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Tuesday, May 09, 2006
Notice how the commercials have gotten short this market here. In spite of all the cries from the pundits talking about $100 Oil.
These are the real insiders exiting the long side of this market.
Thanks for the comments. I am just getting this blog started. I think it is unfair to take up Rich's blog on RE with all of this other talk. I can go into some detail as to how to use this if you like. Or anyone else for that matter who might come in here.
Here is a bit more on how to use this information. We cannot simply go out and sell(short) every time the commercials get net short a market. They are hedgers by nature, so they do have a short side bias to begin with.
I would suggest exiting long positions when they get heavily short in an uptrend, and exiting short positions when they get heavily long in a downtrend.
Conversely, look for buys on dips in price in uptrend, when they get long, and look for short entries in downtrends when they get heavily short.
May of 2005 is a good example in that crude oil chart of a buy setup like I just described.
The commercials are the actual producers of the commodities themselves. The futures exchanges were originally created for these groups to hedge their hard commodities.
As a result, they are in the business of knowing where prices are going better than anyone else. They are the true insiders in the game. They are out of business if they cannot have a general idea of where things are going. So they do have a better idea of the supply demand equation at any point in time than anyone else.
Study this in detail, and you will see how good their track record is. I will post the gold chart here tomorrow, so it can be seen what they have been doing there.
Notice how the commercials have gotten short this market here. In spite of all the cries from the pundits talking about $100 Oil.
4 comments:
Cool chart, Chris. I can see that the green line, the commercials, leads the price chart.
Hey Poway
Thanks for the comments. I am just getting this blog started. I think it is unfair to take up Rich's blog on RE with all of this other talk. I can go into some detail as to how to use this if you like. Or anyone else for that matter who might come in here.
Here is a bit more on how to use this information. We cannot simply go out and sell(short) every time the commercials get net short a market. They are hedgers by nature, so they do have a short side bias to begin with.
I would suggest exiting long positions when they get heavily short in an uptrend, and exiting short positions when they get heavily long in a downtrend.
Conversely, look for buys on dips in price in uptrend, when they get long, and look for short entries in downtrends when they get heavily short.
May of 2005 is a good example in that crude oil chart of a buy setup like I just described.
Hope this helps some.
The commercials are the actual producers of the commodities themselves. The futures exchanges were originally created for these groups to hedge their hard commodities.
As a result, they are in the business of knowing where prices are going better than anyone else. They are the true insiders in the game. They are out of business if they cannot have a general idea of where things are going. So they do have a better idea of the supply demand equation at any point in time than anyone else.
Study this in detail, and you will see how good their track record is. I will post the gold chart here tomorrow, so it can be seen what they have been doing there.
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