Well I am surprised you guys are not mentioning natural gas. My Index and WILLCO seem to suggest it is at a bottom. The price itself is also quite low in itself.
I’m putting this on my watchlist for a possible upward move in the medium term. Especially that my back testing of the COT Index with Willco showed a 75% of getting the bottoms right on the monthly chart.
I agree that Copper is also at an extreme, and as I said Larry Williams expects the start of a rally on January 25. My backtesting showed that COT index and Willco are only right 30% of the time in picking the bottom on the monthly chart.
Hey guys, I finally finished my study on Natural Gas and the relationship between it’s price and the weather in the USA.
[B]Average temperature in the last quarter of the year:[/B]
2006 - 51°C
2009 - 54°C
2013 - 55,25°C
2008 - 60°C
2014 - 62,25°C
2010 - 81°C
2005 - 87,75°C
2007 - 87,75°C
2012 - 88,25°C
2011 - 89,75°C
In the last 10 years, price rallied 7 times out of 10.
In 2008, 2014 and 2011, the price actually was decreasing. As you can see, there isn’t really a relationship between actual cold and the price of Natural Gas.
Thanks Philip for mentioning it. I do not do COT an Nat Gas. I am watching though the price every day. Also ETFs. Interesting is that Nat Gas is correlated with Oil, but Oil is falling pretty much always but Nat Gas is holding to its’ price a lot better.
I did not even know you do these analysis on commodities. You never posted them! Great to hear. Can you post your Willco signal and your back testing? Everyone would be interested in that one.
BB, I hope you meant to say Farenheit instead of Celsius. If not then Mike has had some warm winter lately.
Your study is good and has an interesting result. Actually I thought it has a lot to do with weather. But then it has only to do with demand/supply and production costs. Have you read any article on the topic?
Sorry to change the subject. But I’m gonna talk about currencies now.
I’ve been thinking. About my plan for this week. At first I was like, "Now what…I had a successful week last week, so what do I do…start over? " But after much contemplating I remembered what I need to do.
And this is what I’m gonna concentrate on doing this year. Every trade that I make will be made on the basis of the numbers that I run. (there’s much data that I collect) But mostly having to do with the trends. And I have a determination on each of the currency pairs. I have a long term trend (monthly charts) determination, a medium term trend (weekly charts) determination, and a short term trend (daily charts) determination on each and every pair. I keep track of them. Systematically. And that info is for me to know who is strongest down to the weakest in each of the 3 perspectives. I have done this all last year. And I can see in each of the time frames where each currency has faired against the others. I rate them. This is all just a broad way of seeing who’s stronger than the others. And we all know the currencies move in tandem across the board moreso than individually. Ok. That’s nice. That’s data. But, this is the way I have decided to trade, by the numbers.
Whoever is ranging and then switches to trending high, is my signal to get in. That is always my starting point. From a ranging condition to a trending high condition. And once I’m in, then it’s another set of rules. But for the most part it will be following the rule of “if it’s trending high, I’m in it”.
And I do this with the long term trending ones, and medium term trending ones. Only. So with the long term trending ones I will keep open for months at a time. The medium term ones I will have open for weeks at a time. I don’t do this way for the daily chart trending ones.
So that’s 1 strategy for 2 different time periods I have.
And I have only one other strategy. You guys know what it is. I call it the currency trading strategy. It’s what I did this past week. I seen the AUD turning the bend on the daily and weekly charts. I went with them across the board. And scooped up over 1000 pips. AND THEY WERE NOT THE STRONGEST. The NZD and JPY beat them out. So now I have been looking at the AUD (their numbers) in comparison to the others. I have found that they didn’t make the most pips, BUT, they did move up the most (by far) on one of my tables. I call it the strong/weak deflator. They have changed the most trend determinations for the up side than anyone else.
For instance, I determined them to be trending low against GBP, EUR, CHF, CAD on the medium term trend, at the beginning of the week. Now at the end of the week they are ranging to those 4. And against the USD they have changed from trending low on the daily trend to ranging.
Basically when their status of how they are trending to the others move to the up side, I believe that to be a currency getting stronger.
And what do I do now? Well, as I see things, I don’t see any changes. They have not corrected much by the numbers in the last 3 solid weeks. And I will wait to see what the correction will look like. If they correct and the figures still show they are not sliding back to where they were going (ranging low), then I will stay with them. I’m gonna keep them going across the board until that happens. Sure, I’ll start putting in some stop losses when it is looking bad.
And as I look at the other currencies,this week, the one I think is interesting is the CAD. Will what happened with their economic indicators on Fri really push them back a ways? Cause I have them on the precipice of trending high long term against the CHF. And CAD against the EUR is at a turning point of a medium term trending high. So, I will be watching closely if they can shrug off that bad data. If they do, then I think they have some serious strength. And that will prompt me to get in with those 2.
So that’s what I’ve been up to.
I’ve been wondering if I should take all this stuff and start a thread about it.
(FE, you gave me that idea)
Not sure whether I’ve already mentioned this, apologies if it’s a repeat.
This is the thing about correlation, it fluctuates, sometimes one thing is the leader, then later another takes over - always context.
Last week I was discussing Nat Gas with a friend, price was rising despite Oil falling at the same time. This was the chart hr1 of nat gas at that time:
Anyways, I was saying that for me I would not buy, I mentioned, well I’ll just copy and paste what I said:
[B]“Example. live now the S&P is falling, I see that XNG is in live hr1 free fall, NAT GAS on hr1 has just given a sell signal on WS, price on Oanda is 3010 - but with a series of higher lows and higher highs
XLE is also falling so the energy is falling.”
so def no buying even though the sloping trend line is up.
[/B]
Could you suggest me a free demo trading platform or service with historical data (from Tick to Year Timeframes) of CBOT and NY exchange? Offline is prefferable…
I would not go long either just yet. The thing about correlation is that I don’t think it could be exploited effectively. NatGas might be linked to Oil to some degree, but that link is way too weak for me to base (or even reinforce) trades on it.
I see oil down so is gold. USDJPY is up. So is S&P500. US10yr is flat. It seems to me that we’re in a yet another risk on environment. Then how’s commodity high yield currencies are losing ? Why’s all the money flowing into USD and S&P ?
As Peter suggested I have looked at forexlive to get a feel of market sentiment live. I’ve stumbled upon this headline :USD in demand again as Europe gets underway 12 Jan | ForexLive. USD was flat mostly during asian session there was a sudden upward movement on USD across the board the move was prominent even on hr1.
EDIT: S&P is down and US10yr is up. What we’ve witnessed may have been a pseudo risk on environment. Maybe it was just a dollar buying across the board. Something isn’t right. I’ll just stay on the sideline.
You could call it: “A Statistical Approach For Trading”, maybe the Analyst Arena is the right place for it.
Just before you would jump into it, I suggest you to think about 2 things:
You cannot be very sensitive when you start a new thread. You have to hold on and fight alone. Look at the beginning of this thread. I was completely alone without any answers. I held on because I knew sometime someone will come and it will worth the time. It also worked out like this. The COT Report is something special, many people look at it around the world but comparing all traders, only a very small fraction follows the report. So I was ready to wait until people show up. Your system is a lot more special so you have to be ready to work on it alone for quite some time.
Very quietly I would suggest to work a bit on your style. It is now what you write but how you present it. When you make stats posts with charts or numbers, they are great. People do look at how the post looks like and make already some decisions. Your very last post (and others where you only write) is not good structured. I know IT is not your thing, but for a good thread you need to build up some structure, use [B]different[/B] [I]letter[/I] TYPES etc. Maybe you can exercise it a bit.
On the bright side you are very hard working and you love what you do. And that is the most important.
Either way you choose, I wish you good luck and we are always there for you,
Thanks FE for that. I surely won’t jump into things. Just let me post these things here. I just don’t want to be off topic for you. Let me know.
Plus, you guys are my BFF’s.
Hey Doc!
Yeah, as you might have guessed, I do follow the AUD. And I’ll tell you what I think.
During Asia session they were up on everyone, across the board. Then started the London session. Things have turned. They are turning down, correcting, against all the majors. And also CAD. I have noticed CAD, during London, have appreciated much across the board. But on the other hand the Aussie is up against the NZD. And against the JPY is really flat.
My sentiment is a correction. Finally. And it’s early, in the week. We’ll see how it all progresses. They just have not had a pretty good correction lately Doc. I’m not worried. We need to remember that for any kind of appreciation there has to be a depreciation first, (inhale). I’m just watching how the week will turn out to look like. That’s the tale, days of data moreso than hourly data.
Mike
PS…looked at that “forex live” link. It makes sense. Remember, the USD and AUD are opposites.
Are you sure about the correlation between NatGas and Oil? I checked it, and they don’t seem to be linked.
