UPON FURTHER REVIEW
In the post the other day where I forecast a few things for next year, I am going to revise one of those just before the New Year starts. The above chart is a weekly chart of Unleaded Gas. As you can see there have been consistent upward moves that have occured every time the commercials bought dips in this market. This is recently occuring once again, so the near term outlook here and for the other energy markets except Natural Gas, is upward.
I had stated that I though Crude might retreat back down to the 30's, so I am revising that to project upward prices for the beginning of the year, and taking back that $30 call. I do admit to being unduly influenced in some views this year from one of the COT experts whose newsletter I get. He has had a sub par year but I would argue through no fault of his own. The way to use COT data effectively has changed dramatically this year. Many patterns in it that have been reliable historically have not worked this year. The way that I have displayed above of using it has continued to work consistently. It is an art not a science using this information.
The following displays what I consider to be an unreliable way of using this data.
If you look at the bottom of this you can see the COT report showed consistent commercial selling during this huge blow off top we had in GOLD. I have 5 arrows marking areas in theory that would indicate selling opportunities, all 5 failed. I have marked marginal on the first arrow on the chart, which was actually a legitimate signal that had mixed results. Then you can see the second arrow, which had a great result, buying that dip with the insiders. The last one on the chart indicates a buy, and is why I am looking for a bounce in GOLD now.
It is very easy to be influenced by this report because it has picked so many tops and bottoms almost right on the day and number. For someone like me who follows this closely, it is hard to ignore this massive selling that went on here., but it has to be ignored. It did eventually "pick" the top, but we can hardly say it was useful for that. You would have run out of money long before this market topped, selling just based on this alone. Their activity needs to be considered in the context of the trend until it gets to a historical extreme, which is when this market topped.
HAPPY NEW YEAR AND GOOD TRADING TO ALL!