COT Report Analysis - a thread on market sentiment

Trading Discussion News and Economy
1385

Good Weekend guys!

Week of 9/29 - 10/3 Summary:

Monday///////Tuesday//////Wednesday//////////////Thursday///////Friday/////////////
EUR: +4 -0 3//NZD: +7 -0 0//JPY : +6 -0 1//NZD: +7 -0 0//USD: +7 -0 0
CHF: +3 -0 4//AUD: +6 -1 0//CAD: +6 -0 1//AUD: +5 -1 1//CAD: +6 -1 0
CAD: +2 -0 5//USD: +5 -2 0//AUD: +4 -2 1//JPY : +5 -1 1//JPY : +4 -2 1
GBP: +2 -0 5//GBP: +4 -3 0//USD: +2 -2 3//EUR: +4 -3 0//GBP: +3 -2 2
USD: +2 -1 4//JPY : +3 -4 0//EUR: +2 -3 2//CHF: +3 -4 0//EUR: +3 -4 0
JPY : +2 -2 3//CAD: +1 -5 1//GBP: +1 -4 2//USD: +1 -5 1//CHF: +1 -5 1
AUD: +1 -6 0//CHF: +0 -5 2//CHF: +1 -4 2//CAD: +1 -5 1//AUD: +0 -4 3
NZD: +0 -7 0//EUR: +0 -6 1//NZD: +0 -7 0//GBP: +0 -7 0//NZD: +0 -6 1

Total pips/////Pips against other side

USD: +883///+258 (CAD, AUD, NZD)
JPY : +761///+174 (CAD, AUD, NZD)
CAD: +321///+249 (USD, GBP, EUR, CHF, JPY)
AUD: +297///+271 (USD, GBP, EUR, CHF, JPY)
NZD: -144///-46 (USD, GBP, EUR, CHF, JPY)
CHF: -478///-155 (CAD, AUD, NZD)
EUR: -542///-218 (CAD, AUD, NZD)
GBP: -1098///-533 (CAD, AUD, NZD)

So, if we add up the Majors vs. Comms pips (right side) = Comms +474.

Monday: M +10
Tuesday: C +8
Wednes: C +1
Thursday: C +7
Friday: M +5

We can see that Majors took charge on Monday, then during the week gave up control until Friday. So, it is just about an even week. Comms edged them out though.
Let look at some history.
So if we back it up to July, we hadā€”
Majors took 3 in a row. (last 2 weeks in July and 1st week in Aug)
Then Comms took 4 in a row. (the rest of Aug and 1st week in Sep)
M ā€“ (really crushed them) (2nd week of Sep)
C ā€“
M ā€“
C ----(this past week)

Be right back with my stats, and comments.

1386

Hey fellas.

So this was (is) my plan. For the month. Iā€™m shorting NZD.
I put into place all orders. On the 1st of Oct.
NZD/USD ā€” .7735
GBP/NZD ā€” 2.0962
AUD/NZD ā€” 1.1227 ////// (was executed) ///// (margin called) // -97 pips /put order back in at same price.
NZD/CAD ā€” .8699 ////// (was executed) ///// ( still running ) // -13 pips, currently
NZD/JPY ā€” 84.89 /////// (was executed) ///// ( still running ) // - 17 pips, currently
EUR/NZD ā€” 1.6345
NZD/CHF ā€” .7399

So for the week (month) so far Iā€™m down -128.3 pips.

Boy did I do good with where I placed the NZD/USD. It came down to 2.0 pips (.7737) of where Iā€™m gonna get in at (.7735). Then it went back up 30 pips and thatā€™s where itā€™s ranging now.

Nothing else mentionable. Other than the fact that if you look at where my levels are at, I have a long way to go for most of them to kick in. Iā€™m banking on a longer term drop.
All Iā€™m hoping for is to achieve a +200 pips out of all of that up there.

So, thatā€™s my story.

Mike

1387

Hi Flows,

I wasnā€™t thinking especially scientifically, I posted at 2.30pm UK, there was plenty of time for USD/JPY to continue north - but it refused to cross the line, I figured that those who control price would probably do that.

FE has placed his orders above the line, probably one or two others have likewise. The banks scooped the last orders that were just beyond the line and ā€˜squeezedā€™ those longs.

They now have the new longs in a sort of loose grip, few of them will have exited (well done to FE who did), so the question is will buying force the price above the line, or will the banks manage price back down and panic out those new longs, catch the slipped orders and then up we go.?

Thatā€™s what I was thinking when I said that the break would be an indicator - see, told you it wasnā€™t very scientific :slight_smile:

1388

FE, see you are following Silver.

John Murphy teaches, well Iā€™ll just quote: ā€œwhen charting any commodity itā€™s a good idea to chart stock tied to that commodityā€

Or ā€œAny divergence between a commodity and stocks tied to it usually signal a trend changeā€.

HE offers one idea to watch stocks ā€˜tiedā€™ to silver is to watch an ETF (Exchange traded Fund) that invests in Silver.

Stock symbol SLV (iShares Silver Trust) and SLW (Silver Wheaton) are the two that he advises to compare.
He shows in 2011 where they diverged and signalled a market turn.

He says ā€œinterestingly stocks tied to a commodity often change direction before the commodityā€.

(SLV is an ETF based on Silver price).

Notice at the bottom of the chart, under instructions, I just put in $silver, then a comma, then the next symbol, etc.

Just thought Iā€™d let you know :slight_smile:

http://stockcharts.com/freecharts/perf.php?$SILVER,SLV,SLW

1389

Hi Peter,

Lol, well, those are what I actually want to hear. The kind of understanding that comes with experience. I spent most of my time studying systems and technicals, paying too much attention to details and missing the bigger picture. Joining this thread is my attempt to reduce my technical tendency, but when I look at the results of my COT analysis, I guess I still have many to unlearn :stuck_out_tongue: How long have you been trading Peter? I hope one day I can have at least some of that understandings.

1390

Hi Flows, I have been interested in the market some 20 years, but Iā€™m not an experienced trader, just an experienced learner.

Aha!, I found the science since I last posted. Itā€™s that thing about the weekly chart on Gold that we talked about last week - I told FE before that this thread is being read :slight_smile:

This guy posted this on Sep 23ā€¦

DecisionPoint: GOLD: Possible Triple Bottom - Articles - StockCharts.com

1391

One final thing, before I get back to the books, the chart of SLV (same as silver price) and SLW (silver stock)

There is clear directional divergence from mid Jan 14, the stock is rising while silver price is falling.

The at beginning of Feb - up goes Silver price - this is what Murphy is talking about when he says that divergence signal a market turn and where indeed the stock led the commodity.

Great info from Mr Murphy, Iā€™m off to read further.

PerfCharts - StockCharts.com - Free Charts

1392

Lol, I was hoping for a one digit number. Well, thatā€™s 19 years and 8 more months for me. Any tips, Peter? :smiley:

Yes, correlation thingies give me the creeps sometimes. Like some kind of a leading indicator? This is my COT table for USDX. More observation time for me I guess. Enjoy your book time, Peter!

USDX 10-4-2014.jpg700Ɨ93 29.5 KB

1393

Ah Flows, just one tiny tip:

Prepare to be wrong :).

Lol, the correlation stuff still give me the creeps, Iā€™ve another good one relevant to the present, Iā€™ll post tomorrow.

1394

Hi everyone,

Peter,

Thanks for the retails sales article. Donā€™t you think that it is only a seasonal rise or last yearā€™s value might have been very bad? It is a surprise to see something positive from EUR when everything else looks so bad. There might be a revision next month.

Sometimes I wonder how come you are not managing a hedge fund or something like that. Really. Such knowledge could make fortunes out there. Thanks a lot for helping me out with silver. It might be annoying for all of you that I am mentioning it so often but I have to say I am really really really excited about it. This is the first commodity setup since I follow COT report that I can try to spot live a trend change. I lost already some money to jumping in. I do not do it anymore. I wait for the reversal, leave some pips there, but as soon as I see it, I will enter the market. I really do my best to practice patience. I wrote your post out and saved it so I can read it again later.

As I see flows agrees with my opinion a lot.

BTW Peter, you do not hear this often from me: I did not like the article from post 1386, based on gold forecasts. When I started trading, I was stupid enough to make trades based on such analysis. Even in the past weeks I had seen several promising videos on buying gold and silver (at that time they were on a lot higher level) or exotic currencies for reversals. I do not think I have lost more pips trades on based biases. This is also a great example. The only positive thing I saw there was the guy pointing out the possible triple bottom and connection between gold and USD. But as a technical analyst, he has no idea on what is driving the markets, no fundamental or sentiment. I am in this thread from the beginning to avoid such losses and have an edge on the market. This guy can very well be right with his technical setup but silver is more an extreme level and he has no idea on that one. These technical stories are good but they failed week after week and when they hit once, then they will draw some trend line or support or a fib level and celebrate themselves as heroes. I rather like the S&P setup which lined up with my fundamentals, Philip analyzed it real life and combining that with fundamental news did confirm me to enter the trade.

Your divergence example is just awesome, I will look at this chart on the daily basis to plot that reversal. I am also reading tomorrow my Murphy book. He is the opposite of Williams. He talks about how fundamental analyses are ok but technicals are the real thing! It is like a Kindergarten. I learned it does not matter if you are right or wrong. What matters is you won or lost. These two are arguing the whole time which analysis is more important. Lol, even a newbie knows it is person dependent. We are fundamentals because it fits to us more but it does not mean this kind of analysis is better. If you look though on my above saying, I am in contradiction as I just criticized a technical analyst. I guess actually I am part of the Kindergarten and fight for my argument of being right.

Rookie,

I guess Forex Gump will write his NFP review from your recap. You can send it to him and save him some time! I guess tomorrow comes the classical ā€œSunday COT Reportā€ and therefore is the rookie part of the thread missing today.

Flows,

You should always read carefully what Peter writes. He has a lot of wisdom what he proves to us on a daily basis. It is amazing that I get into trades based on easy biases (S&P and Silver) and actually he comes up with so correlations and analysis that I just cannot believe this is all out there and I entered my trade without such knowledge. But if I havenā€™t entered these trades, maybe the information would have never been shared. I am thinking about challenging Peterā€™s knowledge with entering trades in the Hogs and Cocoa markets. Based on my finding USD/JPY is not yet on the top but it should not be very far away.

Actually I agree pretty much everything you wrote in post number 1386.

And do not worry about having sometimes creeps in correlation. I only have creeps with them. Actually 100% of my knowledge comes from a forum member called peterma.

Mike,

Thanks a lot for the great stats! May I ask what does ā€œmargin calledā€ mean by you? I cannot believe that with your solid strategy you got margin call. I would more think that it was a normal slop loss hit. -128.3 pips is not bad I think after such a week. You can make that up easily.

I really do enjoy all our discussions, good night guys. After all this is Saturday night so enjoy a bit the weekend!

FE

PS: I was just thinking how good it is not having a female member of the team. We would be all fighting who is cooler and smarter and the quality of work and friendliness would surely go down. Do not know how this thought came into my mind.

1395

I did some Sherlock work and have figured something out:

Besides rookie and Philip, all four of us are reading and working on our thread.

I canā€™t decide if it is amazing or crazy. But for surely shows the dedication of our people. I drink a shot and think on rookie and Philip, write my own Q3 trade journal report and check out what Peter, Mike and flows are up to.

Buona sera

1396

Lol, never catch a falling dagger. Silver and Gold are that dagger, the old guy that Williams talked about who said for to wait for the dagger to quiver awhile and then very carefully and gently to go over and lift it.

The commodities are falling, Copper, Gold, Silver and Oil (the CRB) are in free fall - not a great sign for the S&P - we are in a deflationary era (excluding UK at present), the big question is why.

I was going to post this tomorrow, but why wait, the relationship between Gold and Silver is such an indicator, think about it, both are precious metals, they should move in tandem.

Only one difference, Gold is both a precious metal and an alternative currency, Silver is a precious metal and an INDUSTRIAL metal. (sorry for shouting).

So if silver is falling FASTER than Gold (shouting again), what then?

Iā€™ll finish by quoting Mr Murphy: ā€œThe Silver/Gold ratio influences the Stock Marketā€.

Man, this FE causes a lot of thinking, zoom out to the industry std of 200 days:

http://stockcharts.com/freecharts/perf.php?,$GOLD,$SILVER

1397

Forgot to mention, Iā€™m not a subscriber to Stockcharts but John Murphy posted:

01-Oct: John Murphy: ā€œMARKETS ENTER DANGEROUS MONTH OF OCTOBER ā€“ A LOT OF 200-DAY AVERAGES MAY BE TESTEDā€

Then again MRCI ( the guys into seasonals and trends and so on) will say this:

For the stock market, October has historically been the single most treacherous period of the year ā€” followed by incredible opportunity!

1398

Sorry Peter, I am very tired. And even if I wasnā€™t I wouldnā€™t know the answer. Please shout at me a third time and explain what this means.

Thanks and the first thing tomorrow morning is to check your answer.

Good night!

1399

Well then I canā€™t wait to see your system which I think will translate that relationship. Historically though a fall in S&P used to give a boost to the greenback if I understand correctly. However this relationship has changed and now the S&P and the US Dollar now go hand in hand.

Your statement is also supported by seasonality; October is the bottom of the stock market. I am also starting to agree with you that the Dollar rally is near an end. I do think we will have another high, but that high will bring a divergence. Thatā€™s what Iā€™m expecting. My 6 year COT index for dollar is at 0.

By the way guys I did my analysis and the system produced no trades for the coming week. I still have a bullish GBP bias though, especially if the dollar reverses in the coming weeks. The pound has been benefiting against other currencies from the dollar currencies. If you noticed; two weeks ago when the pound made small gains against the dollar, the GBP just smashed all the other currencies. When GBPUSD turned red, Pound made small gains against other currencies. That is because pound selling was not as strong as the selling of other currencies. When the dollar stuttered, the pound just collapsed.

Now if dollar starts losing to the pound, I expect the latter to tear all the other currencies and hence my bias.

Tomorrow Iā€™ll post a review on September seasonals, preview October seasonals, tell you what happened with GBP last week.

[B]EDIT:[/B] Sorry Pete I failed to see you did mention the October fail seasonality for the stock market.

1400

I have been looking at the charts of AUDUSD, EURUSD, USDJPY and NZDUSD and Iā€™m sorry to say there is a divergence against the dollar on all of them on the 4 h charts. Personally I will wait to see a test of last weekā€™s lows on all the pairs. If I see the divergence again Iā€™m taking all my dollar positions off the table. This could really blow up in our faces. Iā€™m also tightening my stops as soon as the week starts.

Iā€™d rather not win more pips and wait for a retracement to buy the dollar at a better price than to make those pips next week then see them vanish a week or two latter.

Closing those trades will give me a return of 72%, it was a good run.

1401

Good weekends guys!

COT report - 30 Sepā€™ 14

COT sep 30.jpg700Ɨ375 29 KB

The commdolls
AUD, CAD and NZD

Non commercials: Specs have reduced their net position across the board and have changed their net position on AUD and CAD from positive to negative. Specs are now net sellers of AUD and CAD except for NZD with net positive reading still currently at 64 getting quite close for a turnaround.

Commercials: Commercials are net buyers of commdolls including NZD which was the only commdoll that had net negative reading last week. NZD down to 0.7956 from 0.8145. AUD down to 0.8823 from 0.8963. CAD up to 1.1095 from 1.1049 against dollar respectively.

The majors
EUR and GBP

Non commercials: GBP net position has changed to net positive after two consecutive weeks of net negative readings. As for EUR specs have reduced their net position /shorts/ by -4440. EUR net position /short/ has been fluctuating up and down for the last 3 weeks after it reached its yearly high on Sep 2ā€™14.

Commercials: Commercials have sold off some of their longs on both GBP and EUR but they have been net buyers of pound and euro for a while. They still do hold majority of the longs on both GBP and EUR and still are net buyers. GBP went up to 1.6323 from 1.6308 while EUR plunged to 1.2773 from 1.2897 against dollar as of last tuesday.

The safe havens
CHF and JPY

Non commercials: Specs have added on to their net position /shorts/ once again for the 3rd consecutive week on JPY but reduced their net position /shorts/ by some -818 on CHF.

Commercials: Commercials on the other hand are net buyers of both CHF and JPY and they have been for the 5th consecutive week with some sell offs in between. JPY up to 109.04 from 107.953 and CHF up to 0.9451 from 0.9371 respectively against dollar as of last tuesday.

Conclusion

AUD - bearish
CAD - bearish
NZD - bearish
GBP - neutral to slightly bullish
EUR - bearish
CHF - bearish
JPY - bearish

I know this was relatively short compared to my usual reports. Iā€™m trying to keep it neat, short, up to the point and first and foremost easy to read :wink:

1402

Morning guys! Iā€™m back

There was a lot to catch up with. I literally had to write down all of Petermaā€™s and some of Philips posts. You guys must have some ā€˜first hand experienceā€™ and a lot of knowledge. That sure will save me from some in the future I hope.

You know what Philip I actually had the same thought on US rally losing its heat soon after compiling the NFP post /Thanks FE by the way! if heā€™s reading I guess he could use this without my permission ;p by the way this was just a compilation of what Iā€™ve been reading and watching on NFP not my own thoughts/ sluggish wage growth and downward pressure on inflation may well keep Fed from raising its rates by their previously scheduled date sometime mid next year. So weā€™ll have to keep an eye on dollar and its fundamentals and watch out for any signs of big guys jumping onto the next. I havenā€™t done much reading on GBP and its fundamentals yet but i will guys. I want to compare the two GBP and USD and where they stand and if USD rally is now just a hype - if it is a hype and if theres some other currency that has more to offer we need to shift our view on to whats likely to rally next. So far out of all currencies that we analyze except for dollar pound shows some bullish sentiment the rest are all bearish. However there might come a surprise guysā€¦ I might change my view if I do more reading on pound and its fundamentals.

But if dollar rally ends soon pound might be what the big guys jump on but that again may not last long . If ā€¦RBA hike its rates first thing even prior Fed and BoE thats one possibility, if thats going to be the case everyone will be want be on board and thereā€™s CAD. Again I havenā€™t read much on CAD I probably will have to if CAD or any other currency that I havenā€™t been covering comes under the spotlight ā€˜in a rallyā€™. And then thereā€™s also interesting correlation between AUD , NZD and EUR , CHF they all go hand in hand one after another and I have seen AUD and NZD going in harmony first hand experience /looking at Mikes stats also should confirm this/. Probably because fundamentally theyā€™re in a similar situation. As they are in a similar situation when RBA hikes its rates RBNZ might do the same soon after sometime next year. If thats going to be the case they are going to steal the spotlight and will be in a rally against everyone and dollar will be out of sight.

Thereā€™s a lot of possibilities not only pound I think AUD, NZD and even CAD well commdolls in general do have potential but i canā€™t say the same thing for yen , euro and franc. Theyā€™re in big trouble and it will be a while before they get it all together especially Japan and EU.

I missed Draghis live speech last week but once I see the update on their website I will compile a report on that and Japan and on UK. Lots of things to doā€¦ Do you guys wish we had an office ? That would have been perfect!

Anyways Iā€™m off for a while but I will be back tonight

1403

Here are the systemā€™s results for last week:
[B]GBPJPY:[/B] -207.26
[B]GBPCHF:[/B] -13.54
[B]GBPNZD:[/B] -76.98
[B]EURGBP:[/B] -48.08

Total for this week is [B]-355.92[/B] The buy signal according to the system is over. During that run of four weeks we generated 1237.92 pips after swaps.

1404

Williams keeps saying ā€œthis is a thinking persons gameā€, I just realized that is what is good about this thread - it makes you think, thanks guys for doing that :slight_smile: