Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: mishedlo who wrote (33145)	5/25/2005 8:53:24 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

Mish, all I can tell you is I've traded energy influenced by the COTs. And energy has really been where I've had excellent in and out, and back in success for several years. As I've maintained, COT readings are more an intuitive art than a science. I don't think you can be a straight quaint (or just overlay a chart) on it either. What it tells you is how the aggressive spec money (that's strongly influencing modern trading) are positioned, and thus where big moves could occur. I think you have to overlay fundamental factors on it too. For instance, when the specs were long 180,000 contracts in the energy complex as in March, it tells you the rally is likely long in the tooth, especially when you couple that with the Wizard's Ministry of Truth synthetic economics agenda. That doesn't mean they won't go to 200,000, but it's red alert, and I posted as much then. Message 21127940 It doesn't tell you exactly when the market might break, it just tells you risk is high. Now with positions flat, one has to reason, and ask, what are the chances the fund and specs might lean on this market and actually go short? I'd say it's possible, if I had to attach odds, maybe 25% to any significant degree, especially given fairly high inventory levels. raymondjamesecm.com Maybe others might debate me, and that's fair game for one. In a different area, gold, you keep bringing up that small specs are entrenched with this 25,000 long position. I don't consider that especially relevant to the equation. First a 10,000 shift (343,000 open interest) in small spec holdings, will barely influence gold prices. Secondly, there is probably a permanent gold hedge in play there, given that gold is viewed as money in some quarters. The larger specs in gold are different though, it's hotter money. In gold I'm more interested in the overall spec shifts between say 50,000 to 200,000. It doesn't have to go to negative to give me a favorable call. Unlike energy, I say the chances of that are maybe only 5%. Again that's the grist of a good debate, but it's how I play it. In currencies specs will swing from extreme long to extreme short. However, the pattern has been for short high burst trades, before they shift the other way. Right now the specs are long the USD. I'm getting short, bought the Yen again at 92.62, and the Sept Cdn at 79.55. I think another factor one needs to overlay on the COT set ups, is how easy money is. Are the Wizards pumping, is Uncle Ernie back? From Dec to last month he was in the closet, so that influenced all these leveraged trades. I could easily see in March, that they (anti-USD and commodities) were in trouble. Message 21150291 If he is coming back, and the Fed pauses this summer, then these trades could easily lever back up, especially now that positions have been liquidated.