Commercial interests rule the commodity markets.
Correct. They short against physical product to lock in a guaranteed price.
A drop in open interest signifies short covering.
For the most part, but also it can show a closing out of long positions when there's a strong speculative interest in place. Whereas, the pairing is one-one the premium build or a possible contango or backwardization can show forcing above commercial supply.
So what you have is the Commercials covering their shorts in the face of the price rise.
To establish this one looks to later months to see if there's a divergence. When commercials cover they're confident that price increase will persist, although it's prudent to sell forward depending on the time to market hold period, to sell physical long.
My commodities trading education says this is an attitude of bullishness on their part.
That is to be taken as bearish. It's one of the more reliable indicators, especially in light of the fact that if price reverses a little, there's little short demand to prevent a waterfall of selling when the commercials realize all at once, they gotta GET OUT.
However, as I told you, I sold all mine.
Anything with a multiple or a debt load should be sold since short rates will be rising whether FED lets them or not. It would be totally disastrous if FED lowers ff rate at the end of month.
I left some for the other guy, which I learned later from you, is the right thing to do
Absolutely. It preserves your psychology. I can't emphasize enough how important is your state of mind in this biz. |
