COT Report Analysis - a thread on market sentiment

Trading Discussion News and Economy
4120

Hey guys…
Well, the day is upon us.
And so far this week (2 days) it’s been mostly the Comms. I’ve been riding them still, since my last post.
So, yeah, I have a cushion going, and plan on staying with them through the ride. (Actually I have to cause this will all go down before I get off of work today) (And I can’t jump till I get home)
Here’s a couple tables.

2015-12-16_0653.jpg700×421 51.3 KB


The total accumulated pips are on the right. That would be the Majors totals’. (from the start of the year)
And when the lines are moving down, that means the Comms are increasing. Going up is Major increase.
2015-12-16_0656.jpg700×307 39 KB

I just don’t know what’s gonna happen (of course), but apparently I believe the Comms will have more of an edge of increasing, than the Majors (in total.

Mike

4121

Hi Guys,

the FOMC meeting is over so it might be good to discuss it a little. I am not sure what about you, but I was personally surprised. We talked a lot about (with great analysis of Peter) about the very probably rate hike, which also occured. I was more surprised on the hawkish comments as I was more ready for USD selloff. I did not trade it, but have to think about what it all means for USD pairs, commodities and stocks in the future.

I know Phil and Mike was paying a lot of attention on this event, but surely Peter and Rookie also follow it carefully. I would be happy to discuss your take on it.

Have a great day,

FE

4122

Hey Fe,

Well, I didn’t get hurt. At all. I’m sitting at around +1,600 pips up. The Comms are still over the Majors.
The JPY took the hit. Also the EUR. And on the other hand, the CAD is seriously weighing on the Comms.
Good thing the other 2 are pretty strong.

Here’s the daily result.


So, if you add up the USD pips against the CAD, AUD, NZD, it will equal +79.

Here’s the total daily result.


From the top down is the months’ running % (strength to weakness). In bold is what happened that day.
The USD did come in first, then the AUD for a close second. Then NZD, CHF, GBP, CAD, EUR, JPY.

So, we can see that the money is flowing moreso towards the Comms collectively speaking anyway.

Mike

4123

I sold USDJPY and did well, short term though for 70 pips or so.
On the monthly chart, on all pairs and commodities with no exclusion (based on my system), there is a very big correction coming. This correction is for USD weakness, Euro strength, NZD strength, AUD strength, CAD strength, JPY strength, Gold strength, Silver strength and Oil strength.

Now with all those instruments showing future strength basically means the story is dollar weakness.
Unfortunately My system doesn’t tell me when that happens, it could be a month or years. What it does is tell me when that correction is over.

The way I see it we will get very strong weakness that will make all the dollar bulls eat their word. Once those bulls disappear, King dollar will return with a very strong rally.

4124

Hey Philip!
Man, is it nice to hear from you.
I would love to see your words come true.
So, I was just sitting here, thinking about what you wrote. And if your right…this is what I think the reason will be.
The Chinese Yuan! (also called the Renminbi)
I think they will be more and more of a major player in the days ahead. Look, it only makes sense. They are on the opposite end of the US Dollar. And the times are changing. We just might have a new sheriff in town.
And remember…who owns pretty much [B]all[/B] of the gold in this world? They do, and that might make the difference, in the future.
I dug up something that I read recently. Check this out. (Sure it is painting a bad picture for the Chinese, but, think about the future and their part on the playing field)

Mike

P.S…read also that link in the first sentence of that story ‘world’s elite currencies’. Very insightful!

4125

Yeah It is one of the possible theories. I’m personally not too enthusiastic about this particular story. This is because this story, originally, was linked to QE will lead to inflation. So far since 09 this has proven wrong. Japan has been doing QE for more than a decade and the threat it is facing is actually deflation.

The good thing is we don’t need to think of reasons why it would happen, I’m actually more concerned with buying the dips in the dollar. I just wanted to put it out there that there will be a big dip to buy. A dip big enough for some people to think there will be a reversal of trend.

4126

Hi BB,

Sorry for the delay in answering but I was unable to reply and couldn’t post an image due to technical issues.

I meant why did you use an 80 day average as opposed to 26 week, 52 week or 156 week averages. I decided to go with the 26 week.
Thanks.

4127

This is my image.

EUROCOT.jpg700×368 49.3 KB

4128

Hi PipPhil

If I recall correctly, that was what Williams’ suggested when I cam across the Willco. I don’t think it makes much of a difference, it is just like any other oscillator. Reduce the variable, and you get more frequent signals.

Hope it helps

Regards
Balazs

4129

Hey guys.
I found this story very interesting. (Sorry about always bringing up China)
And then I did a little research. (I’m telling ya…watch China)
So, before you click on the links below. This is the list, from the top down (strongest to weakest) on the REER (real effective exchange rate). And some notes about them.
CHINA --Every yr increasing. The only drop was this year 2Q, but picked back up in 3Q.
GBP --Increasing every year.
USD --Across the board are increasing.
CHF --Was having some bad yrs leading up to this year. Now this yr been picking up.
NZD --Increasing in recent yrs, but this yr is going down hill quickly!
EUR --Been dropping every yr, and still.
AUD --Peaked in '12, but dropping every yr since. This yr falling terribly!
CAD --Falling hard since '11.
JPY --Falling hard since '11.

AUD: Keeping a close eye on China – Rabobank

And look for yourself.
Effective exchange rate indices
Look under ‘our data’, ‘tables on effective exchange rates’.

Mike

P.S. --And if you want to have a good definition of REER, here’s a good place to start.
Real Effective Exchange Rate (REER) Definition | Investopedia

P.P.S. – Here’s a chart of what they looked like up to 2014. The times are changing! China is hiding behind CAD. All Comms on top. But that’s not the case anymore.

2015-12-22_0945.jpg700×357 47.4 KB

4130

Hi Team,

I would like to wish you all Merry Christmas and a very Happy New Year! I think we managed a lot in 2015, we all fined a bit our own way and hopefully it is going well for everyone.

We will work further on in the next year too and hopefully we will have many good discussions.

All the best,

FE

4131

Merry Christmas everyone and happy trading.

4132

Merry Christmas guys!

4133

Hey guys!
Well, if your still out there, checking the market, reading, and thinking about what’s up and coming…here’s my thoughts on the sentiment.

First off, I believe this last week of the year is going to be very telling. Sure, we have been having very low volatility lately (normal around the holiday season). But, not only do we have months’ end play coming, also the years’ end play. Plus, what I have seen this last week.

OK…I can show you…(“no Mike, don’t do it”)…or just tell you.
It definitely was a Comm week. Believe it or not the CAD was the top dog on Wednesday. They, as a whole, had more pips/ % over the Majors. And to step back a bit and give a summary of this month it was like this.
The Majors absolutely crushed the Comms the second week of the month. So much so that even though the Comms dominated all of the other weeks, I don’t think the Comms can catch up and over take the monthly running pips total. We had 1 day short of 4 full weeks so far. So, the last 2 weeks were dominated by the Comms. And we are approaching the last week of the month. Year also.
Now, when I think of profit taking, balancing of accounts, and stuff like that (which is the opposite of trend following) it surely is interesting. And I’m always asking the question of who’s trending. OK, well, we all remember when the Fed made the big announcement. It was in the third week. Ok, so we can easily see that the old saying was true. ‘Buy the rumor, Sell the fact’. That was probably the reason why the week before was nothing but selling of the Comms (and buying the USD). Then when came time, it was risk on and selling of the Dollar. But then the following week (last week) that all continued. Still selling of the USD and interest rate differential buying.
So, when I step back and think of the flow (well, see it on paper) I see there is more Comm buying, than Major buying. In fact, I know there is because of my one chart. Ever since Sep 29th, the trend is with the Comms.
Sorry guys…I must.

2015-12-27_1244.jpg700×203 13.8 KB

So, this is what I’ve been thinking. And asking.
This coming week should go completely one way or the other.
It could be a continuation of the Comm run. Which is a lot of unwound trades taken place. (Cause this entire year really belonged to the Majors, as you see) Squaring up of accounts.
Or maybe all this Comm buying will be the end. And come early next year, it’s back to the Majors. See the chart? Those arrows are the M/C trends. (Blue is Majors, Tan is Comms) And this last Comm trend seems like the same length as they had back in the beginning of the year.

Look, I happen to think that we are gonna see some real stuff fly come the beginning of the year. I think that the affect China has on the market is gonna continue. I have a feeling it’s gonna get real ugly for the Comms. Once everyone comes back to work, I think we might have some new faces up at the top.
GBP, along with EUR, and the CHF. With the USD.

Guys…I got to run.
I’m off (of work) this last week. And opening a live account.
Watch for the thread. I’m gonna make a statement.

Mike

4134

Hi Mike,

very interesting analysis and chart. Thanks a lot for that. I wish you also a great success with your live account. In the last months you did not post your results with your account, but I guess it was running good if you open now your account. You worked a lot and made serious steps. I hope you will be the same as much concentrated on the live account.

FE

4135

Hi everyone,

I guess the new year started with a quite strong risk off move with the Asian stock market fall. Most of the low liquidity holiday moves were reversed in a couple of hours. This shows how little happened in the last two weeks. We will see how it all develops, for now JPY seems to be the king of the hill.

FE

4136

Hi Philip or BB,

I would like to discuss the divergence between silver and gold in the COT report. It is quite interesting. Gold is on a net extreme and seems like it is also dancing back from a COT Index extreme. On the other side Silver is not on a net extreme at all and in the COT Index it is just heading to an extreme. The summary is: gold is bullish and silver is bearish which is an interesting scenario.

Any thoughts?

FE

4137

Yeah I noticed it too FE and was puzzled as well.
I don’t have an explanation for it. The only ‘after the fact’ explanation is that the rise was because Gold is a safe haven asset. So the extreme long in gold is related to the stock market decline?

But Oil is also bullish, so it seems that silver is the odd commodity and not gold.

4138

Hey guys…how about some sentiment?
Well, I guess I’ll state the obvious.
Majors. And to be more specific, the JPY and the USD.
I thought it would go one way or the other. I remember seeing the Comms were on a roll. Pretty much the entire month of Dec. Even the last week. So I kept thinking, if the Majors were to come on aboard, it would be pretty substantial at the open of the year. And so it is. Ever since the opening bell, it’s been nothing but a domination, from the Majors and also a selling of the Comms. I think the Comms got out all they can at the end of the year.
So, in regards to my trading. I waited (on my shorter/medium term strat) till today. I got in with the Majors at the London open. Man…I’ve been watching closely. It went like this. The open started out with Majors all over the Comms. Huge dive down. Then it was pretty much supported at a certain low level, all the way through till the open of Asia, Wed start. Then I seen a pretty good spike at that time. I waited to see how Asia will end up. Pretty much the same, until London opened up. Then I seen another real big spike. So then that’s when I got in with the Majors. And for the next 2-3 hrs it just kept on moving up with the Majors. I was nice to see that. Kind of confirmation for me that I’m on the right track. So, I will take it day by day on the results. I just do not want to jump before all 3 sessions are completed.
Well, that’s my #1 strat.
My #2 strat is a 1 trade that I will run for the entire year. That is based on my one particular chart. Whoever is trending I’m in with. And I’m in with the Comms, at the present moment. I won’t switch till a certain level. I’ll keep you up on what’s up with me guys.
So, yep, I’m live. But, honestly, it’s all the same.
But I am taking much more notes on my trades now. I get very detailed on all my reasons, thoughts, plans, etc… Cause if I go wrong, I need to see exactly why.

Mike

P.S.—you guys see my journal? It’s in the ‘journal’ section. I have gotten a lot out on that. And plan on continuing it for a very long time. It helps me.

4139

Hi Mike,

thanks for your recap on sentiment and I also take the opportunity to wish you good luck with your thread, I checked it. I see you have uploaded already quite some information.

I am not sure about the strategy number 2 though. It sound like what some financial institutions do: passing the strategy to a calendar year. I actually believe it is better to enter and exit a trade when the signal comes and not when the calendar says its enough. However that is only my personal opinion.

I tell honostly your thread is quite long for the first look so I couldn´t read it all, did you already change to live account?

All the best,
FE