MUSTARD IS OFF THE HOT DOG!
For those who never had the pleasure of listening to Chick Hearn the famous old Lakers announcer, this was one of his favorite sayings when Magic Johnson got a bit too crazy with the ball. My next favorite one was "worthy can't throw it in the ocean tonight." East coasters probably hated him, but he made me laugh.
You know we have weird markets when the Copper and Cotton markets appear to be the same trade. The mustard has to be off the hot dog now. They both have run up, had a large range bar followed by an inside bar with a down close. The COT Synthetic looks nearly identical. There are other oscillators not shown, that also look amazingly similar on both charts. I do not for even a moment suggest that these two markets are correlated, but it is bizarre how similar these two charts are. To me, I would not play two things at once that were this similar, regardless of the fact that they are too unrelated markets. These are two markets I am watching, and I consider Copper to be different enough from Silver and Gold, that I can trade them independently of one another.
I am looking aggressively at the short side of all the metals right now. The stock market seems to be in a tough spot. I do have some marginal short term sells but they are against a very strong trend, and I don't really have anything else supporting them other than just the pattern. That is not enough for me any more. I tend to fall in love with my patterns at times too much not understanding that they are better when combined with something else backing them.
I traded some emails with a new reader whose name I will not reveal, who is interested in the COT data and how to best use it. The main point that I have tried to get across in here over the last couple of years is that working with this data takes experience and patience. You cannot trade COT data in systems mechanically. There are so many judgement calls that have to be made about who is positioned where and what else is going on around it, that it cannot just be specifically designate to buy or sell based on static readings. This subject is way too complex for any short discussion. The best I can offer is that when I show charts with the data, I will point things out. I already do this, so it does not represent much of a change.
If I ever decide to go further on this it is going to be a pay service. It has taken me years and a lot of dumb trades, to finally learn the best ways to use this. I have also learned when not to use it. As it is with everything else, I just try and get an edge on determining market direction going forward, and this tool is helpful at times. At other times you need to go completely against it to be doing the right thing. If someone is looking for the grail, this is certainly not it.
The intra day price action is like watching paint dry right now. It is incredibly slow. History tells us that this will lead to more volatility so as hard as it is, do not fall asleep at the wheel right now. When volume picks up you need to be there. Cattle is looking interesting to me on the short side in a few days potentially. I know some of you are long Coffee here, I am waiting for a higher short term low to form in here somewhere before I go after that one. I am also interested in Natural Gas on the long side. This market has been in such a monstrous down trend, it almost makes the Gold trend look like a wiggle. There are some cycles due here and some of my tools are diverging down here, so it is time for me to pay attention here.
That is all I have for now