After the monster bull run many of the commodities had a crash was in order. After the crash there is normally a brief period of rest and accumulation. This allows the margins to back down so the cycle can start all over again. The trick is knowing when its a low or just a pause!
The CFTC numbers can help with that. The data is delayed about 5 days, so its tough to just trade on the raw data, but I use for a backdrop, kind of like looking at monthly chart.
There are only a few commodities out of the 43 that I follow that have any extremes going on. And the just so happen to be in the energies. This week Heating Oil and Natural Gas tweaked the list. The HO has made a new all-time high in Commercial Shorts Open Interest. So the big boys are loading it up and hedging their inventory. This means either we have to much current inventory or they are hedging out into the future to lock in current prices.
Natural Gas contrarily has made a 7 year low in CS's OI. Hmmm... Commercial Shorts are getting out as the market makes new lows. This would be a tough one to sell weakness on from here but the chart is ugly. One good thing is that margins have come down and that shows signs that the exchange feels the wild risk is out of the market, meaning the boys that were wrong are now out!
One other market that keeps topping the chart CFTC charts is the Emini S&P. This is interesting one. In June of 2008 the Fund Longs OI was at 27o-k since the hard price smash the current FL OI is breaching the all-time high records. Currently the FL OI is at 730-k. The fund managers are not trying to beat the S&P they are using the S&P. Will see what happens when March goes off and we'll see if the fund longs roll to June. This concerns me for hard smash if they roll into June. They are long and wrong!!! The market might have to bust these guys. We'll know in the next couple of weeks to see if they roll or not.
Disclaimer: All comments and posts are for learning purposes only. Don't use this information for your trading. Don't believe the comments or posts as accurate at all. Again this blog or any other site related are for learning purposes only.
