we wait that Rookie sleeps out his headache after partying and he can also post his findings.

2277

Instruments covered:

[ul]
[li]Copper
[/li][li]Gold
[/li][li]Palladium
[/li][li]Platinum
[/li][li]Silver
[/li][li]Corn
[/li][li]Rough Rice
[/li][li]Soybeans
[/li][li]Wheat
[/li][li]Coffee
[/li][li]Cotton
[/li][li]Sugar
[/li][li]Crude Oil
[/li][li]Gasoline
[/li][li]Natural Gas
[/li][li]Treasury Bonds
[/li][li]VIX Index
[/li][li]Dollar Index
[/li][li]Euro
[/li][li]Swiss Franc
[/li][li]British Pound
[/li][li]Japanese Yen
[/li][li]Canadian Dollar
[/li][li]Australian Dollar
[/li][li]New Zealand Dollar
[/li][li]
[/li][/ul]

2278

Hey guys.

Before I start off. I’ve got to applaud BB and FE! I was thinking it was going a piece of cake. Doing historical analysis. Mine’s not that much of a historical analysis compared to BBs but I did attempt. Should get better as weeks to come.

So lets start off with CI index for AUDCHF

Screen Shot 2014-12-06 at 8.34.43 PM.jpg700×481 51.8 KB

I think the chart is self explanatory I have added an arrow and circles for illustration purposes. Specs are in harmony with the trend where as commercials are the exact opposite and it matches perfectly with the daily chart of AUDCHF.

So I went one step ahead and did 3 COT year index

Screen Shot 2014-12-06 at 8.44.04 PM.jpg700×466 35.1 KB

The area that I’ve circled with a vertical line is where 3 year commercials COT index reached its bullish sign - an extreme bullish reading. And it just so happens to be at major weekly support. And soon after AUDCHF rallied bouncing off of major weekly support.

: verdict : I think this looks pretty accurate I think we should keep analyzing FE. I have double checked the numbers whilst working on it so there shouldn’t be any error or whatsoever. Hopefully.

PS: Very funny FE. I could use some paracetamol.

2279

Great job there Rookie! I was planning to verify whether the CI works or not, but you did it already! I too, think that the index is of great value and we should investigate the issue further.

2280

Moving onto Russell 2000 mini

The Russell chart that I have on my platform goes by US Russell 2000. So just in case I have compared my own Russell chart to the mini from trading view.

Screen Shot 2014-12-06 at 9.51.32 PM.png700×555 118 KB

Voila. Mines right about the same. Compare yours guys.

Screen Shot 2014-12-06 at 9.40.23 PM.jpg700×492 48.4 KB

I resorted to line chart as bar charts over at trading view wasn’t functioning normally. Again the chart is self explanatory. We don’t see wide gaps in between specs and commercials net position. But you could see if you notice carefully that specs are in harmony with ongoing trend and commercials are the exact opposite.

Screen Shot 2014-12-06 at 10.06.35 PM.jpg700×439 26.5 KB

In course of year 2014, we have had 3 signals in which I have circled in black. The timing however was a bit earlier. During both of these 3 signals (around Apr, June, Sep-Oct) both commercials and specs 3 year COT index signaled extreme readings for a reversal so does Willco. As for the timing, we should wait until the extreme reading comes down a little and with the momentum kicking in and flow with the trend early on.

PS: Thanks BB! I’ve just been amazed by how accurate these signals can be!

2281

Hey BB,

I’ve updated my whole database. Everything. So I’m going to asking some questions. On copper you mentioned you’re going to wait for a retest of descending support. Assuming your chart is daily, the last bullish candle. Wouldn’t you consider that as a retest ? Or are you waiting on your ProGo ? Progo divergence ? I think answered myself. How accurate progo signals are ? and how do you set it up ?

2282

Here comes the report.

AUD
Nothing much going on here. All that its there to say is, commercials 3 year COT index is currently at 80 and has been climbing up steady.

GBP
3 year COT index wise there isn’t anything to report. But while checking net position chart I have noticed something. But its past. Still though I’d share.


Notice the sudden drop in OI and not soon after commercials and specs have switched net positions. Though there wasn’t any signal from COT index and Willco just with these we could have went in short on GBPUSD.

Screen Shot 2014-12-06 at 10.59.56 PM.jpg700×289 30.6 KB

CAD
Same as last week

CHF
Same as last week

Russell 2000 mini
No signal

AUDCHF
No signal

2283

That’s a weekly chart and the price has not yet touched the support line :slight_smile: ProGo seems to be pretty accurate and easy to interpret, that’s why I’m using it.

My analysis goes something like this: Trend -> COT Extremes -> ProGo -> TA.

I’m planning to include Intermarket analysis in my repertoire, so I’m reading through Murphy’s book. Surprisingly, I’m starting to grow fond of it. I think once understood and applied properly, one can benefit greatly from the ideas presented in the book.

2284

Hi Rookie,

great analysis and contribution there! Quite a lot of work I see. You were partying last night not so long as I see :slight_smile:

There is only 1 chart that I see different. It is the Russels 2000 net positions with price. I see you marked the position extremes. They do not tell much for me. It looks like random points and does not help much. How do you see it? However it was good to wait with my analysis as now I do not have to look for a new market but I also check a cross index.

BB, it is great that you find the book useful. I wish you good reading.

C u guys,
FE

2285

Hi guys,

Rookie and BB made some great analysis, I have to continue with quality out there. After Rookie had a good Cross index analysis, I decided to add also a CI to my database. I choose EURJPY because it is one of the most liqiud crosses and the advantage is that OI is similar in both currencies so we should see more accurate signals than it was with EURNZD. So I did right away a historical analysis based on the last 3 years of data and it proves that this cross does make sense to follow. And yes Rookie, now you see that historical analysis do take time to do, even if it looks in the end only one picture in the thread :slight_smile: Congrats, you made a nice one! And the good news is, if you make 3-4 of those analysis, you will get faster, too. Just like updating your database.

So let’s see that EURJPY net positions chart with the price chart:

EURJPY historical analysis.jpg700×514 50.4 KB

So, looking at the chart it is interesting to see that commercials were a lot more accurate on the buy signals while they did actually mess up a bit the sell signals. Nothing more to add, maybe we can write this down at this pair.

Have a nice weekend further on,
FE

2286

[B]BB[/B]
From what I have observed thus far we’ve only seen you going long in most cases against the trend - If I’m correct you do use COT 6 months index to blend in with the existing trends - I don’t find this reliable at all so far. COT 6 months signal. How do you find it so far ? I do like your method by the way. It seems simple and clear. But I know a lot of work had been put in to produce those signals :slight_smile:

[B]FE[/B]
Yep. I had been partying out and managed to came back before 12 midnight. And now hangover from numbers and graphs. If there is a such term :slight_smile:

I think on Russell 2000 mini, the fact that its a mini had something to do with how commercials and specs net position graph turned out. You don’t see much gap between the two so it wasn’t easy for me to draw the vertical lines but to me what matters the most is that the players activities are in harmony with the chart. 3 year COT index buy signals however were very accurate!

And on sugar while I was updating mine, I had seen a signal. I think its a good one. Good luck! And a suggestion for FE how about you use daily charts instead of weekly in your historical analysis ?

Think I’m going to love doing these kinds of analysis. Lets keep it coming guys! :-))