How to formulate COT indicator? How many ways to formulate? How to interpret COT indicator? How many ways to interpret?
look for divergence between commercials and small specs. Take a look at cotton for example on the CFTC site. Watch how the commercials respond to price and then how the priced moves next. Often times in cash market commodities like ags, softs, meats, and energy the commercials are highly accurate because they are users of the commodity. Oil commercials have been heavily short since the April peak in prices. Unleaded Gas commercials have been more long suggesting what we know, tight gasoline refinery capacity supporting gas prices but plentiful crude oil.
There are a few books on this topic. I haven't read them, but you can view parts of them via the search inside the book feature at Amazon. Sometimes the commercials are right, sometimes they're not (maybe they're hedging, who knows). Also be careful in those futures with multiple size contracts (for example S&P 500 futures has SP and ES). They could be long ES but short SP and since SP is 5 times larger the net may be short. SSB
Whenever the small traders get about over 75+ bullish it signals a downturn. LOL. Also watch when they get bearish. That is when the market ramps. Small guys always get wasted. John