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Supplemental
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| "Charts and Data" include Long Term Charts with COT data |
Supplemental
CIT Report
Charts
of Supplemental Report data
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NEW SHORTCUT TO THIS WEB PAGE www.cot1.com 5/9/08 4:00 pm eastern CURRENT OPEN TRADE RECOMMENDATIONS: Hold the Long December 2008 $3.00 Corn PUT option bought for 3 cents or $150. If you followed the recommendation in this report, on 11/28/07, you purchased the December 2008 $3.00 Corn PUT for 3 cents or $150. Hold the position. Hold the Long May 2009 $4.00 Corn PUT option bought for 7 cents or $350. If you followed the recommendation in this report, on 3/31/08, you purchased the May 2009 $4.00 Corn PUT on a 12 cent or better recommendation for 7 cents or $350. Hold the position. Risk is the net premium paid plus commission. HOLD the Long JUNE 90.00 Swiss Franc PUT bought for 110 or better. If you followed the recommendation in this report, on 2/4/08 you purchased the Swiss Franc June 90 put for 110 or better. (about $1,400) Risk is the net premium paid plus commission. HOLD the Long SEPT 90.00 Swiss Franc PUT for 40 or better. If you followed the recommendation in this report, on 3/14/08 you purchased the Swiss Franc September 90 put for 40 or better (about $500.) Risk is the net premium paid plus commission. December 2008 corn option prices
WEEKLY COMMENTARY: If you study history,
there is a reason But I guess a
leadership that burns food when people are starving Last week I displayed the following is a long term chart of Gold with the net commercial position plotted as the red line. I explained that the chart shows the current net commercial positions are at the largest net short position since the 1980's, AND THAT NET SHORT IS INCLUDES THE LONG POSITIONS OF THE LONG INDEX FUND HEDGERS, so the commercial "producer" net short is really substantially more than the reported number.
I recently add to this website 12 week summaries of long only and short only large trader positions so we can see grossed up short and long positions, with the one year, three year and five year range of the data. I even cranked up my charting program and made the following long term chart of Gold with just the gross commercial shorts plotted in red. You can see there has been a substantial increase in commercial (producer?) hedging all during this bull leg since year 2000. (I thought the major producers were "unhedged!" Who is doing the hedging? Central banks? IMF? Is that fair?)
My position on the commodity markets is very simple. I say we have recently seen record net hedging in the commodity markets by producers, and this suggests the producers view the markets as grossly overpriced. In the past, when an individual commodity market was overpriced and producer hedging was extreme, I recommended commodity traders WAIT for a "technical signal" of a change in trend and then take short positions, with stops above the recent highs. In the current markets dominated by the index funds, we need to modify our approach to WAIT for the dominant OIL market to break trend. This is new to commodity trading. In the stock market, a "top down" approach has always been the preferred approach for "traders." If the market is in a bull leg, trade individual stocks from the long side. If the market is in a bear leg, trade individual stocks from the short side. The dominance of the commodity index positions, as shown in the new "supplemental reports," has now made it reasonable to take a "top down" approach to commodity market trading. Oil also has recently had record net hedge positions, but just hasn't broke the up trend since the January 2007 leg low, yet. Oil currently represents over 50% of the Goldman Sachs Commodity Index that is dominating the commodity markets. It seems that as long as new money comes into the commodity index funds, the index and oil will not break their up trend. That's ok. Be patient. EVERY BUBBLE in history has burst. The hard part is trying to figure out when! In stock market trading we watch the small cap stocks abandon the "generals" as the "market" climbs to it's final peak. We can say we have a similar situation in the commodities. Many individual commodity markets are no longer following the "generals (energy)," and that divergence may be a sign of a market top. (You can see this in a comparison of the new highs in overweight in oil Goldman Sachs Commodity Index compared to the well below the highs Dow Jones / AIG Commodity Index.) GSCI (click here for three year chart)
DJAIG (click here for three year chart)
Since the record net commercial short positions and the break of trend in markets like GOLD and WHEAT, and Sugar and the Swiss and Pound, my approach has been to make a few long term put option recommendations and then just wait. These markets like Gold and Silver and Sugar and Wheat and Swiss and Pound, have already broke trend and are ripe to fall into the extended most volatile "third leg" of decline. But they haven't, yet. Are they waiting for oil to crack? So, all I can do is start to analyze OIL to try to see how that market looks. The following 25 year chart of oil with the net commercial position plotted in red shows that we recently had the largest net commercial short position. This is a remarkable net short position because the net short is net of the index fund longs.
Like in the above second chart of gold, I prepared the following chart plotting only the commercial SHORT position. Clearly we recently had record commercial shorts in oil.
But the trend has continued higher! Yes, the trend has not yet broken and so new money is attracted into the index funds and continues to push the market higher. So, we have a issue: "How can you forecast a top?" One way of forecasting price resistance is the take the first leg of a market rise and extend it in Fibonacci series. (see my paper on First leg Forecasting at Futures Trading School .com) The following chart shows that if we take the first leg in Oil from it's 1999 low to it's year 2000 top, and extend that range in the Fibonacci series we find resistance, in part, at 82, 126, and 200!
We hit 126 TODAY! Will this price area stop the market? OR, will we break through and accelerate to 200? I don't know. I think 126 is a possible top, especially considering the record commercial shorts suggest oil is grossly overpriced. I will consider recommending a short on a break in the two week low with a stop above the high. THE PROBLEM WITH CALCULATING RESISTANCE WITH THE FIBONACCI SEQUENCE IS THERE IS ALWAYS ANOTHER HIGHER CALCULATION! In my Commodity Index timing .com web site commentary this Sunday I will show the net commercial positions in other major commodity markets and also show the long term first leg forecast in those markets. I have been suggesting that the commodity bubble might burst soon, (I have been updating a DAILY comparison of the commodity indexes to the bursting of the stock market bubble in 1929, DAY by DAY in my web site www. Commodity Index Timing .com ) and I have often been asked what "might" trigger such a liquidation? I generally suggest a turn in the dollar could spark the change in trend. It looks like the dollar has turned, and now I add that we need to go on a daily watch of crude oil.
Good luck and good trading! George PS I need more paying subscribers. The $35 per month subscription is billed month to month to your credit card, click here to subscribe PSS Would you like me to consult with your firm on these or other matters? Call me at 239-947-9131, or email me at george@georgeslezak.com Email george@georgeslezak.com for more information.
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NOTE TO SUBSCRIBERS: WEEKLY
OPEN INTEREST SUMMARIES ARE POSTED ON SEPARATE PAGES. Click on the
above links Futures
Only Chart and quote links BarChart See Futures Trading School for memos and other links of interest See background page for a possible "trading strategy." |
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Comments
and trade recommendations are selected from the
markets that are highlighted with light green or light
red in the 12
week summary of reportable net commercial positions and in
the 12
week summary of reportable net commercial positions "with
options" . The markets highlighted in light
green or red are markets where the position of the net
commercial hedge traders are near the FIVE YEAR
record net high or net low number of contracts. The
strategy followed in this web site is usually to then
trade on a breakout of the two week high/low, in the
direction of the net commercial position, with stops
at the opposite two week high/low.
The 12 week summary schedules also identify when the reportable net commercial positions are near the high or low of their ONE YEAR or THREE YEAR range. They are then highlighted in yellow and identified by I or III (or I- or III- ) in the columns. I recommend that if you consider trades following the net commercials in markets where the reportable net commercial position is near the one year or three year range that you use a shorter term trading strategy with daily monitoring. My choice of markets for comment or trade recommendation is not suggested as the optimal choices. I am not commenting, and I am not making trade recommendations on every market highlighted in the 12 week summaries. All aspects of any trade recommendations contained in this report are subject to modification at any time. Beginning in 2002, the CFTC will release the "with options" data on Friday evenings at the same time as the "futures only" reports. The weekly commentary on the "Net Options" summary will be combined into the "futures only" commentary. Commitments of Traders calendar of 2006 CFTC release dates. Weekly Commitments of Traders Reports are released by the CFTC every Friday at 3:30 pm eastern, effective for the prior Tuesday's close. The release dates may be adjusted to accommodate holidays. Usually, the summaries of the CFTC COT Report in this web site are updated with the new CFTC information by 4 PM Eastern time after the release of the data. The weekly front month charts with the COT data plotted are usually updated by 7 PM.
Beginning in January 2002, the CFTC releases the futures data combined with the net deltas of option positions on each Friday evening. The weekly report shows the information as of the close for the previous Tuesday. The tables in this Web site are summaries of selected data obtained from the report issued by an agency of the US Government, the Commodity Futures Trading Commission (CFTC). The entire report can be obtained from http://www.cftc.gov/ . The "v" or "v-" following the net position in the 12 week summary tables indicates if the net position is within 95% of the high of the five year range, or within 5% of the low of the five year range. "I" or "I-" indicate within 95% or 5 % of the one year range. "III" or "III-" indicate within 95% or 5% of the three year range. Footnotes on data presented:
C 1999-2006 George Slezak All aspects of any trade recommendations contained in this report are subject to modification at any time. FUTURES TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE AND THE RISK OF LOSS SHOULD BE CONSIDERED CAREFULLY BEFORE MAKING ANY TRADES. A STOP LOSS MAY NOT LIMIT YOUR LOSS TO THE AMOUNT INTENDED. YOU SHOULD BE FOREWARNED THAT SYSTEMS WHICH TRIGGER FREQUENT TRADING SIGNALS AS PART OF A DAY TRADING STRATEGY CAN RESULT IN SUBSTANTIAL COMMISSIONS AND FEES. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. ANY STATEMENT OF FACTS HEREIN CONTAINED ARE DERIVED FROM SOURCES BELIEVED TO BE RELIABLE, BUT ARE NOT GUARANTEED AS TO ACCURACY, NOR DO THEY PURPORT TO BE COMPLETE. ANY REFERENCE TO PERFORMANCE IS INTENDED TO BE UNDERSTOOD AS STRICTLY THEORETICAL. REGULATORY DISCLOSURES REGARDING HYPOTHETICAL RESULTS HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS EXISTS IN FUTURES TRADING. All traders should read the CFTC CONSUMER ALERTS and the "COMMISSION ADVISORY" on trading systems. |
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