Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Commitment of Traders Reports Analysis - Net Commercials and the US Dollar Setup

Commodities / Technical Analysis Apr 03, 2007 - 04:41 PM GMT

By: James_West

Commodities

Volatility Index

VIX [ http://www.buythebottom.com/vix.html ]
Commercials are recent buyers of the VIX. Thus far, the setup looks more neutral than anything else. A classical COT setup to the long side would result if net-commercial position rose near or above 4,000 contracts.

Last week I mentioned that the VIX looked overextended to the downside and would probably retest its 10-day moving average (MA). Over the next several days, the VIX did indeed rally and is now trading above its 10-day MA in the 14 to 16 dollar range. With the bullish setup in the stock market right now, I would expect the VIX to decline over the next little while, and ultimately end up under $12. However, if we see the VIX rallying and closing above $16, that would tell me that volatility decided to stick around. Speaking of which, a move above $16 for the VIX would probably also translate into further weakness in the stock market.


Broad Markets

Russell 2000 [ http://www.buythebottom.com/rut.html ]
This index is not the most bullish looking one, but the setup is to the upside never the less. It is important to note that commercials were gradual sellers over the last 6-months as the stock market was rallying. But as soon as the market declined, commercials turned into aggressive buyers . What is very bullish, is that the market's decline was – relatively speaking – a minor correction. In fact, the RUT tested 810 last week; only 20 points shy from its all-time-high. It looks like we will hold recent reaction lows at 790; critical support is located at 760.

S&P 500 [ http://www.buythebottom.com/spx.html ]
This is one of the most bullish looking setups from all of the stock indexes. Again, this is a great example of how commercials were steady/gradual sellers during the most recent uptrend in the 2nd half of 2006, but after February's decline they turned very aggressive on the buy side. Recent reaction low is at 1,410, while critical support is around 1,370.

NASDAQ 100 [ http://www.buythebottom.com/ndx.html ]
The Nasdaq has been range-bound (1725 – 1850) for over 4-months now. It will be very bullish for the market if/when this index breaks out to new multi-year highs above 1850. The commercial setup remains to the upside, with recent support near 1,750 and with critical support near 1,715.

Dow Jones [ http://www.buythebottom.com/indu.html ]
The commercial setup in the Dow, looked very bearish until two weeks ago. Back then, my hypothesis was that net-commercial position would turn back up only if we saw a decline in the markets. February's meltdown gave commercials the opportunity to buy the markets as evidenced by the COT charts of the above four indexes. Make note that commercials are buyers at relatively high prices, which is unusual and very bullish for stocks in the intermediate term. Recent support is at around 12,250 with critical support at around 12,050.

The market is setup to the upside, and if we hold recent reaction-lows, I would expect the indexes to challenge their February highs in the not too distant future. Moreover, what happens over the next month or so may set the trend for the rest of the year. That is why it is imperative to have an open mind so that we are able to hear what the market is saying. Otherwise, if we are biased and our perceptions are slanted, it does not matter if the market will dance around in a clown-suit, our filters will ignore it, and we will never hear the market's tune.

Commodities

Crude Oil [ http://www.buythebottom.com/wtic.html ]
Last week I mentioned that it is important to respect the trend. In oil, the trend was more or less side-ways, but more bullish than not, after it broke below $60 in March and then reversed to ultimately close back above $60. In any case, now that oil broke above $64 the intermediate-term trend (approx. 6-months) is clearly up. I maintain that right now it is important to respect this uptrend, as long as oil is above $64 on a closing basis.
Some may wonder why I am not putting more emphasis on the COT setup. The reason for this is that the COT setup is not 100% clear. Yes, net-commercial position declined over the last couple of months, and the current setup is bearish. The problem, however, is that commercials are not aggressively bearish. For example, if net-commercial position dropped to -100,000 I would put much less emphasis on the uptrend. The thing is, before net-commercial position is going to drop to -100,000, oil will probably first move up into the mid to high 70s. To recap: commercials are sellers, but they are not aggressive sellers meaning the current uptrend may very well stay intact for the next little while, or it may even breakdown today; this is why the trend is very important to follow right now .

As for the commercial setup itself, commercials were slight buyers of oil last week, even after crude rallied and broke above $64. This is unusual, as normally commercials sell into strength. At the same time, it is probably wise to wait for future COT reports to analyze more data before jumping to conclusions.

Gold [ http://www.buythebottom.com/gold.html ]
The commercial setup with gold is neither here or there. It leans to being more bullish than not, but then again - I would fall back on the intermediate-term trend in this market for guidance, which is currently pointing up.

Currencies 

US Dollar [ http://www.buythebottom.com/usd.html ]
The COT setup is to the upside
while this index is trading sideways in a range from roughly 82.7 to 83.5. If we hold 82.5 that would translate into a bottom; also a breakout and hold above 83.5 would also probably translate into a bottom being put in. If/when a bottom is in place, a logical target for the rally would be at the first area of major resistance around 85.5.

Regards,

By James West

http://www.buythebottom.com

© 2007 buythebottom.com. All rights reserved

Disclaimer - This article is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of James West only and are subject to change without notice.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules