(Price related charts are not enough. You need to know what the "Super Traders are doing):

Excellent interview with Larry Williams on Financial Sense.
Williams is one of the most successful traders, and has written several best-selling books about his trading methods. In his new book, he talks about how he uses COT reports to improve his trading results.

Trade Stocks & Commodities with the Insiders, Secrets of the COT Report
Book: , Buy it:

Here are some key points from the interview:

+ Williams wants to trade like he is "the house." The secret to doing well is watching the behaviour of the super traders: producers and users of commodities. You need to understand what they are doing: they usually buy and sell at the right times.

+ Commodity markets are 5 times bigger than stocks & bond markets. We all need commodities: energy, food, etc. Real supply and demand factors operate in the commodity markets. Commercial consumers buy when they expect to make money (albeit not only at low prices), and producers sell when they want to lock in a profit. When the commercials become aggressive buyers, it is time to buy. When commercials are big sellers: sell.

+ Markets are set up by the action of commercials. Small traders can wait for the ideal set-up. Large speculators tend to be trend followers and they are often wrong at the turning points. Newsletter writers are also often wrong at the turns.



+ Open Interest is useful. When the overall interest is waning, but longs are being built by the commercials, the users are positioning themselves for an upward move. They may be helped by Large Speculators and Small traders exitiung the markets.

+ When the Commercials buy at high prices, "they are scared", and the upward trend in prices will likely go higher. Commercial buying in dips in a rising market is very bullish. Example: They are buying energy now, and that may be foretending higher prices in 2-3 months time.

+ Big traders will feed biased news into the market to generate the liquidity they need to get into / or get out of their positions.

+ Betting too big... is a road to disaster. Betting small is a much smarter idea, because eventually something will go wrong when you are in a big position.

= = = = = =
LINKS:
The Fin.Sense Interview: http://www.financialsense.com/Experts/2005/L_Williams.html
L.William's Website....: http://www.ireallytrade.com/homepage1.htm
COT data (US Govt.)....: http://www.cftc.gov.com

As Dr Bubb has already ponted out, the Commitment of Trader figures show you where the "smart money"---or Commercial Traders---are placing their fortunes of cash. While the media has touted Gold and Silver as the buys for the future....the COT data shows "smart money" loading up their highest ever level of short contract sales in history. That was one 'key' which suggested that commodities based off the CRB index had already reached a very high level for this current time frame, and that those long these two markets should protect themselves against a possible selling off from the recent highs. This past week, the CRB has fallen from a high of 339 to a low of 325 in a flash.

Also, as the Dollar trends higher, physical Commodities that are priced in Dollars like, Gold, Silver etc, become more expensive and less attractive to foreign investors.

Gold COT chart; http://www.insidercapital.com/Charts/GC_br.png Commercials hold record short positions.

Bonds; http://www.insidercapital.com/Charts/US_br.png Commercials hold record long positions, and as usual the small traders are following the jobs report(media hype).

---

"While the media has touted Gold and Silver as the buys for the future....the COT data shows "smart money" loading up their highest ever level of short contract sales in history"

NOT ANYMORE.
The COT report for last week shows a marked fall in Comm'l Shorts. The peak was over 4 weeks ago, and the position is much improved since then. Comm'ls have been shortcovering as trendfollowing funds sold.

One that's had me in the past. Would a better idea be to tailor your bets to the situation?

A good example is a programme I watched about a bunch of MIT kids who could card count. The core of their strategy was, when it looks like the odds are on your side - bet big. If they are stacked against you - bet small.

Yo!

Fantastic forum this.

I'm a full time trader also. I notice commercials are getting pretty long on oil too.

Cheers

I'm with you on this one Bubb.I too like gold

if the shorting of commies was a trigger for lower inflation then why has the gold rally persisted in the strength of the oil price decline?????......there is underlying strength to gold at the moment....time to add.

I think you can get a bit cheaper than $470 at $1.74,but time is running short,anything in the $460 region I am buying.

Oil COT - Bullish

I might have a long punt on CLF6 if it trades near $57 this week...

Best of luck. Oh, I should do some kind of useful commentary before I go. Buy... uh... Gold. Wait, no, sell it. Or buy. Either one. Actually, I do have an active position in Gold, and it's short, so there we are. Definitely go short. Maybe.



btw, there can't be too many futures traders in Geraldton ?

---

Hehehe. It can get like that sometimes. eh? Especially with gold!




Well it not known as financial centre, mostly fisheries, farming and mining. Mind you, nobody would pick me for a trader either. I get around town via pushbike dressed in tatty old beachwear. So you never know

Likewise, good luck to you with your trades
Cheers

At 4 degrees C???? Ah , I get it: this is some kind of red herring tactic to keep other traders out of heating oil while you build up your position, right?

Wayne,

OIL SHARES are looking good.
I have been long calls on XLE: the Oil share ETF

COT figures still look good for OIL, but I am getting cautious because of...

SEASONALITY


Period from Thanksgiving to Christmas has often brought a SHARP Selloff in Oil

Dr Bubb, am I interpreting this seasonal pattern chart correctly? It seems to be saying the oil price could drop $15 around Xmas time and then go up to $60 in the Spring and that would be all normal pattern of price behaviour? I was never aware there was such enormous seasonal variation in the price of oil.

Have I go this right?

That chart is based upon 15 year and 17 year Averages, up to 1999.
Also, it is distorted by the big rise at the beginning of the "October War"

I dont have anything more recent.
But YES, the seasonal strength is behind us, and we may need an abnormal year for a big winter rise

= = = = =

Here's the ENERGY COT Data that I keep:

+LONG++ -SHORT-: Comm'rl ++LONG+ -SHORT- RATIO Lg.Spec : DATE. =Price=: .OIH./.XOI. OI/X
(comm.): Futures -NetSht Combi'd w/Opts. CmS/L Net.LgF ..Tues. Lond.pm: .XNG.. XLE. XN/X
.WTIC.. ........ ....... ....... ....... ..... ....... ....... .......: ....../.... ....
....... ....... + ...... ....... ....... ..... -...... . 11.22 $ 58.84: 126.70/1014 2.48

543,858 473,204 + 70,654 830,318 835,299 1.006 -56,167 . 11.15 $ 57.61: 115.60/ 962 2.42
530,501 465,085 + 65,416 881,835 887,888 1.001 -47,816 . 11.08 $ 59.71: 119.35/ 986 2.43
521,071 461,207 + 59,864 869,391 880,961 1.013 -42,040 . 11.01 $ 59.85: 119.00/ 989 2.42
523,109 464,980 + 58,129 856,346 865,910 1.011 -38,084 . 10.25 $ 62.44: 116.42/ 970 2.39
549,911 503,139 + 46,772 871,290 887,239 1.018 -26,118 . 10.18 $ 62.44: 108.08/ 941 2.32
545,812 485,853 + 59,959 879,235 882,126 1.003 -40,570 . 10.11 $ 63.05: 114.13/1005 2.28
529,094 490,136 + 38,958 856,427 873,444 1.020 -27,251 . 10.04 $ 63.90: 119.60/1039 2.32
541,508 502,633 + 38,875 854,242 868,438 1.017 -26,329 . 09.27 $ 65.07: 123.41/1075 2.30
532,544 511,803 + 20,741 836,035 865,205 1.035 -13,103 . 09.20 $ 66.20: 123.15/1068 2.31
534,826 526,988 ++ 7,838 848,029 889,734 1.049 - 8,248 . 09.13 $ 63.78: 116.80/1044 2.28
524,902 540,460 - 15,558 828,851 886,083 1.069 +24,094 . 09.06 $ 65.96: 119.30/1046 2.33
532,610 537,190 -- 4,580 826,431 875,753 1.060 +19,360 . 08.30 $ 69.81: 115.51/ 985 2.34
522,331 530,687 -- 8,356 795,037 850,773 1.070 +15,720 . 08.23 $ 65.71: 112.85/ 963 2.34
552,971 578,683 - 25,712 847,477 908,667 1.072 +40,395 . 08.16 $ 66.70: 113.70/ 978 2.34
509,259 533,649 - 24,390 796,636 853,820 1.072 +34,988 . 08.09 $ 63.07: 116.00/ 979 2.37
490,451 508,328 - 17,877 768,481 818,238 1.065 +26,070 . 08.02 $ 61.89: 117.08/ 965 2.39
502,164 504,112 -- 1,987 763,194 799,656 1.048 +11,929 . 07.26 $ 59.20: 112.58/ 938 2.36
511,125 523,348 - 12,223 762,149 810,008 1.063 +18,899 . 07.19 $ 58.69: 106.35/ 924 2.30
502,119 527,788 - 25,669 783,568 840,391 1.073 +34,029 . 07.12 $ 61.48: 107.25/ 940 2.28
493,272 510,966 - 17,694 762,786 813,597 1.067 +32,758 . 07.05 $ 59.59: 106.58/ 931 2.28
481,358 487,852 -- 6,494 738,883 783,440 1.060 +22,008 . 06.28 $ 58.20: 101.90/ 899 2.28
496,818 500,964 -- 4,146 746,143 782,757 1.049 +19,847 . 06.21 $ 59.04: 101.19/ 895 2.25
529,397 522,129 ++ 7,268 783,014 813,616 1.039 +12,563 . 06.14 $ 55.97: 100.32/ 874 2.23
496,939 485,653 + 11,286 747,568 770,512 1.031 + 1,375 . 06.07 $ 53.76:+ 94.55/ 840 2.23
512,236 473,136 + 39,100 751,911 744,658 0.990 -17,401 . 05.31 $ 51.97:+ 93.20/ 826 2.23
507,855 479,026 + 28,829 746,000 749,790 1.005 -14,319 . 05.24 $ 49.67:+ 89.84/ 813 2.22
510,659 489,926 + 20,733 738,759 749,570 1.015 - 2,308 . 05.17 $ 50.67:+ 87.35/ 792 2.22
520,162 504,290 + 15,872 786,678 811,549 1.032 ++ ,085 . 05.10 $ 52.07:+ 90.91/ 827 2.22
511,576 502,576 ++ 9,000 780,672 811,459 1.039 + 8,403 . 05.03 $ 49.50:+ 89.85/ 813 2.23

NG HHUB
....... ....... + ...... ....... ....... ..... -...... . 11.22 $ 12.03: 392.70/51.06 7.69
260,272 255,234 ++ 5,038 399,684 388,517 0.972 -43,820 . 11.15 $ 12.30: 370.43/47.80 7.74
248,678 249,158 -- 0,480 381,749 378,354 0.991 -40,786 . 11.08 $ 11.80: 376.75/49.05 7.68
243,301 246,620 -- 3,319 369,465 367,225 0.994 -35,936 . 11.01 $ 12.31: 387.59/49.12 7.89
243,261 260,481 - 17,220 397,988 392,364 0.986 -17,811 . 10.25 $ 13.16: 389.86/48.65 8.01
246,450 262,293 - 15,843 ....... ....... ..... -24,055 . 10.18 $ 14.22: 376.45/46.67 8.07
241,869 263,515 - 21,646 ....... ....... ..... -17,448 . 10.11 $ 14.34: 399.16/49.95 7.99
237,671 263,285 - 25,614 ....... ....... ..... - 3,225 . 10.04 $ 14.14: 421.22/51.60 8.16
243,658 262,274 - 18,616 ....... ....... ..... -18,926 . 09.27 $ 12.60: 421.89/53.56 7.88
237,234 276,148 - 38,914 ....... ....... ..... - 7,281 . 09.20 $ 12.68: 416.89/53.15 7.84
233,393 270,573 - 37,180 ....... ....... ..... -10,781 . 09.13 $ 10.88: 400.57/51.28 7.81
225,878 257,423 - 31,545 ....... ....... ..... - 8,604 . 09.06 $ 12.30: 397.37/51.31 7.74
218,364 248,675 - 30,311 ....... ....... ..... - 9,196 . 08.30 $ 12.12: 385.96/49.28 7.83
220,488 256,007 - 35,519 ....... ....... ..... - 5,050 . 08.23 +$ 9.57: 378.91/48.21 7.86
221,867 253,356 - 31,489 ....... ....... ..... -- ,830 . 08.16 +$ 9.47: 375.52/48.59 7.73
213,638 245,741 - 32,103 ....... ....... ..... -10,576 . 08.09 +$ 8.77: 378.09/48.98 7.72
208,580 238,172 - 29,592 ....... ....... ..... -15,797 . 08.02 +$ 8.20: 383.75/48.90 7.85
220,557 239,493 - 18,936 ....... ....... ..... -26,904 . 07.26 +$ 7.46: 375.85/47.72 7.88
224,046 243,546 - 19,500 ....... ....... ..... -24,099 . 07.19 +$ 8.05: 367.67/46.15 7.97
212,629 234,806 - 22,177 ....... ....... ..... -20,800 . 07.12 +$ 7.64: 375.49/47.00 7.99
215,000 227,282 - 12,282 ....... ....... ..... -28,893 . 07.05 +$ 7.68: 368.92/46.80 7.88
211,858 229,166 - 17,308 ....... ....... ..... -25,566 . 06.28 +$ 7.17: 350.01/44.78 7.82
215,911 232,506 - 16,595 ....... ....... ..... -28,911 . 06.21 +$ 7.62: 349.43/44.92 7.78
207,238 220,275 - 13,037 ....... ....... ..... -31,753 . 06.14 +$ 7.34: 344.73/44.90 7.68
209,469 217,639 -- 8,170 ....... ....... ..... -32,957 . 06.07 +$ 7.20: 332.83/42.35 7.86
219,614 209,830 ++ 9,784 ....... ....... ..... -45,334 . 05.31 +$ 6.49: 329.50/41.68 7.91
225,219 220,974 ++ 4,245 ....... ....... ..... -45,023 . 05.24 +$ 6.48: 319.71/40.48 7.90
232,118 232,913 --- ,795 ....... ....... ..... -35,449 . 05.17 +$ 6.63: 310.97/39.32 7.91
222,430 230,715 -- 8,285 ....... ....... ..... -24,927 . 05.10 +$ 6.88: 316.41/40.95 7.73
215,984 230,578 - 14,594 ....... ....... ..... -19,040 . 05.03 +$ 6.70: 310.95/40.31 7.71

Graphical format...

BIG CHANGE IN COT REPORT = = = =

Commercials ("smart money") WERE LONG Stock Index Futures...

+ $7 Billion Net Long in late October (Net long is very unusual),
+ Increasing their shorts by a huge $6 Billion per week,
+ Now $27 Billion net short- very large: exceeded late 2004, early 2001.

SWIFT CHANGE, and the degree short is very worrying

=

Small option traders are buying almost three times as many calls as puts (worst since bubble days)

- says Jason Goepfert, in a Market Views interview

Doc,

Interesting moves in the bond market. COT data gave the early tip....again.

Charts and comment here

Haven't gone cold on energy longs yet either...crouching, waiting!