DON'T OUTSMART YOURSELF
As I watch the NBA playoffs this weekend I am reminded alot about opinions. What is it they say everyone has one? I often get to the point where I don't want to offer my own and if I hear another one from somebody else on politics, religion or sports I might just start go into radio silence mode. We constantly are exposed to everyone telling us things are different than what we can see with our very own eyes. These people are 'experts" so what they say supposedly means something. I have heard every expert in the world of Basketball including one of my very best friends who is the manager of an NBA team, tell me how good the Lakers are and how New Orleans is no threat to beating them. I have watched them play all year and one thing I am sure of in spite of any experts opinion, they could lose to any team any time including probably a good college team.
What is it about all these people, are they so tied up in their own opinions that they truly think they can convince some dumb ass casual observer like me that what I can see for my own eyes is not happening? The Lakers are just simply not any good, losing a game to New Orleans or any other team is not a monumental upset. They lost 5 or their last 7 games, hello!!!
This is the same in the financial markets. You always need to operate with a trust but verify approach. Do not read my words or any one else's for that matter and just blindly accept them. Observe for yourself what is happening. This all leads me to the above chart which shows a fairly consistent large Small Speculator long position accompanied by a heavy Commercial short position. This is supposedly according to the COT experts, a very bearish situation and should lead to large price declines. However, as you can clearly see in the chart at the top, the projection going forward for this condition is actually a continued price rise. How can this be? All the experts say it is not so? Well we have seen one market after another with this condition just soar in recent months.
I will grant the experts one thing. For the most part historically this has been a reason to look for declines, but the rules are being re-written now and all you have to do is look at a chart and tune out all the noise. One market after another is ramping to historic heights. Whether or not they "should "or "should not be," is irrelevant. Just like the Lakers. They should not be as bad as they are but they are bad that is all that matters. Our opinions about whether a market should go up or down or a sports team should win or lose, do not matter. It is what actually happens that does.
This is another example of this condition that occurred in the past, and you can see it is not really all so bearish after all. This should be easy to accept since we are now seeing recent examples regularly of the Small Specs being right for extended periods of time. It is not really anything to be overly concerned about if you are positioned on the opposite side of the commercials and with the individual investors as we have all been led to believe.
One thing you can see in the above chart is that when the Small Specs start to sell and Commercials buy on dips against trends like this, it is time to look to get aboard the freight train for another move up. We just saw this happen in the Yen recently and currently the Soy Complex has this condition. As a result, that should be one market to watch for a buy setup, Soybeans. This does not mean just go out an go long Soybeans. First off you should verify what I just told you. Second, you need to look for an actual buy entry on a daily chart. The COT setups are on weekly charts and do not always move markets right away, although at times they do. You all have to do your own research with these types of patterns to see what will work best for you. I just wanted to point out that it is on you to do this. You should not take my word or anyone else's for that matter, on what causes what in trading. It will be your money on the line, so get your money's worth by studying these types of things for yourself.