Trading Gold/USD - page 27
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Cot reports FFT GBPCHF
Cot reports FFT
Statement
Sugar October 2006 Weekly Futures Chart. Here is the position of the commercials showing that before the Sugar bull market, the commercials were net long.
Sugar has been in a bull market since 2004 and had almost breached the 20 cents per pound level in February 2006. Before this bull run, the commercials were net long in early 2004 signalling that it was only a matter of time before the sugar market would offer a potential long trade set-up. If you had taken advantage of this situation and had roll forward your positions, the profits per futures contract would have been about $14,400!
Cot reports
Trade Futures Ltd.
Natural Gas October 2006 Weekly Futures Chart. Here is the position of the commercials showing that before the Natural Gas bull market, the commercials were net long on several occasions.
Natural Gas had been on a huge bull from June 2005 to October 2005 producing
profits per futures contract of about $70,000.
Notice how prior to futures prices increasing, the commercials were bullish.
Platinum October 2006 Weekly Futures Chart. Here is the position of the commercials showing that before the Platinum bull market, the commercials were net long.
The chart shows the commercials were net long (above zero line) in July 2004. A few months later, there was a huge bull run that lasted for about two years. This equated to approximately $23,800 in profits per futures contract, assuming you had roll forward your positions. This is another example of how we can use the COT commercials data to spot a potential long trade set-up.
Gold October 2006 Weekly Futures Chart.
It is interesting to see that each time the large traders had their largest long positions, the market declined. This may surprise some of you. Further, in May 2006, when gold prices peaked, the large traders were not at their highest net long positions
Here is the position of the large speculators showing that when the large traders were at their highest net long, the market declined. The Williams AD shows a closer correlation.
When the net position of the large speculators is at an extreme, expect the market to move in the opposite direction of the net position of the large speculators. For example, if the large speculators are net long and the net position is at an extreme and prices have been moving up, expect the price of the commodity to correct down.
The large traders can and do make money when they catch a trend move, but such strong trends are rare. There is a greater chance the commercials will be correct.
Remember the COT report shows the number of longs and shorts that is the total position. It does not tell us when traders entered their positions, only the number of contracts they are long or short. We know that when a market rallies, more long trades are added. It is only logical that close to the end of an uptrend, the trend followers will have their most bullish positions. What is important to recognize is that not all the long trades were placed right at the end of the trend; the positions were added over the trend move and will naturally be greater the longer a trend lasts.
Crude Oil weekly futures chart from April 2003 to July 2006. I have marked the positions where the COT commercials were net long (above zero line). Once this occurred it was only a matter of time before futures prices started to increase. I have also included the Williams AD/MA to provide a timing trigger.
Crude Oil September 2006 Weekly Futures Chart. Here is the position of the commercials showing that before the Crude Oil bull market, the commercials were net long on several occasions. The AD/MA is included on this chart.
PLATINUM forecasting
GOLD forecasting