Makin Sense Of The COT (Commitments Of Traders) Data
I expected the non contrarian gold Commercial Traders to be aggressively short selling in the latest COT report (http://www.cftc.gov/dea/options/deacmxsof.htm), instead they traded significantly net long, but, only added modestly to their long position. There was a very sharp decline during the five session stretch from 8-9 thru 8-15 (a monthly cycle high occurred on 8-9 for HUI/NEM/XAU), so, they may have just been locking in some short term profits with the short covering they did.
The one year NEM Lead Indicator chart shows the very bearish wide gap between NEM and HUI/XAU right now, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem, which points to a dramatic decline soon. Also, XAU Implied Volatility collapsed to 33.67 on 8-18 from 38.37 on 8-15 despite the decline in the XAU, which points to substantial weakness in the near future.
The monthly downcycle's (since 8-9) declining peaks downtrend line appears to have turned down and increased in strength/become more sharply declining (see the first chart at http://www.joefrocks.com/GoldStockCharts.html), so, there shouldn't be much relief for longs until Wave A down of the Wave 2 Cyclical Bear Market (since 5-11-06 for HUI/XAU and since 1-31-06 for reliable lead indicator NEM) bottoms in the 100-110 range (XAU) in the next few weeks. For recent action see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. ....... http://www.JoeFRocks.com/
The one year NEM Lead Indicator chart shows the very bearish wide gap between NEM and HUI/XAU right now, see http://finance.yahoo.com/q/ta?s=%5EXAU&t=1y&l=off&z=m&q=l&p=&a=&c=%5Ehui,nem, which points to a dramatic decline soon. Also, XAU Implied Volatility collapsed to 33.67 on 8-18 from 38.37 on 8-15 despite the decline in the XAU, which points to substantial weakness in the near future.
The monthly downcycle's (since 8-9) declining peaks downtrend line appears to have turned down and increased in strength/become more sharply declining (see the first chart at http://www.joefrocks.com/GoldStockCharts.html), so, there shouldn't be much relief for longs until Wave A down of the Wave 2 Cyclical Bear Market (since 5-11-06 for HUI/XAU and since 1-31-06 for reliable lead indicator NEM) bottoms in the 100-110 range (XAU) in the next few weeks. For recent action see http://finance.yahoo.com/q/ta?s=%5Exau&t=5d&l=off&z=l&q=b&p=&a=m26-12-9%2Cp12%2Cfs%2Cw14&c=. ....... http://www.JoeFRocks.com/
posted by Joe Ferrazzano at
8:15 AM
