Is the U.S. dollar headed for its 2008 low? “Big money” could be saying yes.

Market Pulse: Mar. 7, 2011

COT Data

This past week we saw Commercials come in at 6,816 contracts net-long (52-week high) and large specs came in at -7,088 contracts net-short. By analyzing the 5-year weekly chart below, you can see what will happen if Commercials continue adding to their net longs. Also, take a look at the weekly pattern that will complete if the dollar goes below 72. Currently, there is a lot of pressure pushing the dollar down. Something like the ECB raising rates even slightly could push the dollar down even further.

Of course, if we see the dollar at 2008 lows, can you imagine the cost of commodities? Oil with its “fear premium” (I don’t believe these predictions — you know “buy the rumor, sell the fact”) caused by the Middle East crisis. Grains are either near or at all time highs, softs too. So if we see the dollar continue its long-term strong downtrend, what exactly will these commodities cost as final products here in the United States?

Keep a sharp eye open for corporate profits of big oil; they will be staggering once again. And yes, commercials are at 52-week net-short lows in crude, and for the first time in 5-years of disaggregated data, our friends the swap dealers are actually net-short crude. Interesting isn’t it. Have a great week and remember to follow the trends.

Commodity

12-mo low

12-mo hi

4-Mar

25-Feb

Cattle (feed)

-2,917

7,100

1,334

1,164

Cattle (live)

-73,179

-18,177

-31,288

-32,658

Hogs

-38,039

836

-34,851

-34,777

Corn

-408,170

119,389

-405,010

-403,757

Oats

-7,738

829

-6,189

-7,738

Soybeans

-203,260

56,797

-136,125

-143,663

Soybean meal

-90,487

-6,350

-49,004

-56,059

Soybean oil

-117,444

32,394

-80,176

-66,681

Wheat

-32,577

76,473

-7,620

-10,008

Orange juice

-18,722

-6,588

-17,392

-16,687

Coffee

-47,729

-4,637

-34,961

-40,485

Cocoa

-38,511

8,586

-38,511

-36,942

Sugar

-221,694

-104,983

-181,856

-184,671

Cotton

-69,857

-12,970

-36,390

-41,880

British pound

-66,435

97,211

-39,233

-47,103

Canada dollar

-106,282

-13,109

-106,282

-101,129

Euro FX

-63,130

124,494

-63,130

-53,834

Japanese yen

-52,533

92,866

-31,862

40,480

Swiss franc

-33,169

27,482

-32,915

-18,403

US dollar index

-39,311

6,816

6,816

3,724

Mexican Peso

-120,059

-14,488

-102,818

-120,059

Australian dollar

-102,706

-10,793

-92,491

-84,193

S&P 500

-88,893

33,981

-20,549

-14,429

T-note -10 yr

-74,761

356,573

135,630

229,611

T-bond -30 yr

-43,324

151,936

50,037

55,190

Eurodollar

-1,179,414

105,872

81,781

-15,542

Crude oil

-319,669

-23,057

-319,669

-258,897

Heating oil

-66,097

7,568

-38,696

-50,406

RBOB gasoline

-91,597

-10,453

-74,294

-76,151

Natural gas

111,345

228,910

228,910

223,838

Copper

-36,201

1,793

-27,951

-28,534

Gold

-302,740

-193,197

-250,596

-231,806

Platinum

-34,909

-15,759

-32,380

-32,928

Silver

-65,413

-43,146

-56,460

-57,793

Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.

Proceed to Page 3 for this week's detailed fundementals charts...

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