HOW PRECIOUS EXACTLY ARE THEY?
I do not recall which thread it was in, but there was a minor debate over Gold and Silver as to why I was bearish short term because there was a bullish COT picture. I held to my position because of the trend, and have been rewarded for that view this week. This is exactly why using COT data is an art not a science and also at times it will get you looking exactly the wrong way at the worst possible time. Even my attempt at a COT fix, my synthetic indicator, was dead wrong here. This is why I have said repeatedly, that it is a work in progress and I like it when it agrees with where I am looking, but don't care if it does not. In this case it switched to the buy zone right when I was shorting this market.
I have been on record here as saying that I think the Silver market is done and we have seen the highs this market will see in my lifetime. I do have to admit that I did not expect this market to break as hard as it did, but the trend is down and surprises generally come in the direction of the trend. The cycles which have not been very accurate in the metals except Copper, have been calling for a significant decline to begin at the beginning of next year. That does not necessarily mean it will come from a high price, just that it will come at that time. In any event, the lesson learned here is that trend is the most important thing to base trading on. The COT stuff is best when it lines up with the trends, those are must do trades. When it is against the trend like in Gold and Silver here, it is not as reliable, and I ignore it in these situations. Keep in mind I pointed out how bullish the Sentiment was for this and Gold and showed how declines had occurred just like this every time it had reached the levels we were at. It just happened again.
I know I will never convince Gold bugs to ever consider that these might come back down, and I don't care to even try. I will gladly let their panic when this really rolls over just enrich me. I don't even need for them to ever admit anything. If my coffers are full that is all I care about. What they fail to see is commodities markets wrote the book on reversions to the mean, they are not one way streets in either direction. I don't think this is the "big one" but you never know. It will not be posted by the media in advance when it does happen. After all they are part of the conspiracy.
Here we have what to me is just a mess, the SP 500. I just do not have a really good feel for what this is going to do in the next 10 days. I think we are going to have a move down that is a fake, then a good year end rally. However, most of my indicators on a short term basis are showing down, but not really bet the farm down. You can see I have Will Trend in blue on the chart. This is a Larry Williams tool to show where the trend is. We are still holding in an uptrend on this at the moment by a thread. For those who are bullish, you could buy here with a close stop underneath, and get out if we close under this line. That is not a trade I will do, but for aggressive traders it is certainly a possibility.
I just don't have any divine wisdom on this pig right here.
Here is one market I think is once again setting up a selling opportunity, Cattle.
I suppose we could be short already yesterday when the prior day's low got taken out but I did not take that entry. The seasonal still shows a little move up, so I decided to wait a day or day more. This could be one for next week. As with everything else, this is a setup not a trade. One thing about the meat markets is that they seem to be able to defy gravity and trade independent of the stock market. That is a feat worthy of the congressional medal of honor these days.
As to what trades you might have on right here, you just have to trail the shorts down with stops and see where things lead. It is kind of choppy and equities will likely determine the fate of most commodity shorts right here. If stocks happen to hold here, the commodities markets will also. I do think energies are still sells from a weekly perspective.
Have a nice weekend.