The Latest COT Data (as of 1-24-06) is Cautiously Bullish Short Term

The latest COT data (as of 1-24-06) is bullish short term since the gold Commercial Traders traded net long and the gold Speculators traded net short, both of which portend strength for at least part of this week, but the data is three days old when released, so most of the strength may have occurred last week, and the Commercial Traders only added a modest 343 long contracts, and, covered a large number of short contracts. They also were surprised (as I was) by last week's strength due to the Fed's massive lending, because they had added a large 11,306 short contracts the prior week in anticipation of substantial weakness. The gold Commercial Traders added 343 (added 10,554, 13,289, 6357 the prior three weeks, sold 1381, 8157 the prior two weeks, added 11,405 the prior week, sold 14,042 the prior week) long futures and options contracts and covered a large 8435 (added 11,306, 4626, 3299 the prior three weeks, covered 2036 the prior week, added 4202, 2623 the prior two weeks) short futures and options contracts which portends strength this week (non contrarian indicator), but most of the strength may have occurred last week because the data is three days old when released, and the very modest long trade suggests that caution is in order. The gold Speculators (hedge funds and other speculators/traders) sold 6157 (added 5541, 2975, 1521 the prior three weeks, sold 3988, 5112, 19,247 the prior three weeks, added 9102 the prior week, sold 2697 the prior week) long futures and options contracts and added 1783 (added 3743, 9445, 5824 the prior three weeks, covered 1535, 7432, 8720 the prior three weeks) short futures and options contracts which portends strength this week (contrarian indicator). The most important consideration in timing any market is the cycle channels/trendlines (see charts below).

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