with the cot I see us moving south ,
teb
On Wednesday there were signs of accumulation as the top was breached again and held for a time on the breakout, and the same on Thursday though price held in much better (so much so that even some ppl on message boards started to take note) and showed further signs of accumulation. Whether it continues to the upside or not is anyone's guess but this rally off the bottom seems to have started as a short cover rally, done by the hedgers/commercials to squeeze the large funds who added a large amount of shorts on the bottom (6/7-6/8). By the way,...
I want to make a couple of points regarding the CoT report because it's been mentioned a few times and lots of people check the markets by this measure. As an intro, we know it comes out on Friday at 3:30 PM Eastern time and covers the week ending the previous Tuesday for data. So this past report came out on the 11th containing data up through the week ending the 8th. I have thought about this quite a bit. If I were a long term trader of such size that my trades were reported in the CoT, when would I likely make my move to switch funds (which can take some time) without alerting the public as to my money movements prematurely? Answer: not Tuesday. Kind of obvious that some day following Tuesday would be the optimal time, giving you a maximum of a 9 1/2 day lead time before the public received its report, while Tuesday only gives a 3 day advantage.
With this in mind, and understanding that the large players are not all about broadcasting their moves in advance, I believe it's possible to piece together a more current state of the CoT report by utilizing publicly available volume and OI information, tracking the changes from the past CoT report as well as price changes using common sense (buying drives prices up, selling drives prices down) and a basic understanding of market microstructure. In the post I quoted I made reference to the data I get from doing this analysis which brought me to the conclusion that a large # of fund shorts were added on 6/7-6/8 (much of that was rollover volume) and that the rally represented the hedgers (commercials) squeezing the funds but that on Thursday it appeared we had some bone fide fund longs coming into the market along with the unknowable amount of shorts that must also be covering. Because of this group that took positions on Thursday, and owing to the fact that not enough short covering has taken place to wipe out those 6/7-6/8 poor fund short entries, I believe the upward trend will continue either until the shorts capitulate or until the longs decide to pull the plug on their short squeeze campaign. Both of these should show up in the daily calculations I'm making, though there is an unavoidable 1 day lag time due to the late OI data.
From past data some of these E/U short squeezes have led to exceptional moves to the upside in very short times, and this particular setup has the potential to evolve in that same way. It appears the spring is coiled.
