Is gold’s dip a correction or trend change?

Market Pulse: Sept 26, 2011

COT Data

Looking at the weekly chart below you can see that back on Aug. 5 Commercials on the old legacy COT report were 287,634. As of this past Friday, Sept. 23 Commercials came in at 197,628 contracts net-short. That shows liquidation at just over 90,000 contracts. As you know from reading Market Pulse, I prefer the newer Disaggregated COT report. And here is why.

On Aug. 5, Producers (true commercials) had a net-short position of -195,940 contracts. On Sept. 23, Producers were net-short -181,944 contracts. Managed money back on Aug. 5 was net-long 228,824 contracts. This past Friday managed money came in at 151,425 net-long. A much larger drop in longs than producers drop in shorts. So who exactly was liquidating on the other side of managed money? You guessed it, our friends the Swap Dealers. Back on Aug. 5 Swap Dealers were -91,693 contracts net-short. This past Friday, Sept. 23 Swaps came in at -15,684 contracts net-short. This is the lowest we have seen since late 2008.

So you want to know when gold will drop it’s free fall? Keep an eye on the Swap Dealers because when they start adding to their net-shorts again, that is when we will see price rise. And if they continue liquidating, we definitely can see gold test $1,500.00.

Commodity

12-mo low

12-mo hi

23-Sep

16-Sep

Cattle (feed)

-1,290

7,100

1,767

2,536

Cattle (live)

-72,185

10,437

-11,794

1,192

Hogs

-35,979

21,270

-3,480

-6,094

Corn

-413,915

-215,125

-254,294

-274,034

Oats

-7,738

-3,230

-3,230

-3,818

Soybeans

-203,260

-47,513

-133,659

-174,262

Soybean meal

-84,656

-12,672

-40,221

-68,619

Soybean oil

-117,444

4,362

-31,943

-48,737

Wheat

-32,577

65,226

63,898

53,760

Orange juice

-22,341

-11,011

-12,615

-12,090

Coffee

-45,699

-6,067

-23,968

-26,372

Cocoa

-41,808

7,729

115

-10,854

Sugar

-221,694

-104,595

-135,962

-162,419

Cotton

-55,687

-26,984

-32,919

-40,143

British pound

-66,435

75,542

75,542

33,329

Canada dollar

-115,190

-8,624

-12,984

-8,624

Euro FX

-124,855

102,941

102,941

79,017

Japanese yen

-64,864

76,983

-47,174

-31,561

Swiss franc

-42,387

-6,332

-6,332

-9,529

US dollar index

-40,841

14,003

-40,841

-16,610

Mexican Peso

-140,414

19,346

19,346

3,259

Australian dollar

-110,025

-26,704

-26,704

-42,435

S&P 500

-88,893

73,398

28,121

73,398

T-note -10 yr

-74,761

229,611

142,202

89,708

T-bond -30 yr

-29,204

88,803

1,220

15,417

Eurodollar

-1,179,414

458,230

119,579

458,230

Crude oil

-319,669

-72,356

-166,400

-169,016

Heating oil

-66,097

-7,401

-26,430

-21,389

RBOB Gasoline

-85,987

-34,452

-46,958

-53,653

Natural gas

108,160

228,910

161,091

149,556

Copper

-36,201

9,677

9,677

4,056

Gold

-302,740

-193,197

-197,628

-210,468

Platinum

-35,249

-18,670

-30,166

-33,462

Silver

-65,413

-29,166

-40,708

-45,387

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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