Hi Team,
from my side there are only two commodities out there to look for:
Silver
Gold
Trend is down in we are getting to an extrem and it is a 6 months COT Index signal.
Questions?
FE
Hi FE,
Havenāt read the report yet but Iām guessing that the specs are going further long?
If they are then maybe it will gain some short term momentum, but there is only two reasons to buy gold bullion in my book, first if there is risk is off and I donāt have Yen or Chf, and secondly if there is imminent risk of inflation.
Some interesting facts re gold - Gold demand as a metal is of little value, a lot of it is stored, for every 400 tonnes of gold vs 14,000 tonnes of silver used in industry.
Majority of gold experts are forecasting flat for gold 2015 (I know means little, but in fairness these āexpertsā are working in the field, no links, but the recognized guy (maybe called Mr Goldfinger) thinks maybe 2% gain ā¦ hmmmā¦ I think ST knows this guy.
Lately, because of what is really a massive shift in EU economics, gold traders may be in an unusual place, between risk on and inflation risk - for me itās a hard call, and like the weather forecast - which is closest.
Morninā guys! :44:
Itās Saturday again, so as usual, here comes the report.
[B]Copper[/B]
Iām kind of clueless about the instrument. It seems to correlate with the S&P as well as with Gold but having itās own mind these days. Since both S&P and Gold are rallying, I believe that Copper is due for a correction. Commercials are still heavily bullish.
[B]Silver[/B]
The Commercials are 83% long, according to the COT Index. I am getting ready to sell once they step over 90%.
[B]Cotton[/B]
Commercials are 93% long. Iām sitting this one out as it would go against the roaring bearish trend.
[B]VIX Index[/B]
Itās been several weeks since things got interesting with the Index. Well, Commercials believe that it has topped out, so they are going short. That is important because if they are right, the S&P should rally further.
There is something I didnāt understand, you said that commercials are 83% long, but you will wait for it to go to the extreme and then trade [B]against[/B] commercials.
FE on gold, I have been reviewing the shorter time frames and there is a bullish case building up. I think patience is key here.
My idea here is we will definitely a move down towards 1220-1210 area. My problem is that even a move as massive as that to the downside is still also [B]BULLISH[/B].
Its the behavior of gold at this levels that will tell us if the recent move was a reversal or retracement.
Intermarket analysis tells us that Gold is bearish during times of disinflation. But we have to be wary that the recent up move in gold is telling us āThe global economy is entering deflation, Iām now bullish.ā
Hi BB and Philip,
I agree with BB in every point. Ok, I do not usually check the VIX, but besides that. One point to mention, BB silver might be already above your preferred 90% level as the last three days are not shown in the report.
The interesting question is, if gold and silver are both coming to a sell signal, which one to take? Gold basically arrived there already I think.
Philip, BB wanted to write Commercials are selling silver massive. Check the numbers that is right. So the question is why do you think it is all bullish? Your analysis also showed some time ago that it is a retracement. I mean every retracement can have bullish characteristics. Of course you are right with patience, that is a key. I am watching the candlesticks.
Something got my attention though. Maybe Peter can help us out. I do not remember the issue about [I]gold in deflation[/I]. Anyone on that?
FE
Silver is in a downtrend so is gold for now. Commercials 3 year COT index for silver is 83% which means thereās going to be a correction. I think if I remember correctly from this year on he wouldnāt go against the main trend, if he were to take this long signal - it would mean he has to go against the trend. So heād rather wait this out OR when the correction completes and blend in with the specs AKA the main trend. I think its a good move.
Yeah it could well maybe Philip ! but I wonder if silver will go after golds tail if gold is to really rally. Or probably it wouldnāt then thereās going to be a bit of a change , a shift between gold & silver relation. Intermarket analysis always put it into context. Classic example.
FE, As far as I can remember gold has two roles, a currency and a hedge against inflation on top of its role of being a commodity. If gold is to rally I think its a safer bet to long gold than silver say that they both rise. My reasoning is that I remember Peter used to say, silver is an industrial commodity while gold isnāt. Look at copper. I would put them on the same category. Silver being an industrial commodity I wonder if it will get a chance to rise back up even if it does, Iāll be suspicious of the longevity of the move.
Hey guys,
[B]Russell Mini 2000[/B] - thereās something funny about this, probably not reliable as S&P500. Is going to be excluded from now on.
[B]AUD[/B] - Well finally. Much awaited correction might be coming in real soon. Beware. Commercials 3 year COT index 86, same reading for the last 3 weeks. However Willco is about to reach 100, currently 99. Specs are bearish.
[B]GBP[/B] - All clear. So far no major correction detected. Specs are bearish.
[B]CAD[/B] - All clear. So far no major correction detected. Specs are bearish. But if you looked at the chart daily and weekly youād think if thereās ever going to be a correction for USDCAD ?? I would love to get on up with $ against CAD. Sigh
[B]CHF[/B] - Thereās been a buy signal on 13th Jan, Wilco 100 Commercial 3 year COT index was 89 *is considered relatively high for CHF but things seem have settled down since the mayhem. This week it looks all clear. I wonder if USD will bounce back.
Thatās all. Sorry that there wasnāt any report last week.
RE: Checked USDCAD monthly chart it went as high as 1.60 back in 2002 :o
Its strange how the correction that was due for NZDUSD never really came. Remember Dunstans analysis where he had 20 years worth of data, showing a potential correction months ago. I think it was 20 somewhere around the line. While global dairy auction has had 3 consecutive positive reading. What do you guys make of this ? Was USD too strong ?
Check this out. 7450 could be finally it for NZD for some break. After all its sister AUD is due soon. FEā¦ are you covering NZD??
LOL I mistyped it, Commercials are 83% short according to the COT Index. Sry for the mistake, it was still early morning 
Hi Rookie,
you wrote three nice posts, and I have 1 comment/post.
-
About Gold. Yes, everything you said is true, however we talked about all those things. My question was not about gold in inflation situation but in deflation. That is the point Philip raised and I do not think we have discussed it until this point. FYI, with BB we are looking to a downside trade setup, as we both want to go to the direction of the trend. So I think it is an interesting topic. Your suggestion is good though, I like the idea of trading rather silver to the downside as it has a better chance to follow commodities.
-
About CHF. A good trader in another thread said: the CHF charts are messed up by the SNB and are not usable for the following months or even years. This is true. I think for a while you can save some time and do not do the analysis on it. I mean, what do we want to read from the weekly or daily charts?
-
About NZD. Nothing has changed, it is still near to extremes. But of course your question is interesting about it. I am also always following it. Probably I follow it more than any other currency as it has the highest interest rate. So, it is complicated to say what is happening there but here is my story: NZD is one of the strongest currency out there. The recent big losses do not come because of the strong USD but because of the extremely weak AUD and CAD. Speculators lost trust in commodity currencies and a small currency like NZD can just not hold up. Probably after rate cuts out there and delaying rate hikes some people think NZD might be the next who cuts them. Still IMO the fundamentals for NZD line up a lot better than for AUD and CAD.
Waiting for your answer,
FE
FE, when it comes to gold you have to think like many. many years ago - back into history.
Before paper money metal ruled, especially gold, it was the no1 metal of value. Then paper was introduced, but only on the basis that it was an IOU for gold.
Today, like in Germanyās opposition to QE, history rules. If there is any perceived threat to the paper money, then the reaction is to get rid of the paper and get the metal that it is supposed to represent.
The single most threat to paper money is the fact that it devalues via inflation, therefore if there is perceived threat of inflation then historically gold will be bought (and rise in price).
Should another threat to the value of paper arise, say through geo poilitics, then likewise gold will be bought.
So, this week history ruled, the perceived threat to paper is EZ QE, the thinking is that money printing is inflationary. The only doubt to the tradersā reaction that I would have is whether the inflation threat posed by QE is sooner or later, if later, and remember that traders are trying to second guess investors, then are the traders jumping the gun - will investors actually buy gold on the threat of world inflation now?
Ok Peter, thanks. This leads me again that it is a retracement. I made guesses earlier but it takes time until those programs come into effect. We had multiple QEs last year and in long term it has not changed anything. I am lazy to look now, but maybe I do later a check what happened with gold after the 1. QE from EU and the QE from JPY.
Good night guys,
FE
For whatever reason that gold may rise, Philips theory fear of deflation or Peterās over QE we must keep an eye on Gold ETF ?
Gold ETF daily looks up, gold managed to get above 200SMA. What do you think about the volume, Peter ?
On weekly if I were to go long i would wait until it creates a new high, or breaks above the previous high. Am I looking way too far ahead ?? Peter ?
Yeah FE, I agree with your thinking on NZD and CHF, Iām not playing with CHF anytime soon. The only thing that keeps NZD from enjoying its well deserved break - correction is probably strong dollar and the rest of its pal CAD and AUD pulling it further down. Besides that we have positive dairy reading on NZD for the month of Dec through Janā15.
But weāre talking of correction , a complete reversal ? Hmmmā¦ maybe shooting a little far too early. You could go long on NZDUSD when commercials start selling off their longs on this potential correction. Since youāre going to be going against the maintrend - down at least for now. You may want to look out for Dollar index for possible resistance to increase the odds. I will probably wait it out and go along with the trend, but I just remembered that the pair has been in a range for a while now. From here on it could really go both ways. Weāll see 
That is all good and well. The thing is Peterma, deflation is bullish for gold as well (There are plenty of sources on that.)
So your theory could be true. But the worry of myself, FE and BB is that it could be a sign of a market crash or reversal. If the 1150 was a bottom in gold, and the rally in gold is actually a reversal, then the market is also warning us of a top in dollar and stockmarket and an impending deflation. It could be that bonds hold the answer to this debate.
[QUOTE=āPhilipPirrip;679458ā] That is all good and well. The thing is Peterma, deflation is bullish for gold as well (the Intermarket book says that and there are other sources I can share here.) So your theory could be true. But the worry of myself, FE and BB is that it could be a sign of a market crash or reversal. If the 1150 was a bottom in gold, and the rally in gold is actually a reversal, then the market is also warning us of a top in dollar and stockmarket and an impending deflation. It could be that bonds hold the answer to this debate.[/QUOTE]
Itās extremely hard to see the US dollar topping in the near term.
You have the BoJ which is relentlessly devaluing the yen, even mentioning last week that it doesnāt have a problem adding yet more stimulus this year.
You have the ECB now embarking on QE that will be inflating their balance sheet and devaluing the euro.
You have the UK political scene this year which will add uncertainty to sentiment, not to mention its twin deficits that should see the pound continue to struggle.
You have Canada now cutting rates last week and possibly again this yearā¦ Also oilās outlook will keep the loonie on the defensive all year.
You have Australia suffering from the huge drop in iron ore prices and the overall reduction of commodity demand from Chinaā¦ The RBA jawboning the Aussie down to 0.7500 with eyes on a possible rate cut from them next month.
The only place left is the USā¦ Especially considering the possibility of a rate hike (in stark contrast with nearly every other bank easing) happening as early as June. As long as the fundamentals support the Feds hiking, I think gold is going to be pressured downwards for probably the entirety of the year.
Iāve had my fair share of controversial views on this thread. Luckily for every one they are always wrong hahaha.
The reasons you mentioned Global Macro are exactly why I think a top is forming in Dollar. Ultimately these factors will weigh in on the dollar and people will head for safer investments.
If there was room for any, I would have made a case that the Fed will actually cut rates in the second quarter.
The US is actually struggling with a lack of inflation as well. So I actually donāt think they will hike rates until that target is reached. With the threat of deflation everywhere else and economic slowdown in China itself not helping anybody, I canāt see how we can be bullish dollar or stocks to be honest.
Yepā¦ I personally think they will hike in September due to the lower inflation, the key will be two NFPs in a row with strong wage growthā¦ Without that then they probably remain patient.
Judging by previous QE events, the dollar would bounce back the week after QE was announcedā¦ Leading me to assume euro may bounce back next week and the following before resuming the trend. And with tensions in Ukraine boiling up again this weekend, yen may rally a bit too.
The big macros still leave USD as the only place to go though. Who knows though
Hey guys! Since I started working, I have a lot less spare time, so I want to get the maximum out of those days when I happen to be free.
So, I decided to read a couple of books to meet one of the goals I set for myself in 2015. Among them was ā[I]Sentiment In The Forex Market[/I]ā by [I]Jamie Sattele[/I]. I skipped through most of the chapters as I was only interested in the COT Analysis section.
[B]Composite COT Index[/B]
I like to try new stuff when it comes to trading, so discovering a new ways to decipher information in the report always exciting.
The idea of Composite COT Index is to blend Non-Commercial and Commercial Net Positions, so we arrive at a more straightforward COT Index.
[I]Composite NP = Non-Commercial NP - Commercial NP[/I]
Once we have our NP values, we construct the Index using ā[I]PercentRank/Iā function in Excel. To be honest, I have no idea whether the function use the same formula as we did with the COT Index.
Anyway, the results are percentages within the scale of 0-100.
Iāll test the method later, but Iām not yet finished with the chapter and there seems to be more information buried in the book.