COT Data Points To Both Strength And Weakness This Week

The latest COT data (as of 2-7-06) is somewhat bullish short term since the gold Commercial Traders traded net long and the gold Speculators traded net short, both of which portend strength for part of this week, but the gold Speculators shorted an unusually large (> 10% increase in short contracts) 5621 futures/options contracts which portends some weakness. The gold Commercial Traders added 4679 (sold 15,347 the prior week, added 343, 10,554, 13,289, 6357 the prior four weeks,) long futures and options contracts and covered a large 9233 (covered 18,701, 8435 the prior two weeks, added 11,306, 4626, 3299 the prior three weeks, covered 2036 the prior week) short futures and options contracts which portends strength this week (non contrarian indicator), but most of the strength probably occurred last week during Thursday's HUI/NEM/XAU Wave B upcycle, because the data is three days old when released and HUI/NEM/XAU Wave 4's Wave C downcycle appears to be in progress. The gold Speculators (hedge funds and other speculators/traders) sold 5910 (added 44 the prior week, sold 6157 the prior week, added 5541, 2975, 1521 the prior three weeks) long futures and options contracts and added an unusually large (> 10% increase in short contracts) 5621 (added 1047, 1783, 3743, 9445, 5824 the prior five weeks) short futures and options contracts which portends weakness this week (contrarian indicator), because the unusually large short trade is a short term non contrarian indication, but the long liquidation points to some strength, but most of the strength probably occurred last week during Thursday's HUI/NEM/XAU Wave B upcycle, because the data is three days old when released and HUI/NEM/XAU Wave 4's Wave C downcycle appears to be in progress. The most important consideration in timing any market is the cycle channels/trendlines (see charts below).