It sounds interesting and counterproductive at the same time. We are supposed to trade with commercials and fade non-commercials, why are they in the same index together?
Hi BB,
I don’t understand what the author implies by more straighforward COT index. Since you’ve got more to catch on, let us know ! Its totally new to me composite COT.
RE: And I happen to have the same question as Philip.
You are doing that very thing by blending their NPs. Since Non-Commercials are taking the other side of the Commercial’s Hedge, their NPs are mirroring each other.
Here’s a picture of the 3 years Composite COT Index.
This method is still new and requires further investigation.
Another interesting method is the Ratio Index. That simple calculation shows us how many (in %) longs are in the market.
Ratio Index = #Longs/(#Longs+#Shorts)
Again, this stuff is new and requires more analysis.
I appreciate your effort. But I think I will wait for the results as I am not convinced. The ratio index is a nice idea, but I thought its downgrade on WILLCO no?
No, Willco calculates the long short positions in % using the OI. That is basically useless for Currency futures as they are expire every 3 months.
Just a quick follow-up.
There is literally no difference between the Composite COT Index and the Traditional Commercial Index.
As you can see, the values are exactly the same. I prefer the Composite Index from now on as it use one line instead of two.
Composite Index (1 years) for Gold.
Hi BB,
nice analysis, the last chart confirms that gold should move to the down side. Please give us update in this issue. I personally prefer the COT Index as the Composite Index does not tell me how are Commercials and Non-Commercials positioned separately. I like to see those lines for the two sides. I rather wait a bit like Philip said. Actually I came to the same result Friday night with the COT Index for Gold, wrote it here also.
Let’s see what happens, it can never hurt to learn new stuff.
FE
Hi Global Macro,
nice post there. So maybe you can round up your write up and tell your opinion on NZD and CHF too.
FE
[QUOTE=“ForExchange;679523”] Hi Global Macro, nice post there. So maybe you can round up your write up and tell your opinion on NZD and CHF too. FE[/QUOTE] The CHF is tricky… Despite the SNB giving up on the floor they won’t be rolling over and simply letting the market have their way with buying the swissy un-challenged. I’d be watching for intervention (price action on eurchf looks like it’s possible they defended 0.9800 ) as well as another rate cut and talks regarding capital controls. This would make it a situation where we probably see longer periods of the swissy slowly grinding higher, then sharp moves lower as the market reacts to SNB action or comments. I’m staying away from the currency, now especially since US margin for trading the swissy is increased to 5%.
The NZ economy is doing very well but the latest inflation numbers probably will see the RBNZ officially transition to a neutral monetary policy stance coming from a tightening stance. This will take away a lot of attractiveness for speculators making any rallies good selling opportunity. The Canadian rate cut really hit Aussie and kiwi hard as it transfers a dovish expectation to their respective policies. Many economists are forecasting an Aussie rate cut this year and some are even forecasting one next month… If this occurs you would see nzd sold off as well. The market will be keenly watching this weeks Aussie CPI… A big miss will see Aussie sharply fall as it will be a green light for speculators to begin pricing in the February rate cut… Dragging the kiwi down with it. New Zealand’s CPI has a positive correlation to Aussies, and it’s released first. Given that kiwis inflation numbers were poor, the risks are definitely to the downside for Aussies.
Gold should head down according to the 1 year COT Index & Composite Index. The 3 years version probably stays around 75%.
Hi Rookie,
Yes, GLD not unlike it’s counterpart in the gold price chart. Volume is dropping as price reaches it’s current value, I am always looking for momentum, I often equate volume like steam.
I have only 2 etf’s in gold, the other is GLDX, it has a leading aspect in that it reflects investors’ actions in what they feel Gold will do in the future (their homepage depicts a pick axe).
Too tired to post the image, but price has fallen in the past 3 days, some increase in vol on Fri with determined decrease in price, so it seems that investors in that etf have been selling through EZ QE.
When I see a retail trader say early this week that on ECB QE he expects to see Gold shoot to the moon, I stop and think - why does he feel like that, what has persuaded that reaction, if he is reacting, are others doing the same, do market makers sense that reaction, after all prices are rising.
Rookie, I’d always prefer to look too far ahead than look too far back, nice analysis.
Gold is just doing what it should.
FE
I was just coming in to say that. Good start. I will wait for the end of the week and sell it next week, in line with my beloved stochastic 
It happens to be at a weekly resistance.
Who plays the Copper long setup?
Hi BB,
what is the reason to trade Copper long? It is falling like there is no tomorrow.
Rookie,
yeah, but those trendlines channels etc. are breaking through the whole time on all TFs 
I drew my chart full with everything and it break through everything to the upside. I found out that I can always see a technical reason why it turns. If nothing else, then something of the hundreds of possible Fibonacci line-ups will just show that it is time for some change Just like there is always a Fundamental reason. It might have to do something with a COT Index extreme? But combining your technical reasoning with the COT Index does look a strong indicator.
FE
It’s not. Actually, it is in the plus. Anyway, I was just curious.
Hi BB,
no, I meant the whole trend. Just wanted to understand what you spoted.
FE
Hey guys.
Monday’s results.
Total pips////avg %
GBP: +1416///1.27
EUR: +790///.94
AUD: +275///.70
USD: +219///.37
NZD: -83///.25
CAD: -402///-.26
JPY : -448///-.51
CHF: -1767///-2.74
Majors over the Comms +210 pips
So…what happened to the Swiss today? Doc? Everyone took a piece of them today.
And this is the first time the GBP took a day (on top) in a couple of weeks.
And I think that the Comms are on the way down. This week (as mentioned by Macro) will set the direction for the Comms. I’m thinking it’s going down. Cause they (AUD mostly) should have been climbing much higher by now, but that ship has sailed. IMO. We’ll see.
0110 GMT
Mike