.............Interesting COT Data Last Week

The latest COT data (as of 1-31-06) 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, given that gold stocks, which tend to lead gold, fell very sharply after last Tuesday 1-31's likely Elliot Wave 3 minor intermediate term cycle highs. The gold Commercial Traders sold an unusually large (> 10% decrease in long contracts) 15,347 (added 343, 10,554, 13,289, 6357 the prior four weeks, sold 1381, 8157 the prior two weeks) long futures and options contracts and covered a large 18,701 (covered 8435 the prior week, 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), because the unusually large long liquidation is a short term contrarian indication, and the aggressive short covering also portends strength, but most of the strength probably occurred last week because the data is three days old when released. The gold Speculators (hedge funds and other speculators/traders) added 44 (sold 6157 the prior week, added 5541, 2975, 1521 the prior three weeks, sold 3988, 5112, 19,247 the prior three weeks) long futures and options contracts and added 1047 (added 1783, 3743, 9445, 5824 the prior four weeks, covered 1535, 7432, 8720 the prior three weeks) short futures and options contracts which portends strength this week (contrarian indicator), but most of the strength probably occurred last week because the data is three days old when released. The most important consideration in timing any market is the cycle channels/trendlines (see charts below).