COT Report Analysis - a thread on market sentiment

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2872

Hey guys.
Have some results.
Pips totaled.
How the month looked.

[B]WEEK 1[/B]////////[B]WEEK 2[/B]////////[B]WEEK 3[/B]////////[B]WEEK 4[/B]////////[B]RESULTS[/B]/////
NZD: +1861///CHF: +11885///JPY : +2057///EUR: +2213//////CHF: +8188
JPY : +1528///AUD: -718//////USD: +1741///GBP: +1930//////JPY : +4312
AUD: +1310///JPY : -787//////GBP: +1530///JPY : +892////////USD: +2448
USD: -92//////USD: -1069/////CHF: -364/////USD: +751////////GBP: -833
CAD: -605////NZD: -1199/////EUR: -769//////AUD: -631////////AUD: -1431
CHF: -746/////CAD: -1791/////CAD: -1116////CAD: -1269//////NZD: -3235
EUR: -1461///GBP: -2383/////AUD: -1430////NZD: -1304///////EUR: -4039
GBP: -1795 ///EUR: -3938/////NZD: -1649////CHF: -2582///////CAD: -5410

Now they wonā€™t add up because there was 2 extra days in the month thatā€™s not counted for in the first weeks results. Those totals are the monthly candle.
Iā€™m working on getting everything adding up in percentages. I think thatā€™s a more accurate gauge. Sorry I donā€™t have that now. But, just waitā€¦I am working on something real big. And it will have %'s. I found the site of all sites, for my stats. It even has excel incorporated in it. So, soon enough I will be getting more efficient with the process, along with so much more data. (Maybe the days of the pencil and paper will go away) :51:

Ok. Thatā€™s nice. Letā€™s talk.
I see what happened in the last week of the month, for the months end play. The EUR and CHF came back around, from ā€œNagasakiā€ in the second week. Lookā€¦over 2k pips for each of them. And it all happened then and not sooner. (Weā€™ve shouldā€™ve known, because things always tend to go back to balance) I know, hindsight is 20/20!!!

The Majors are taking over (well took). (shouldnā€™t have been a surprise, because of the oil situation) ā€¦Look at CADā€™s #'s.
In the first week, the NZD, and AUD were on top for the most part. Then from then on itā€™s all down hill.

Soā€¦the question begsā€¦where do we go from here?
Well, I will be keeping track to see: how much the EUR, CHF will come back to rest. Cause is this a trend that will continue? Also will the Comms continue on the steep slope? And are we still in the era of the strong USD?

One thing I know for sureā€¦the numbers will talk. I just hope I can be in on the flow of them.

Mike

2873

Hi guys,

I checked COT. Besides what I mentioned above here are what you can also check for a discussion:

  • JPY: is at a sell signal

  • Cocoa: soon it should be a buy signal but that looks a dangerous trade

  • Sugar: a sell signal is in the cards. This looks a reasonable trade.

What do you guys think?

FE

2874

Goldā€™s role - 1) Inflation hedge. 2) Geo Political risk hedge. 3) Alternative currency, specifically USD. 4) Market Risk hedge.

Gold - The inflation hedge aspect has been side-lined - guys that went long on that are gone.

So why the rise on Friday past? - If no.1 and not no.2, def not no.3 - that only leaves the last one.

The USB10yr tells the tale, the S&P likewise (aside from a little fadeable side show on energy).

Hmmm. wonder is this the reason:

Forex Calendar: Economic Calendar for FX Trading News & Event Risk

2875

Hi Peter,

you can always say something new to us. Thanks for sharing. We were not discussing the fourth reason until now so it was good to read about it!

FE

2876

Hey guys. I came up with the %'s.
This will be important to me, cause we have a lot of year to go. So why not start from the beginning.

CHF: +12.82 %
JPY : +5.52 %
USD: +3.33 %
GBP: +.12 %
AUD: -2.42 %
NZD: -4.51 %
EUR: -4.74 %
CAD: -6.89 %

I really believe %'s give a more accurate comparison, than pips.
Look at the Pound. -833 pips, but actually in the positive, % wise.
Hereā€™s the break down of them. (GBP)

Against who////how much of a % /// total monthly pips made

CAD: +6.05 % /// +1048 pips
EUR: +4.38 % /// +283 pips
NZD: +4.09 % /// +712 pips
AUD: +2.20 % /// +286 pips
USD: -1.80 % /// -529 pips
JPY : -4.25 % /// -974 pips
CHF: -9.78 % /// -1659 pips

So, I add those %'s up, then divide by 7.
What gives me a truer pictureā€¦ -833 pips or +.12 %

Itā€™s all about comparing each other.

Mike

2877

FE, you mean USDJPY sell ? Sugar is looking good already reversed downwards, theres a buy signal for palladium but since commodities are in a downfall gold & copper being lead I would cross that out. And I have yet to check out the 52MA value for palladium Iā€™m assuming you have checked the 52MA value for sugar and it was lower than week prior ? Iā€™ll be back shortly with the currency readings.

re: I checked sugar and JPY along with MA values. Its a valid sell. Nothing new on the rest of the currencies. Same old findings.

2878

Morninā€™ guys! :44:

Itā€™s the end of the week again, so here comes my COT Analysis.

Copper

I donā€™t know about you guys, but I really have to discipline myself not to jump right in with a long position because of the trend.

1.jpg700Ɨ355 31.3 KB

Gold & Silver

Well, well, seems like the situation is as bearish as it gets.

According to the Composite Index, both metals are overbought. Our traditional COT Index is still yet to flash an extreme reading in Goldā€™s case.

Gold

2.jpg700Ɨ355 39.7 KB

Silver

3.jpg700Ɨ355 41.3 KB

Note that we are getting another bearish signal from the Movement Index in both cases.

Natural Gas

Still bullish.

2879

I do want to report on something, and I know I have been pushing it since 2015.

Dollar index COT index for the month of January was 2. We should be thinking of a turnaround in coming months. Everything so far points to that possibility.

[B]COT Index[/B] The 3 year index is at 2 for the month of January 2015. This is just a warning sign since commercials are usually early. Its worth noting though that the index have been in the extreme sell zone since October last year.

[B]Golden ratio[/B] I know we donā€™t use it yet but I do incorporate in my analysis and you will see I have a lot of factors leading to my analysis. The golden ratio reached a sell area in October (in line with the COT index.) When the ratio reached an extreme for dollar, it manifested itself approximately 60% of the time.

[B]Commodities[/B] Gold broke to the upside. And although I will look to sell it with you guys (if my technical system flashes the signal), this doesnā€™t mean that the trend is bearish. For it to be so, Gold has to go on and break the $1140 low it formed several weeks ago. If gold however retraces then goes on to break the 1300 peak it reached last week, then the trend is now bullish and gold has officially bottomed.

[B]Bond Market[/B] A rally in gold followed by a rise in the treasury note yield is bearish for dollar and stock. Looking at the monthly chart, TNX has formed an inverted head and shoulders which hints at a reversal. Only a break of the 1.39% low would invalidate the pattern.

[B]Risk of deflation[/B] We know the risk is there, Japan is already with negative inflation as are some countries in Europe. That is bullish for gold an bearish for dollar.

[B]US Economic data[/B] They have been extremely poor in January; horrific retail sales and durable goods order. GDP was also lower than expected.

Objectively speaking, if growth is below expected and inflation is below expected why would anyone in their right minds expect the FED to hike rates?

Eventually money will move out of the stocks and dollar and they will go down. If we donā€™t know where it would go (although there is a good chance that money could go to gold and AUD by extension for very good reasons, but thats another discussion), we can just sell the dollar and SPX500.

2880

Hi Philip,

I see you check TNX - the yield index, also I find of help when looking to the bond market for guidance on risk is IEF and TLT, the advantage is that you have volume and can come down in time, can be useful when a move is underway.

Example - on Friday, on TLT, check the second last candle and itā€™s associated volume, that was confirmation that the late move up on the S&P was worthy of a fade, that coupled with a single sector move indicated that the late move up in the S&P was not investor led.

One other thing that I find of help is UUP, as expected it is a reflection of USDX with volume. I notice on HR1 the lack of volume in the past couple of days with price up at a resistance, perhaps reflecting a wait and see approach by investors.

2881

Hi Team,

One of my good friends was reading my post and sayings on W/S and asked if I can tell a bit more about these signals. I post it here, maybe it also helps others. I have to say the signals are clear but it needs pratice as you have to get your feeling for it. Even if the signal is clear, it takes experience and practice to see right away if it is a good signal or not.

I heard in the last times that I try to pick tops and bottoms. This is not really true. The way it sounds is that I am spotting reversals. Well, as I said I do not want to countertrade so I try to trade in the direction of fundamentals and trend. This is very important because spotting a turning point in a reversal and a retracement is a huge difference. The second has a definitely larger chance to become a good trade.

Here is a picture where I entered S&P almost at the swing bottom:

17122014 sandp.jpg700Ɨ221 18.2 KB

To trade this setup you have to have a confident feeling where the main trend moves. I was confident in an uptrend so I was looking only for long trades. At this time I would not be sure at all with S&P so I just do not trade it. But you see the hourly chart of 17.12.2014. and at that time I was confident. As you see, S&P crossed the zero W/S line and also the 50MA. This signal does not always work. But the loss is very limited as I just put it under the recent swing low. This way I can have a very limited loss but a good run to the upside. I do not even wait sometimes for the MA cross. If the trade is at a short extreme, after a huge downward movement, I also enter sometimes. But that kind of a move needs practice, rather leave it in th beginning.

Besides having a fundamental bias, you also have to get used to W/S. The reason I know if I am right or wrong is, that above the zero line has to be an ā€œenergeticā€ movement. With time you will get what I mean. If trend is up and there is a downward crossover, usually it will be not so strong and when it crosses back up then it will move fast up. Why is this important? It is crucial to understand current sentiment. In the case of my S&P trade if the upward movement at the crossing point would have been little with no strength then I would have known that the index is going still down because the down crosses are stronger than the up crosses.

Counter trend moves are also tradeable but more risky. I spotted a retracement in NAT GAS and it turned out to be a good trade some time ago. At that time I thought it is a reversal. So a good adjusted SL made me a gain but I wouldnā€™t enter that trade again as it was against the main trend.

A recent example is gold. Check the W/S chart with 1H on Friday. There was an up cross which did not bother me. However what really bothered me that the upward movement was followed with very strong up candles. This is not a good sign because I was short. My bias did not change but I do not like those moves against my bias.

Ok guys, I hope there was some help in this post,

FE

2882

Hey guys !

In case if you guys havenā€™t heard Chinaā€™s manufacturing gauge declined to 49.8 est 50.2 and thereā€™s a talk of another round of targeted stimulus might be underway. I see dollar taking a pause. I wonder if its the topping or just a healthy pause. USDCAD has a long way to go - I mean it has the potential to keep running higher. EUR zone PMI numbers came out decent, EURUSD certainly is enjoying its ride up, along with that correction is still in progress referring to commercials 3 year COT data and Willco both signaled 100.

I was thinking of going with a dollar pair up, but looks like it wonā€™t happen anytime soon. R:R wise, I donā€™t see a dollar setup that fulfills what Iā€™m looking for. Crosses might have something better for offer, but the choppiness and lack of clear bias hmmmā€¦ Iā€™ll stay on the sidelines.

Much anticipated AUDUSD and NZDUSD correction , hmmm still nowhere to be seen. RBA interest rate decision and monetary policy statements that are due on tuesday, might make or break the AUD. Whatever the case, Iā€™m thinking the correction might come afterwards. Oil is up on daily, the upward move is prominent enough to be noticed on daily. USDCAD is down. Looks like Iā€™m left with not much of a choice.

Aside from the currency hereā€™s whats happening in Ukraine : Deadly clashes rage in east Ukraine after peace talks fail | Reuters and gold certainly couldnā€™t care less.

Screen Shot 2015-02-02 at 7.26.54 PM.jpg700Ɨ310 31.7 KB

And last but not least steer clear of CHF pairs : Talk of SNB aiming for a target of 1.05-1.1000 may be wide of the mark | ForexLive - again ?!

What have you guys got going ?? Mike ?

2883

Hey Doc!
Nice to hear from ya. (Kinda missed you on the weekend)

Well, I placed one order this week. Around a couple hours into London session Monday. For the whole week.

GBP/JPY going long.
Thereā€™s so much potential on the up side. Plus the good figures for the GBP that came out.
Plus you guys ā€œshortā€ biased for the JPY. COT report.
Not to happy about any world conflicts going on though.

Weā€™ll see.

Mike

2884

Think Ive found one of Peters tricks :slight_smile:


Oil is up but the rest is down, I see S&P is in a pause mode so is USDJPY and US10yr. Is there any explanation ?

2885

Hi Rookie,

I found this for oil:

Biggest U.S. Oil Workers Strike Since 1980 Enters Second Day - Bloomberg Business

Not sure if that is the reason but tried to answer your question.

FE

2886

Rookie is right about pause mode. Many times I have read how the chart pattern given by this mode is the market makers accumulating buys/sells - they may be correct or not, what I do know is that traders or investors have paused.

How do I know? - well check volume on SPY (for S&P) or UUP (for US Dollar) or TLT (for US Bonds).

Even XLE, currently leader of the pack, has hour on hour diminishing volume.

When I see all those guys on the sideline - there is where I go also.

2887

Thanks FE for the article,
I guess then oil rally should be temporary, if its the cause.

2888

Hey guys.
Mondayā€™s results.

CAD: +817///+1.03
NZD: +214///+.49
AUD: +186///+.49
EUR: +322///+.45
USD: -213///-.30
GBP: -429///-.37
JPY : -273///-.43
CHF: -704///-1.17

All Comms today.

0105 GMT

2015-02-02_2008.jpg700Ɨ314 18 KB

Mike

2889

I wanted to share those news with you because Iā€™m excited about it. I have been testing my trading plan and Iā€™m into the third week so far. I have made 2940 pips. I just wanted to thank you guys because when I first joined the thread I was on a bad spell and out of ideas. You really inspired me and I feel more in tune with the market thanks to you.

2890

You are very welcome Philip :slight_smile:

Success stories are always good to read, it makes our mood better. So just share what you traded in the last three weeks and where you made your pips!

FE

2891

Hi Rookie,

you made earlier sometimes some great analysis on the CRB Index and analysed the reasons behind the fall and rise. Maybe it would be time for a recap after that oil rise? How did it affect all commodity markets or did it affect at all? Letā€™s line up those fundamentals behind this phenomena.

FE