I thought I'd share something for those interested in commodities (and hoping it's new to some of you).
It's the commitments of traders report:
Commitments of Traders

where the last week's contract position totals are available free to view. If you've never seen this before, it can seem a little bewildering, but, it is simply a total of the contracts held (long and short) by traders broken down into three catagories:
commercial (those entities who are generally hedging - producers and so on), large traders (funds etc), and non-reportable (small traders like us). Adding all three together will give you the open interest in that commodity on that day. Typically, we'll see that the large traders largest figure is opposite the commercial's figure; so in other words if the commercials have a large short figure in relation to their longs, then more than not the large traders will have a large long figure in relation to their shorts.
What can we do with these figures? Well, one thing for sure: in each of the categories, if we subtract short from long, we arrive at a net figure, ranging from a positive net long to a minus net short. (futures magazine sends out an email every week with all the commodities tabulated with their net figures.)
The theory goes like this: with a high commerical net long or short (say, the highest in 6 or even 12 months) then expect the market's trend to pullback, or even turn. The idea being that since the commercials are primarily in the market for hedging, then they're going to offload at some point. We are primarily concerned with the interaction between commercials and funds. Let's look at an example.
As of today (25.1.08), the COT report figures for Cotton are as follows:

Large: L:95,612 S:22,545 Comm: L:115,797 S:208,413
Net figures: Large +73,067 Comm: -92,216

Since the data is released weekly, lets see how this data would look graphed against the weekly nearest contract of Cotton:

http://www.informedtrades.com/attach...1&d=1201270670

Here you can see, that it looks much like a standard technical analysis oscillator, and that the interaction between funds and commericals runs counter to one another - and pretty much in sync with the peaks and troughs of the market - particulary when we focus on those that have a 6- or 12-month gap between them.
So, as of today, 25.1.08, we can see a very large commercial net short position - the largest in recent years; we'll want to pay attention to see if the commercials add to, or start to offload some of that large position. Here's the daily chart, see what you think:


http://www.informedtrades.com/attach...1&d=1201273506

Regards,

the seeker

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