Am I understanding this correctly? Who are the commercials, BTW? Large specs = hedge fund = smart money Small specs = retail losers = dumb money Commercials = ?? If the large specs are increasingly long (or short), does it mean you should play on the same side?
Commercials are not speculators. They are the producers (eg farmer) or consumers (eg food company) of the future product, who need to hedge in the future market for protection.
Those would be fund managers hedging their underlying stock portfolios. Not necessarily. I mean it is not as clear cut as that. Commercials are big players as well so you cannot just disregard them.
Basically, yes. The difference is that specs take speculative positions in expectation of making a profit. Commercials hedge their underlying instrument position so that they are not losing money, they are not interested in making a profit.
Is there a chart indicator that follows commercials for index futures? I just watched Larry Williams tape today, called "the money tree." And he talks about commercials. The tape is outdated from the 90's. But I wanted to try to use 'commercials' with index futures and see if it worked. I can't find commercials in any chart packages though. Any suggestions? For trading the emini S&P 500.
There's no chart indicator for this. COT is released once a week so if you want to plot it on a chart then I'd say you have to do it manually.