As always much appreciated. Thanks Clay
Wilf
To: openfx@yahoogroups.com
From: clay@claymarafiote.com
Date: Sat, 5 Mar 2011 09:38:44 -0700
Subject: [OpenFX] COT 3-4-11 [1 Attachment]
[Attachment(s) from clay@claymarafiote.com included below]
Hi Traders,
A good Saturday morning to you. It's a little overcast here in the Tampa Bay area, but yesterday was FANTASTIC, so I'll put up with some cloud cover. At least it's warm enough to wear shorts and flip flops!
On to the COT... (see attached)
The small traders and specs have been buying the aussie and looney; as commodity currencies, it's no wonder, especially with oil going through the roof this week... and the commercials were sellers (hey, the specs and smaller traders have to buy from someone). That said, the looney (i.e., CAD) is at extremes and the aussie is real close. Look for a 180-degree differential, which usually presages a turnaround. The kiwi, however, didn't benefit, and small traders kept on selling.
Other pairs at extremes are the swissy and euro, and the pound has turned the corner. This is a good time to start looking for a longer-term move setting-up in the opposite direction. Depending on one's risk tolerance and whether they're an active, swing or position trader, entries might already be in place. But, especially for active traders, Friday was Non-Farm Payrolls, which creates some chop and, if stops are too tight, you run the risk of getting a whipped around. This next week may offer some good entry opportunities in the shorter timeframes. Keep your eyes open.
Note the US Dollar Index. Specs (green line) and commercials (orange line) are at extremes. AND, finding a dollar bull right now is about as easy as trying to find a politician you'd want take home to meet your mother. But I digress.... The point is, right now the consensus is 99% dollar bears. O' to be contrarian ;- ) If you're not sure what this means, please see my post this week covering the topic--or just post a message and ask. Anyway, take a look at the COT chart.
What can I say about the shiny metals? The specs and short term traders are buying, which means the commercials are selling. While I don't know where the top is (especially with silver--though it did hit my target near $34.80), I have to ask: "If it's the end of the world and, the commercials being the "smart money", why would ANYONE be selling? I mean, if you knew there weren't anymore macadamia nut white chocolate chip cookies, and you LOVED, LOVED, LOVED macadamia nut white chocolate chop cookies... I mean you just couldn't live without 'em... would YOU sell any of your stash?
Okay, maybe "insulin" is a better metaphor. Bygones. Still, you get my point.
That's it for this week.
Be well and keep living large!
Clay
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