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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: quehubo who wrote (28880)	1/8/2004 9:50:05 PM
From: russwinter	Read Replies (1) \| Respond to of 206094

I use the COT when I see an extreme position, that also seems fundamentally sound. The commercials tend to be the smarter, more stable deep pocket "industry" money. The specs tend to be hot money, and in the futures pit, trigger happy. I posted this in early November and in hindsight, that would have marked a great point to be seriously long along side the commercials, especially on NG. I bought some NG futures right then in fact, to go along with my energy portfolio. Message 19479854 I would consider the spec position in crude quite high right now, and therefore potentally bearish. Most of the time COT readings are just noise, but record or near record positions should not be ignored IMO. I just get out of the way, when I see it. Of course stocks have their own rhythm, but just be aware. The NG COT position is neutral, or more exactly not significant right now. If I had to imagine a theory about why crude might correct, I would say something to do with China, or some change in perception by speculators about the "one-way" China playbook going on right now. Almost all commodities are getting this long in the tooth, big spec long position/big commercials short position look to them. Of course, the conditions may be set for big spikes first (going on right now in many commodities in fact). I also think there is a big spec carry trade of borrowing in USD at nominal interest rates, and piling into commodities and currencies. Xie describes a venal version of this based on finding a huge hole (apparently called "arbitrage" in polite company, I'd called it corruption or profiteering) in the false economics of the dollar peg in mainland China. I just think this is something all commodity oriented investors and traders need to be aware of right now. In fact, it's a serious mistake (so far) that the Fed isn't more alert to this, as there is a train wreck underway. It's a factor in the large money supply drop in the US IMO, and immense global distortions are being created. When the Fed finally wakes up and starts raising rates, the whole carry trade into commodities could get disrupted. If there is a big spec position lined up, look out. Xie describes it pretty well. Message 19670153