Hi Traders,
An awesome Saturday morning to you! For some reason, I was up at 7:15, today. I have no idea why, but I’m not complaining! Nope, I have tons to do, including preparing this week’s COT report for you guys. So, I better get busy 😉
This week’s COT charts are here
Gold and silver climbed this week, with silver hitting highs. Who’s buying? The small guys and specs. Hmmm… what does that tell ya? It tells you the commercials, those groups with more money than the Fed can print in a month, are selling. They’re selling gold, too, while the small traders are buying it up like my ex-mother-in-law used to by Beenie Babies (she had boxes of those things… don’t ask me why).
So, are these to shiny metals at a top? If you look at the gold chart, not the specs (green line) and commercials (orange line) were 180-degrees out not too long ago, which often presages a turn-around. Silver isn’t showing the same thing, however. Instead, there’s plenty of room before the “180-degree” indication comes into play. So, keep watching.
When it comes to the commodity currencies, the CAD is at extremes, which, as you know, is a heads up (see above explanation). The aussie isn’t at extremes, and is sort of treading water. AUDUSD keeps hovering around parity and it appears the specs and small traders aren’t sure where to go next. I mean, it’s sort of a game of “Do or Dare”. It makes sense to; after all, after such strong run-up to parity, do you want to be the guy who bets the aussie will go EVEN higher… before a correction, that is? NZD is has the specs and commercials at a standstill. With all the bad news there, lately, a longer-term “watch and see” attitude just seems prudent. Not exactly rocket science.
The pound is coming off extremes between the commercials and specs. As I mentioned last time, we might see another push north to the 1.64 area (GBPUSD); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES although it’s really struggle at current resistance. Based on the COT reading, whether prices move higher or not, a change of direction is in the air.
Nothing new to report on the yen or euro, BUT a look at the US Dollar Index shows the commercials and specs are 180-degrees apart. As I’ve said before, there’s a better than good chance, in my opinion, that USD will gain strength as we head deeper into the year.
“Huh?”, say some. “But what about all the bad press and crazy stuff the gov’t is doing… you know, the out-of-control” spending and budget cuts and lay-offs and, and, and….”
Well, as you might have observed, whenever sentiments are at extremes, this is usually when markets turn. Remember internet stocks and real estate?
Okay, that’s it for now. I hope your weekend is rockin’.
Be well and live large!
Clay
