Whats shaking

[N Rothschild]

Starting a journal thread to put some of my other analysis in as well as my dow thread. (http://www.trade2win.com/boards/us-indices/49210-dow-2009-a.html)

 

[N Rothschild]

To start with, Gold. I always use COT for open interest as it is a great indicator especially when you take the other side of retail traders. (remember MOST retail traders loose money while the big boys win)

I had some large positions in gold but the volatility took me clean out the game.

Anyway here is a weekly chart, nice topping candle stick there signaling the end of the upward trend, daily chart also failed to make a new high on thinner volume after creating a double top. Currently still alot of open short positions in Gold. even tho i got stung last week im gona be looking for another short entry probably if we retest the 1hr TL with a stop above the highs. First target is the daily 21ema

 

[N Rothschild]

Next is copper, bullish chart, will look to buy a pullback of the break out..heavy long posistions in the market currently. also note copper can be a good indicator of the state of the worlds economy (you need copper to make pritty much everything, cars, houses etc etc) so if demand is going up again...well you do the maths.

 

[2be]

To start with, Gold. I always use COT for open interest as it is a great indicator especially when you take the other side of retail traders. (remember MOST retail traders loose money while the big boys win)

I had some large positions in gold but the volatility took me clean out the game.

Anyway here is a weekly chart, nice topping candle stick there signaling the end of the upward trend, daily chart also failed to make a new high on thinner volume after creating a double top. Currently still alot of open short positions in Gold. even tho i got stung last week im gona be looking for another short entry probably if we retest the 1hr TL with a stop above the highs. First target is the daily 21ema

COT provides great insight as to the possible move of the market. It is therefore important to interpret this data well. If I am right, it is the speculators (non commercial)that move the market, the reason being they are there for profit generation. Commercials on the other hand are in the market to hedge, it works for them like an insurance policy, just in case the market turnes against their interest, whatever it might be. Therefore I am more incline to follow the non-commercials for any indication of the future move, as the "non-commercial" describes the hord of highly skilled professional traders and istitutions committed to take any and every profit thid market has to offer.
It certainly is a great idea to incorporate COT to the overall trading strategy.
Have a grat weekend,
2be

 

[N Rothschild]

from my understanding non commercial is whole sale, investment banks etc..you can also get the bank positions on COT. ive been playing this for a while and my personal view is taking the opposite side to non commercial works the best

"non-commercial" describes the hord of highly skilled professional traders and istitutions committed to take any and every profit thid market has to offer."

so if that is non commercial, where goes joe trader who loses most of the time come under.

us banks were long gold just 3,000 contracts and short 111,000 as of the 3rd of feb

 

[2be]

from my understanding non commercial is whole sale, investment banks etc..you can also get the bank positions on COT. ive been playing this for a while and my personal view is taking the opposite side to non commercial works the best

"non-commercial" describes the hord of highly skilled professional traders and istitutions committed to take any and every profit thid market has to offer."

so if that is non commercial, where goes joe trader who loses most of the time come under.

us banks were long gold just 3,000 contracts and short 111,000 as of the 3rd of feb

Both the commercial and non-commercial camps consist of profesionals, who are in the market for different reasons, often but not always, in contradistiction to one another. Commercials are there to hedge their earnigs which might be threaten by the market's move agaist them, for example a farmer selling wheat, is likely to buy a put (short) option to protect himself just in case the wheat price drops when he is due to sell it, if the price is steady or highier, the put is not excersised, and he earns his income by selling wheat at a good price. If however the price drops and he has to sell it at a lower price, his profit is smaller or even he might have a loss, so the put is exercised and the farmer gets his earnings this way. The farmer is in the market for commercial reason, to hedge his risk, just in case, but he would rather not exercise the put, and sell the wheat at greater profit.
The non-commercial buys a call (long) option to generate the profit, he does not have a product or service to hedge, it does not mean that the non-commercial is non-profesional, not at all. Lets say that the non-commercial has taken the other side of the farmers put, and bought call. The wheat indeed gained in price, so the farmer is happy as he sold the wheat at a good price and the non-commercial is happy too, as his call brought him profit.
If the banks are commited to keep or supply gold bullion,and if they think the gold will appreciate, they indeed will buy put options to cover their obligation. If that is true, banks are classified as commertials, acting resposibly to protect their exposure to the possible risk of gold not appreciating or even loosing its value. Banks usually play it conservatively, especially now. Gold acting as a reserve currency is a save heaven for all kinds of bank's future obligation giving rise for them to hedge their risks, just in case, like the farmer has done. This does not mean that the gold will depreciate, but just in case it does they are coverred.
This is a very simplistic understanding the reasons of these two groups being in the market. My gut feeling is that banks in this present economic climat are more likely to be in the commercial (hedging) group rather that looking for profit in the way that the noncommercial do.
Please check it on google and by reading some other literature.
For that reason I am more likely to get alonside the non-commercial group, as I trade Gold with nothing to hedge.
Please look it up, as I do not wish to missguide you or anyone else reading this post.
Regards,
2be

 

[N Rothschild]

i am totally aware of what your saying and yes you are right im just saying from my experiance this is the strategy if find works best. and btw we are talking about futures here not options so if a farmer is hedging his weat with a futrues contract he will never benefit from the rising prices as you cant just let a future expire can you. and if banks are hedging against gold deposits, well again why use futures as it would simply lock your price in..you would neither gain or loose. (if we asumeyou are hedging an equal amount of gold threw futures) what you described using puts/calls is a perfectly valid way of hedging but we are talking futures here. anyway i dont want to turn this thread into an argument i think we will just have to agree to disagree, i know what you are saying is true but i like to the oposite side of non comercial posistions, ofcourse you can do the oposite and now ive said this i will be proved totaly wrong this week haha

also what is your thoughts on the gold charts, long or short

 

[2be]

i am totally aware of what your saying and yes you are right im just saying from my experiance this is the strategy if find works best. and btw we are talking about futures here not options so if a farmer is hedging his weat with a futrues contract he will never benefit from the rising prices as you cant just let a future expire can you

Hi, agree if the hedging is a future and not a future option, the farmer will not benifit at all.
I think, though I might be wrong, but COT includes the future options too.
Options are much safer instruments, as they migh or might not be exercised, the futures always must be exercised.
Please do not take what I have written as polemical, I just have seen that you have included COT and that made me thinking.
I do wish you many good trades Gold including, and forgive me if in anyway I have managed to mud the water.
Regards,
2be

 

[N Rothschild]

forgot to add this trend line in creating resistance aswell as the double top for gold.

also another strat i use for price prediction shows a high of about 939$ from the low on the weekly charts, we have pritty much hit that so possible change of trend

 

[N Rothschild]

Hi, agree if the hedging is a future and not a future option, the farmer will not benifit at all.
I think, though I might be wrong, but COT includes the future options too.
Options are much safer instruments, as they migh or might not be exercised, the futures always must be exercised.
Please do not take what I have written as polemical, I just have seen that you have included COT and that made me thinking.
I do wish you many good trades Gold including, and forgive me if in anyway I have managed to mud the water.
Regards,
2be

COT gives both futures and options positions in separate print outs, these snapshots are from the futures mate

 

[2be]

i am totally aware of what your saying and yes you are right im just saying from my experiance this is the strategy if find works best. and btw we are talking about futures here not options so if a farmer is hedging his weat with a futrues contract he will never benefit from the rising prices as you cant just let a future expire can you. and if banks are hedging against gold deposits, well again why use futures as it would simply lock your price in..you would neither gain or loose. (if we asumeyou are hedging an equal amount of gold threw futures) what you described using puts/calls is a perfectly valid way of hedging but we are talking futures here. anyway i dont want to turn this thread into an argument i think we will just have to agree to disagree, i know what you are saying is true but i like to the oposite side of non comercial posistions, ofcourse you can do the oposite and now ive said this i will be proved totaly wrong this week haha

also what is your thoughts on the gold charts, long or short

Regarding charts I have chosen to be reactionary to the price action atm. 930 is the pivotal zone, and once the price pierces through it I would expect for Gold to appreciate. There is need to be carefull however that if this happens this time around it is not a false breakout, so a severe SL close, but below 930. I will rather loose some pips than be on the wrong site of the market.
We shall see what happens at the beginning of the week.

 

[N Rothschild]

Next is copper, bullish chart, will look to buy a pullback of the break out..heavy long posistions in the market currently. also note copper can be a good indicator of the state of the worlds economy (you need copper to make pritty much everything, cars, houses etc etc) so if demand is going up again...well you do the maths.

if we look at this situation, the COT non commercial is telling up the interest is short, how ever this was on Tuesday right at those lows and since then we have rallied considerably..so its probably safe to say a fair few of those short got so a large portion of those non commercial shorts got it wrong.

 

[2be]

COT gives both futures and options positions in separate print outs, these snapshots are from the futures mate

I have had yet another look at the posted snapshot of COT and indeed it says it plainly that is is "futures only" and what I have posted relates to Future options, a very differenr scenario. I do apologise for confusing these two, it was not intentional.
This perspective changes the polarity as COT is pointing clearly for the Gold to depreciate, because the future unlike an option has to be exercised. In this case the false breakout is likely to be a trap, and though Gold is likely to appreciate in a longer TF, this time around according to the COT it is very likely to depreciate. Only time will tell, and we shall be ready for both scenarios.

 

[N Rothschild]

lets make some money mate

 

[2be]

lets make some money mate

I cannot agree more!!!

 

[N Rothschild]

Good sell off in gold today, came down to make a double bottom on the hourly charts, prolly rally off this level for a bit till we hopefully head down again, if we can break 890$ should be some potential for 850-840$. Im short from 908$

 

[N Rothschild]

1hr chart

 

[N Rothschild]

oh and copper is not up to much today!