Gold: Seemingly Very Bullish COT Report [View article]
Avi, Your knowledge of EW is unquestionable. But your analysis of COT is flawed. I've been reading the report over and over for a long time and what I learned is that COT can NEVER point exact timing. Nor can it predict the price. What it tells is a summary - funds are buying, producers are hedging etc. COT is not for short period (day-week) traders, you should consider taking position for weeks or months if you follow COT. When people argue who should be watched - commercials or large specs the answer is - whoever you like, they are always on different sides, this is nature of futures market - if I am long then you are short. But one needs to understand it is speculators who cause large swings, hikes or crashes, not the commercials (hedgers). Hedgers come to hedge, speculators come to make money. And if we see speculators going short than the price would be down and vice versa. However by the time we realize that they are short (or long) as hell it is often too late to jump in. So we need to watch for extreme values. Speaking of gold it was wise to short it back in October 2012 when speculators were at many months (and years) long and they started to liquidate their longs. Can someone remind us the price for gold in October? 1800-1900 if I am not mistaken? And if we get back from October 2012 into May 2013, the positioning of speculators is incredibly bearish, positioning of hedgers is incredibly bullish. Speculators have ALREADY sold gold, they can continue selling it for some time but they have squeezed the most already and soon they will make a U-turn to begin a new cycle. Another thing I learned from COT is when extreme is reached and the first phase of U-turn is strongly in progress the market often does not notice it and keeps on following old trend. This first phase is quiet buying (selling) by very smart money. Speaking of gold - extreme is already here but strong U-turn is still due. But the shorting tempo of speculators reached zero, they even added 2200 contracts to their longs.
What a stupid comment. Everyone who writes about investing is guessing this way or another, there is no magic crystal ball. I am Lior's follower though I often disagree with his conclusions but he is doing a great job bringing many bits of info in one place.
Step-by-step answer: - supply of NG comes from oil rigs as well as from NG rigs, reason may be there. - demand is lower because price in April 2012 was around 1.90. - 8 cents up within hours is a move of big players. Whether it is justified by fundamentals or it is a pure speculation - this one is unknown but we will see during coming days. - no, no one knows future. - yes, large storage will come.
Not correct, looking at one day price move is path to nowhere. The price was falling for a few days until Friday afternoon when it sharply reversed the trend. Some say expiration of May contract was the reason, basically it was chaotic buying and selling. And even more - study daily (1 or 5 minute charts) charts and price behavior when volumes were extremely big - last week it was often when prices dropped when volumes were big. This means that some big orders came in saying "SELL". And 4-6 weeks ago (when price rally was on the way) you could see prices jumping because large players were coming with "BUY" orders. My view is that big players started selling already. Another evidence is COT report - users of natgas are incredibly bearish meaning that those who know the real value are shorting the market. On the side-note coal usage in power plants began its rise (and NG began its fall).
Let's bring the numbers in. Looking at position change between 9th and 16th the following happened: - hedgers went shorter by 3,000 contrats, - swap traders by 1,000, - small specs by 5,000, and - large speculators went longer by 9,000 contracts. Although the conventional wisdom says that whenever hedgers go short the prices tend to go north but this statement should be seen in longer perspective because what we see is only 2 number readings and they are not sufficient for proper analysis - we only know positions on 9th and 16th - before and after the crash on 12th and 15th of April but we do not know the readings of end of 11th, 12th, 15th of April and they are crucial to understand the direction of the trend. Maybe it reversed, maybe not. I would wait another week to see the direction. What we see now is mess and let us not make any solid theories yet. What is definetely encouraging is the fact that speculators went longer meaning that no matter all the hysteria hedge funds and CTAs finished their nearly 4 month-long period of pressing the prices down and began buying again. I made lots of thinking and analysis on it in my blog so if anyone interested - welcome to read, think and discuss.
What China Should Do About The Gold Crash [View article]
James, no one could say better. However: http://bit.ly/Z1BRtw http://bloom.bg/11q2ibJ http://bit.ly/Z1BRtx Also, what should be kept in mind is the positioning of hedgers (not speculators) on paper markets - started from Feb CFTC reports that they've been active buyers of paper gold and silver. And you know these guys know the real cost of things and come to market not to speculate but to lock prices when they are at proper levels.
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
Yes, I do expect prices to reverse and I am a buyer for the last two weeks. However time frame for appreciation is not certain, there is no such an indicator. It is very, very likely. Speaking of the opposite extreme - Specs may go all the way to the opposite extreme, say Specs may buy back 50k contracts but this would be a perfect scenario. Realistically speaking I would be thinking of selling the position when they be at around 20-30k long provided there would be no new black swans causing mad price spikes.
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
OK , let's clarify a few things: 1) Specs have been long silver for many years 2) Being 23k contracts long last year and being 6.5k contracts long today means you are shorter this time than a year ago. 3) Do not trust lousy websites to do homework for you. Download data from cftc: http://1.usa.gov/XuBSoI http://1.usa.gov/ZjFCHa Next, filter data in A column for "'SILVER - COMMODITY EXCHANGE INC." Next choose the respective period and perform following calculations: Columns N+Q-O-R = Specs position Columns K-L = Swap dealers position (some say they are commercials but in my opinion they sleep in two beds) Columns I-J = Real commercial hedgers position Having done that you get real picture of who is doing what. Plot a chart, add prices - results will be quite interesting. 4) Technicals are retrospective indicators but think of CFTC position as of waves - they go up and down and this is how they make money. Now they are at extreme where prices are low. So next they will change direction and go towards the opposite extreme and so it will be over and over.
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
OK, I checked data. Last time such a short position was in April 2003 when the prices were around 4.60. And it was 2003. Btw since then silver started the bull run. I am not saying that another one is about to begin (no way) but I am pointing at such an anomaly. OK, another example, it is recent and therefore it looks more plausible - in June 2012 the net long position of Speculators dropped to 7,900 contracts which drove the prices below 28. In less than 3 months prices returned to 30+ and hit 34. This was a 20% gain. My conclusion - market can't stay at such extreme levels for long time.
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
Flash9 You must be watching not Commitments of Traders but something else. According to last report net position of speculators was 6,588 long (futures and delta-options). Same date last year position was 23,354 contracts long. Relatively speaking current positioning is much shorter. Moreover, current position is the shortest one since mid of 2006 when disagregated reports were first prepared by CFTC. You can go ahead and check historical data from previous report format on CFTC website to make sure that even before mid of 2006 speculators were much "longer" than they are now. If economy would be rosy one could suspect a bear market. But the reality is different so I am buying now.
Invest In Coffee And Ditch The Grind [View article]
"There is currently a coffee glut and multi-year lows for a soft commodity."
Do not make wrong conclusions about multi-year lows. FYI following settlement highs have been during last commodity bull cycle for KC front contract: 2000 - 118.95 cents 2001 - 71.25 cents 2002 - 69.70 cents 2003 - 70.35 cents 2004 - 107.95 cents 2005 - 135.75 cents 2006 - 128.90 cents 2007 - 139.30 cents 2008 - 165.40 cents 2009 - 148.20 cents 2010 - 240.50 cents 2011 - 304.90 cents 2012 - 234.90 cents And above numbers are annual highs not averages. Do not make wrong conclusions, at given levels of inventories no one knows where the prices be in 6 months or in 1 year. Coffee prices are not subject to inflation - in 1977 absolute high was at 335.63 and absolute low was in 2001 at 41.50.
Today In Commodities: Stocks Continue To Slide [View article]
Too early to say. Crop progress reports will be resumed in April. Until then we can only guesstimate. Wheat COT look terribly bullish but that is the way it has been for last several weeks. I do not understand this sell-off. Damn why did I buy wheat...
Natural Gas EIA Storage Projections And Fundamental Discussion For Next 5 Weeks [View article]
There are several versions of the report - Futures only, Combined report and one or two more. Basically they tell you more or less the same picture but they look at it from slightly different angles. It is up to you which one you consider the most appropriate. I watch Combined report. Also, another thing is whether Cramer is considering amount of spreads when he calculates his number. There is no unanimity among COT users.
Specs have been increasing shorts, yes, and they are approaching highest levels. I do believe that I should be covering my shorts very soon. Possibly, before coming storage data goes live.
Gold: Seemingly Very Bullish COT Report [View article]
Your knowledge of EW is unquestionable. But your analysis of COT is flawed. I've been reading the report over and over for a long time and what I learned is that COT can NEVER point exact timing. Nor can it predict the price. What it tells is a summary - funds are buying, producers are hedging etc. COT is not for short period (day-week) traders, you should consider taking position for weeks or months if you follow COT.
When people argue who should be watched - commercials or large specs the answer is - whoever you like, they are always on different sides, this is nature of futures market - if I am long then you are short. But one needs to understand it is speculators who cause large swings, hikes or crashes, not the commercials (hedgers). Hedgers come to hedge, speculators come to make money. And if we see speculators going short than the price would be down and vice versa. However by the time we realize that they are short (or long) as hell it is often too late to jump in. So we need to watch for extreme values. Speaking of gold it was wise to short it back in October 2012 when speculators were at many months (and years) long and they started to liquidate their longs. Can someone remind us the price for gold in October? 1800-1900 if I am not mistaken?
And if we get back from October 2012 into May 2013, the positioning of speculators is incredibly bearish, positioning of hedgers is incredibly bullish. Speculators have ALREADY sold gold, they can continue selling it for some time but they have squeezed the most already and soon they will make a U-turn to begin a new cycle.
Another thing I learned from COT is when extreme is reached and the first phase of U-turn is strongly in progress the market often does not notice it and keeps on following old trend. This first phase is quiet buying (selling) by very smart money. Speaking of gold - extreme is already here but strong U-turn is still due. But the shorting tempo of speculators reached zero, they even added 2200 contracts to their longs.
Commodity Chart Of The Day: Natural Gas - A Price Swoon Ahead? [View article]
Will Natural Gas Continue To Fall? [View article]
Will Natural Gas Continue To Fall? [View article]
- supply of NG comes from oil rigs as well as from NG rigs, reason may be there.
- demand is lower because price in April 2012 was around 1.90.
- 8 cents up within hours is a move of big players. Whether it is justified by fundamentals or it is a pure speculation - this one is unknown but we will see during coming days.
- no, no one knows future.
- yes, large storage will come.
Will Natural Gas Continue To Fall? [View article]
Another evidence is COT report - users of natgas are incredibly bearish meaning that those who know the real value are shorting the market. On the side-note coal usage in power plants began its rise (and NG began its fall).
Is Silver Going To Crash Further? [View article]
- hedgers went shorter by 3,000 contrats,
- swap traders by 1,000,
- small specs by 5,000, and
- large speculators went longer by 9,000 contracts.
Although the conventional wisdom says that whenever hedgers go short the prices tend to go north but this statement should be seen in longer perspective because what we see is only 2 number readings and they are not sufficient for proper analysis - we only know positions on 9th and 16th - before and after the crash on 12th and 15th of April but we do not know the readings of end of 11th, 12th, 15th of April and they are crucial to understand the direction of the trend. Maybe it reversed, maybe not. I would wait another week to see the direction. What we see now is mess and let us not make any solid theories yet. What is definetely encouraging is the fact that speculators went longer meaning that no matter all the hysteria hedge funds and CTAs finished their nearly 4 month-long period of pressing the prices down and began buying again.
I made lots of thinking and analysis on it in my blog so if anyone interested - welcome to read, think and discuss.
What China Should Do About The Gold Crash [View article]
http://bit.ly/Z1BRtw
http://bloom.bg/11q2ibJ
http://bit.ly/Z1BRtx
Also, what should be kept in mind is the positioning of hedgers (not speculators) on paper markets - started from Feb CFTC reports that they've been active buyers of paper gold and silver. And you know these guys know the real cost of things and come to market not to speculate but to lock prices when they are at proper levels.
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
1) Specs have been long silver for many years
2) Being 23k contracts long last year and being 6.5k contracts long today means you are shorter this time than a year ago.
3) Do not trust lousy websites to do homework for you. Download data from cftc:
http://1.usa.gov/XuBSoI
http://1.usa.gov/ZjFCHa
Next, filter data in A column for "'SILVER - COMMODITY EXCHANGE INC."
Next choose the respective period and perform following calculations:
Columns N+Q-O-R = Specs position
Columns K-L = Swap dealers position (some say they are commercials but in my opinion they sleep in two beds)
Columns I-J = Real commercial hedgers position
Having done that you get real picture of who is doing what. Plot a chart, add prices - results will be quite interesting.
4) Technicals are retrospective indicators but think of CFTC position as of waves - they go up and down and this is how they make money. Now they are at extreme where prices are low. So next they will change direction and go towards the opposite extreme and so it will be over and over.
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
Eric Sprott - A Rude Awakening In Metals [View instapost]
Comex Gold Inventories Collapse By Largest Amount Ever On Record [View article]
You must be watching not Commitments of Traders but something else. According to last report net position of speculators was 6,588 long (futures and delta-options). Same date last year position was 23,354 contracts long. Relatively speaking current positioning is much shorter. Moreover, current position is the shortest one since mid of 2006 when disagregated reports were first prepared by CFTC. You can go ahead and check historical data from previous report format on CFTC website to make sure that even before mid of 2006 speculators were much "longer" than they are now.
If economy would be rosy one could suspect a bear market. But the reality is different so I am buying now.
Invest In Coffee And Ditch The Grind [View article]
Do not make wrong conclusions about multi-year lows. FYI following settlement highs have been during last commodity bull cycle for KC front contract:
2000 - 118.95 cents
2001 - 71.25 cents
2002 - 69.70 cents
2003 - 70.35 cents
2004 - 107.95 cents
2005 - 135.75 cents
2006 - 128.90 cents
2007 - 139.30 cents
2008 - 165.40 cents
2009 - 148.20 cents
2010 - 240.50 cents
2011 - 304.90 cents
2012 - 234.90 cents
And above numbers are annual highs not averages. Do not make wrong conclusions, at given levels of inventories no one knows where the prices be in 6 months or in 1 year. Coffee prices are not subject to inflation - in 1977 absolute high was at 335.63 and absolute low was in 2001 at 41.50.
Today In Commodities: Stocks Continue To Slide [View article]
Natural Gas EIA Storage Projections And Fundamental Discussion For Next 5 Weeks [View article]
Specs have been increasing shorts, yes, and they are approaching highest levels. I do believe that I should be covering my shorts very soon. Possibly, before coming storage data goes live.