Regarding the 'commercials' - I bought a study at home course about trading futures from Larry Williams of British American last June (which included about 6 hours of VCR tapes), and just purchased a two-day workshop with him for this coming March. I learned of Williams from a very close and trusted friend (former licensed broker) who had previously taken two of the Williams courses and swears by him.
This is Larry's web address ............
britishamerican.com
Now to try to answer your question. Larry Williams teaches that the best possible trade to make is one he calls "a perfect set-up" ... basically it exists in any commodity when the "commercials" are in an extreme position (at least the most long or short in the last 12 months), and the "market sentiment" is in the exact opposite extreme ... actually, I use the "small specs aka the small trader" usually instead of 'market sentiment' (which is not what Larry teaches) ...
This past summer, I evaluated about three dozen different commodities (grains, foods, fibers, meats, metals, energies, currencies and indices) from weekly charts which showed the last three years, and found about an 85% correlation ... as a predictor of which way the commodity price will move ...
In other words, if you look at the S&P 500 weekly chart, you will see that the "commercials" are extremely short and the "small trader" is extremely long (as they have been since May, 2000). If you look back at July, 2000, you will see that "market sentiment" was also in an extreme and opposite position. This is when I bought my first S&P 500 put (for December).
This morning, I sold one of the three March S&P puts and will continue to hold the other two (for a while).
I have not addressed what Larry Williams has to say about when to exactly to enter what he considers "perfect set-ups", as that is much more complicated.
By the way, Williams almost never buys options, which of course, is the first thing I did <VBG>.
I hope that helps. If you want to talk about it, send me your name and phone number by e-mail (see my SI profile), and I will call you.
Disclaimer: The above is my personal opinion. I recommend that you do not base your investment decisions solely on any one person's views or analysis (including mine). Do your own research and take personal responsibility for your investment decisions. |
