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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Square_Dealings who wrote (21027)	10/30/2004 8:52:38 AM
From: Claude Cormier	Read Replies (2) \| Respond to of 110194

Well am not sure, according to Hocbberg, the bullish consensus made an all time low this week near 6%. Very few are bullish.

To: Square_Dealings who wrote (21027)	10/30/2004 10:43:35 AM
From: russwinter	Read Replies (4) \| Respond to of 110194

<looking at the COTs it looks like commercials have been on the wrong side of almost every trade for the past couple months> Commercials are many times positioned "wrong" on a trade, and I don't allow their net position to overly scarce me away from my fundamental Flucht in die Sachwerte view (USDs are Old Maid Cards) of the world. So I really don't see COTs as especially useful for timing, particularly very short term timing. But, I'm using it for gauging (gut checking) intensity on the spec side of a trade. The rule of thumb is that commercials are fairly stable with their positions, specs (and especially funds) aren't. So when the specs get too heavy, or too off side on a position you get the potential for sudden wash outs, or in the case of grains, short covering. In this market it manifests itself pretty violently, and you end up scratching your head really wondering what's wrong with these funds. Yes, they are largely herd like lemmings, but ignore them at your peril. Copper over the last two weeks was a classic, as the specs got very heavy long above 1.40-1.45, then washed out to the 1.25-1.30 area, then CU without fanfare popped up about eight cents on Friday. The total spec long position went from 40,000 long (note I use futures with options), 64.82.65.31 down to 18,000 long. Note that they are still long, but it was the liquidation's intensity that cleared the deck. The fact that they are still net long 18,000 is not what determines my stance, it's the fact that intensity and off side risk has been reduced. In this kind off flight to real goods inflationary environment (my big picture view), we will rarely see fund shorts. And if we do (as in grains now), one should really take note as to bullish potential. Right now the funds are as long FX (300,873)and Gold (208,312)as I've ever seen them. They are also very offside long the Eurodollar and 5 year. Take that bit of information and combine that with the calendar coming up, and you have the potential for some fireworks, and much of it will be MoP silly season phony() (I typically fail to pick the exact causation event in advance, it just "happens", often with something unimportant to my eyes) fireworks no doubt. For my money, at least for more high beta leverages trades (futures, Amex listed PM juniors that I use, etc), I want to be much lighter in my positions right now. Philosophically I could never go short hard real money, but I might (have so far gingerly) go short the five year, IEF or EDs. () Example of this, is the appearance of Osama bin Laden "after the markets closed Friday " with a strange hello America spiel. This is grist for silly season MoP operations and manipulative spin, even going so far as to get Bush reelected (perhaps bin Laden's goal?). Fundamentally it is a pimple in the big picture, but watch how this gets played Monday and Tuesday. It really has that "Wag the Dog" (must watch movie) feel to it, doesn't it?movie:http://www.newline.com/sites/wagthedog/Story/index.html