Here's the most current disconcerting thing I have learned. If you take, say, a six month rate of change of price, it closely mimics the net long position of the commercials. This, to a supposedly COT enthusiast, is not good news as it suggests that all that the commitment of trader report reflects is price action. That would explain why there is almost a mirror image between the large traders and the commercials; commercials by weakness sell strength large traders, funds by strength sell weakness.

I will add, however, that I have noticed when there are differences between the rate of change of price and the commercial net long position, telling messages appear. But it is not simple, probably not terribly mechanical but certainly something one can look learn from.

I have found that to have the COT data reliable you can't just look at their net position or a percent R of their position you have to look at their position versus price levels they have supported/sold in the past.


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