Follow the Smart Money / COT Analysis

Good point! I was so fixated with existing pairs I focus on that I hadn't considered the AUDJPY.

Hi everyone,

The latest Commitments of Traders review is out (here).

Cotton
COT Change (52W) / C-32%, LS-26%, SS-30% /
As Commercials are increasing their net short positions cotton prices start to incline – at least if we look at the past similar situations.

Palladium
COT Extreme / C-110 report, LS-All Time /
Large Speculators have reached an All Time extreme level, which seems to be a very nice bearish signal in this market.

Currencies: AUD, JPY, MXP
All Time / near All Time extremes in all of these markets!!

I wish all of you MERRY CHRISTMAS AND A VERY HAPPY (AND PROFITABLE ) NEW YEAR!
All the best,
Dunstan

the original COT report --> here
COT charts --> here

Hi everyone,

The latest Commitments of Traders review is out (here).

5-Year Note
COT Change (52W) / C-25%, LS-19%, SS-33% /
COT Index (3 year lb.) / C-83%, LS-18%, SS-54% /
We’ve got a couple of bullish signals in this report --> 1) The change in positions of traders was large 2) COT extreme (not an All Time, but still measurable) 3) Both Commercials and Large Speculators are NET LONG, only Small Speculators are on the short side.

Silver
COT Change (52W) / C-19%, LS-15%, SS-21% /
Although we see a large change in this report for silver, let’s not forget that usually these are short lasting signals that could affect prices for a few days. The general picture, the extreme in the market has an opposite directional signal. If we look at the last COT extreme (approx. a month ago), you can see that prices have started to react and thus fall. This signal is still in place, at least until the COT extreme starts to widen again and we see levels of net short ~55-60 thousand contracts for Commercials / net long ~40-45 thousand contracts for Large Speculators / net long ~20-25 thousand contracts for Small Speculators.

Japanese Yen
COT Extreme / SS-All Time /
COT Index (3 year lb.) / C-98%, LS-6%, SS-0% /
After two weeks, small speculators are again All Time Extreme. It looks as if this extreme will widen a bit more; stress levels have not reached their peak point yet. It is not an easy game, so it could be wise to be careful in this market and not to aim to catch the exact bottom --> A good strategy may be, to wait until we see a significant move away from these extreme levels and this coinciding with increasing prices --> to wait for the bottom to be visible. For example: Commercials pull back to ~100 thousand contracts net long, Large Speculators decrease net short levels to ~60-65 thousand contracts and small speculators go back to net short of ~30-40 contracts. As this happens, Yen goes to 1.18-1.20. Although this way we give up “a couple of” pips, the reward potential will still be large enough for the trade to be worth it and we stay away from some loosing traders while prices fall.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here

Hi everyone,

The latest Commitments of Traders review is out (here).

Orange Juice
COT Change (52W) / C-16%, LS-13%, SS-23% /
COT Index (3 year lb.) / C-49%, LS-49%, SS-62% /
The relative cot extreme signal from two weeks ago that started this latest price decline is in my opinion still in place. The change that we can see now is not that significant, but of course could affect prices for a few days, and we have close support levels if we were to consider a long trade. My guess is that the decline should continue.

Oats
COT Change (52W) / C-13%, SS-22% /
COT Index (3 year lb.) / C-76%, LS-34% /
I don’t necessarily agree now with this latest review… of course it is true that the best buy signal would be, if Commercials where to become net long, but a relative extreme exists – as the COT Index shows correctly - that may trigger a rally.

Palladium
COT Extreme / C-All Time, LS-All Time /
I don’t think it necessary for me to talk too much about palladium, the picture is pretty clear and if you’ve been following my thread, you should know by now that All Time extremes are the strongest cot signals. The only important remark that needs to be carefully dealt with is the fact that these extremes could widen for some weeks before they trigger a price reaction. I’ve said it before a couple of times that it is best to combine cot analysis with regular TA tools and risk management tools. What is nice in this market now is that resistance levels are very close so taking this signal and going short would have a very nice Risk/Reward ratio. So the conclusion is that we don’t know for sure that prices will fall from here, but the odds of this happening are high – thanks to the high stress level in the market – and the risk taken on a possible trade would be low.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here

Hi everybody!

I've been working with COT analysis for a few years now and figure I could share this tool with any MT4 users who may be interested.

http://articles.mql4.com/867

Great article. Be warned, it's long,

The zip file for MT4 indicators is at the very end - I can upload it if anyone would like. It comes with an assortment of indicators for COT data on the MT4 platform.
I like to use the Net Positioning indicator, the % change in positioning indicator, and the Absolute Position indicator. As someone before me mentioned, COT analysis is unique in the aspect that it isn't price-based (calculated). I don't consider the time lag in data to be detrimental at all. The way I look at it; I typically download the data on Sunday evenings and I just look at current COT positioning how it relates to last week's price bar to give myself an idea of sentiment.

Hi Bilstein,

Thanks for sharing these with us! You were right about the article; it’s pretty long, but looks very professional. I’ll have a look at it soon!

All the best,
Dunstan

You're welcome

The only downside to it - if you want to consider it a downside - is that you have to download the data yourself from the CFTC, then erase the old data in your "Files" folder (it comes with a little file that does the erasing for you) then run a couple of scripts to compile and concatenate the data for the indicator(s). In all, the process takes about 3-5 minutes but heck, I do it over the weekend so it's no biggie.

Good trades!

Hi everyone,

The latest Commitments of Traders review is out (here).

Orange Juice
COT Change (52W) / C-27%, LS-31% /
COT Index (3 year lb.) / C-68%, LS-25%, SS-61% /
The change size this week was greater than the previous week, we are moving away with large steps from the last cot extreme that started this latest decline. As this is happening, we get closer to a relative extreme that will have a bullish signal --> look at the previous couple of bottoms in price correlating with relative extremes in COT.

USD Index
COT Change (52W) / C-27%, LS-25%, SS-27% /
COT Index (3 year lb.) / C-69%, LS-32%, SS-27% /
The last significant cot extreme happened two weeks ago, when Commercials were net long almost 15.000 contracts. Following this signal, prices started to go higher and commercials have cut back from their long position. In my opinion if prices decline below 79, we could see a widening of this mentioned cot extreme, seeing net long positions of >15.000 contracts for commercials. Till that happens, the cot extreme from two weeks ago is in place and we should be expecting higher prices.

5-Year Note
COT Extreme / C & LS-143 report extreme /
If you look at the longer chart of 5-year note, you can see that almost all the time, when Commercials were net long / at the net 0 level, that coincided with a bottom in prices. We are witnessing this again, furthermore we are at an important support level that would give us the opportunity to use close stops --> giving us a good Risk/Reward for the trade.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here

Hi Bilstein,


My indi only works till 2009, after that it is flat. What parameter must I change, so it will work for every single year I put in?

Hi Bilstein,

My indi only works till 2009, after that it is flat. What parameter must I change, so it will work for every single year I put in?

I don't want to clutter up Dunstan's thread with indicator talk so I sent you a PM. It describes the setup step-by-step. PM me back if you have any other questions.

Hi everyone,

The latest Commitments of Traders review is out (here).

Coffee
COT Change (52W) / C-28%, LS-27% /
COT Index (3 year lb.) / C-77%, LS-24%, SS-60% /
The change and the relative cot extreme (looking at a 1-1,5 year period) suggest a price decline. On the other hand, if we open a longer chart, we can see that the longer term picture is bullish. Commercials are net long and when that was the case, we were close to a bottom in prices.

Platinum
COT Change (52W) / C-17%, LS-15%, SS-20% /
COT Index (3 year lb.) / C-13%, LS-86%, SS-55% /
We’ve witnessed some great cot extremes in the past few weeks without any significant price reaction. Looking at the cot charts my guess is that the rally could continue until we see another All Time COT extreme (Commercials net short, while Large Speculators net long >50-55.000 contracts and Small Speculators net long >7-8.000 contracts).

Mexican Peso
COT Extreme / LS-All Time COT extreme /
We have again an All Time Extreme in Mexican Peso. The last one (few weeks ago) was not able to stabilize a price decline so we are witnessing the widening of the extreme. Of course as stress levels are getting higher, so does the chance of a top in prices.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here

well,
I have tried a lot of trading system, all are failed n failed.
after 1 year, i finally found forum from indonesian pro trader, then i have gotten the suitable n profitable trading by applied his simple system up 2 now, the recent lesson that he shared was about COT, confusing for me, so i haven't apllied it yet.

Thank U Very Much Dunstan, 4 your experiences sharing.
after read all of your thread pages, now it is clear 4 me how to use COT,
it is time 2 apply it in my trading system.

I'm very glad to hear this teleporter! I hope you will enjoy using this analysis method and that as it helped my trading results, it will help yours too!

All the best,
Dunstan

Hi everyone,

The latest Commitments of Traders review is out (here).

Live Cattle
COT Change (52W) / C-32%, LS-31%, SS-20% /
COT Index (3 year lb.) / C-77%, LS-10%, SS-100% /
COT Extreme / SS-387 report COT extreme /
All cot signals have a bullish bias this week. The change in trader’s positions was pretty large and dynamic, while Small Speculators are at an extreme level. It would be an even stronger bullish signal, if also Commercials and Large Speculators were at such extreme levels (perhaps Commercials net long would fulfill that), which could easily happen at the next report.

Cotton
COT Change (52W) / C-22%, LS-21%, SS-26% /
COT Index (3 year lb.) / C-5%, LS-100%, SS-82% /
Large COT change combined with a relative cot extreme: to me this picture is bearish. It is definitely a very exciting market with interesting signals. I recommend you to watch to the remarks told in the review!

British Pound
COT Change (52W) / C-20%, LS-13%, SS-30% /
Although GBP was mentioned because of the relatively large COT change in trader’s positions I have marketed a few very nice points (tops & bottoms) on the chart that coincides with cot extremes. Another great example how well cot analysis can be applied for currencies!

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here

I find the COT analysis very useful, but I also find that COTbase takes too long to upload it. The data is already three days old when it's published as CFTC publishes, on Friday, the position from the preceding Tuesday. If it takes another three days to reach the website then it's almost a week old and that reduces its usefulness.

I notice that both of your posts above (Jan 21 and Jan 28) notifying us of updates fall on Mondays. Why doesn't the update happen on Friday itself within, say, an hour or so of CFTC's Friday 3.30 PM electronic release? That would give people a chance to use the data the same week or plan the next week's trading instead of having to wait till they start work on Monday morning before they even have sight of the charts. They've probably lost some advantage by then!

(I'm a COTbase subscriber)

Hi WideEyed,

I’m a bit surprised about what you are saying… I’m also a subscriber and I have never experienced such a delay what you are talking about. I usually have a look at the data during weekends, but there have been occasions when I checked it just after the report was issued… like 5 minutes or something. At the time I’m writing this, the report is on the site, go have a look, the report is there! So COTbase.com gives us the report basically at the same time CFTC publishes is.

If you are experiencing this delay, I recommend you to contact their customer service, they have a really good attitude towards clients – at least that’s my experience.

So to sum it up for all of you… It is the U.S. Commodity Futures Trading Commission (CFTC) that publishes the cot data. The data is showing Tuesday’s positions and is usually issued on Friday 3:30 p.m. Eastern Time. COTbase.com is updated on Friday 3:35 p.m. Eastern Time. 5 minutes and not three days after the report.

The reason I post on Mondays is quite simple. I do my research Monday morning before the real trading activity starts. Of course there could be traders who’d rather do it earlier… ok, that’s fine, but this is the way I do it and it just works fine for me…

All the best,
Dunstan

Hi Dunstan, sorry if I came across as a bit harsh.

Yes, today I did see the sign earlier saying the site was being updated. And I keep refreshing that page but nothing happens. Based on your post, I logged out and logged back in again and I can see the latest data

Thanks for your reply.

Hey, no problem! I've actually e-mailed them about this and received the following: "our system starts to update the classic (legacy) cot data first and then continues with CIT, TIFF and Disaggregated cot data. This process can take up to 10-12 minutes. During this time we put out a remark that the site is being updated. You can actually already have a look at the classic cot data, even while the update is being done on the rest of the data..." So I guess if you refresh a coulple of times during this 10-12 minutes period, eventually this sign stating that the site is being updated, will go away.

All the best,
Dunstan

Hi everyone,

The latest Commitments of Traders review is out (here).

Canadian Dollar
COT Change (52W) / C-32%, LS-17%, SS-67% /
Both signals, the large cot change and the extreme that we are getting closer to are bullish signals that suggest to me, we could expect higher prices in the near and also medium time horizon.

Gold
COT Change (52W) / C-21%, LS-25% /
COT Index (3 year lb.) / C-79%, LS-11% /
The signs that the cot report is showing us, are pointing a bit upwards in this market. Although we see significant extremes in Platinum & Palladium, I think – at least in the short term – we could expect higher price --> Small Speculators usually signal well a turn in prices, they are not at extreme long levels at the moment.

British Pound
COT Change (52W) / C-20%, LS-9%, SS-38% /
Basically only Small Speculators are pessimistic about the market, so this, combined with Commercials buying tells me that we could be expecting a bottom in prices soon.

I wish all of you good luck to this week’s trading,
All the best,
Dunstan

the original COT report --> here
COT charts --> here