I am debating exactly how to go forward with the blog. I have a few ideas of changes I am contemplating making. Please make comments about what you like and do not like about what I do here, but keep them professional. If you are a homer for something and I have posted things in the opposite direction, I don't want comments about that. I trade in two directions, so at times I will be bullish or bearish in individual markets. Please do not comment on why I am bearish on something at one point in time if you are just always bullish that market no matter what happens. What I am looking for is in general what is liked and disliked.
The above chart show something that has just come up regarding the COT data. I have learned to read this data from the two best analysts of it that exist, Larry Williams and Steve Briese. My analysis will not always be correct at times the markets move contrary to the way I analyze these reports. That is life folks, I know nothing in trading that is 100% and if I did you can damn well be sure it will never be mentioned here :).
As it is with anything else you need to look at this report objectively, what is it saying? Is it saying anything? It is typical that it does not give direction. If you look at every report with an agenda, it is worthless. If you are a perpetual bull like reader Robert, you ignore all the bearish setups and find any little wiggle to support a bullish stance. If you are a perpetual bear like others, you ignore all the bullish setups and just find one weak when sellers out numbered buyers, and proclaim it is a big sell signal. I prefer to let the report tell me what the players are doing instead of funneling them into my own view. Last week is a perfect example of this in the metals. You had some buying by the commercials in Gold, but not anywhere near enough to generate a buy signal. The buying in Silver was so small it barley moved my line yet some people proclaimed it was a huge bullish signal.
If we look at the overall trend in the above chart what do you see? What I see is the commercials generally selling and the small specs and large traders buying. I also see Open Interest rising steadily. This is a bearish setup. Yes it is true the positions of these folks did go back in the other direction this last week. If you are bullish you would say hey look at that huge buying... Please!!!!! Look at what the overall trend is and don't be a pinhead. What we want to see is significant trends in the activity of the players, not one week action. Robert who like so many drank the cool aid that millions have drank, and no matter what any report says, is bullish on Gold and thinks it will rise the next 20 years. These folks cite the recent amount of commercial buying which is not even half of the selling that has taken place. If you were watching a sporting event and one team had a 30 point lead and the other team narrowed the spread to 17, would you be convinced the team trailing was going to win? I wouldn't.
My dad is a good person to pick on to make this point. I was talking to him the other day and he was down that Michigan had lost the first round game in the Big Ten basketball tourney. I had read the paper and saw that they won that game, so I asked him what he was talking about? Of course they were trailing apparently with 3 minutes to go so he turned off the game and missed the comeback win. He was in a negative way just looking for signs that they would lose and ignored everything else. This type of bias can really rob you of many of life's great experiences. Look at things for what they are, do not assume something is going to happen. It may happen like you think most of the time, but there are going to be times when it does not. Just because you are convinced Gold will always rise no matter what happens in life, have a plan just in the 1 in a million chance that you are wrong. I can assure you from personal experience, that I am never sure what will happen, and neither should you be.
If you are T Boone Pickens, I am sure you are so bullish on Oil now that the COT report showing there could be some trouble with that position means nothing. I my humble world I prefer to not have agendas and to lean where the data leads me. Even though I am very bearish on Gold in general for the reasons I have stated over and over in here, if we get COT data where the commercials turn into strong buyers on the next dip, I will be bullish. That will be where the data takes me. For now it takes me to the short side of Crude and Gold.
If you are a long term trader or investor, you should not be reading this blog. I am a short term trader and I play both sides of the market. There is no point at all if you are locked into one side in anything to be reading here, this is just a bunch of noise.