Rough rice: "While the one year long chart suggests that a good sell opportunity is in formation, the 5 year long chart shows that we are at a COT extreme. " I am new to your comments. I don't get well what you mean here. Would you bit kind to explina, please?
Hi tallent e, What I wanted to say is that the two time frames are telling different stories --> the shorter one (1 yr) is showing a bearish picture, but the longer one a bullish. I hope I could somehow help you. If you are new to the report, check out some of my earlier posts, where I explain a bit about the report and the tools I use. If you still got questions afterwards, just let me know and I’ll try answering them! All the best, Dunstan
Hello Dunstan, thank you for replying. My point was that I don't understand what is so different between the shorter and longer graphs. I mean both show large traders and commercials' positions getting closer.
Hi tallent e, Maybe the attached chart will help. I have indicated the cot index (based on a 5 year lookback period) for Commercials. They are at 81%, which is an extreme level. You don’t see that if you look at a one year chart, all you see is that the last three times, when both C & LS were net short, prices started to decline shortly. Both remarks are true and it depends on each and every trader, which “story” they believe in . I just wanted to highlight to anyone, who follows these reviews on YouTube (as I do), to be careful, cause the picture is not that obvious. All the best, Dunstan
I have attached here the 1yr chart also, indicating to you the "other story" I hope now it is clear, what I was trying to say. all the best, Dunstan
Hi Dunstan. Thank you for your ne reply. What I observe in the graph you attached (during the last year), is that a period when both C and LS are net short followed by a rapid turn of C in net long territory and a symetric increase of the net short positions of LS translate into pressure on prices. Is that correct? Is that so for every underlying product? Do you recommend to base observation on the futures only COT report or on the futures-and-options-combined? why? Thank you. @tallent_e
You are welcome! I would say that Large Speculators are the ones, who lead the trend in prices, but Commercials, who are on the rights side, when the shift/turn happens. If you are new to cot analysis, one of the first things you need to learn is that each and every market has its own characteristic. Although there are generalities in these tools that I use, I always analyze the historical chart of the specific market to see, how prices reacted to the cot signals in the past. COT data is not derived from price, therefore it is quite different than a usual technical indicator. Regarding your question about the data type --> I use the futures only cot report. Honestly I never really took the time to compare the two, so I wouldn’t like to recommend either. I’m guessing that the two strongly correlate with each other, so there shouldn’t be a big difference between the signals either. If you wish to investigate into it, please let us know (here in the thread) if you find anything interesting! All the best, Dunstan
Thank you for this new input, Dunstan. I have had overviewed the COT reports so far. But, I now wish to move a step further. I feel like there are nice things to learn and be a bit better at anticipating price moves. In the pic you attached sooner today, there is "COT index" given for each category of investors. How are those stats computed? Best, @tallent_e
COT index: If you look at the 5 years long chart of Rough Rice that I posted yesterday, you can see two purple horizontal lines. These are boundaries of Commercials positions, their most extreme net short level (0%) and most extreme net long level (100%) (in this 5 years range / lines placed to these extremes). The setting that I used (you can’t see that on the image) for the COT Index was 5 years lookback, and the system showed me that Commercials are at 81% level (19% away from the 100% max level on this 5 year range). It’s actually that simple. If my explanation wasn’t that clear, have a look at this video, it talks about the cot index at 8:45. All the best, Dunstan