From the Trader Dan Beehive Forum
Dan I would like your take on the Gold COTs
One of the popular Gold/Silver traders makes this comment in his latest buy gold calls, again:
“There is no need to mince words or beat around the bush with this update. The latest COTs for gold released yesterday showed another marked improvement so that they are now strongly and unequivocally bullish – in fact they are at their most positive since late 2001, that’s 14 years. ”
The reason why I read this article was because it was sent to me by a friend who follows Armstrong and Marty’s gold call gets a mention in the article, seems M.A. following is growing.
Warning!! following this guys chart work suggestions in no different than asking the family dog for advice:
Suggesting the RSI as being Deeply oversold as a buy indication, we ALL know the RSI can stay oversold or overbought for a very loooong time, having it reverse course is a step in the right direction that’s far more important and a signal of a change
COT is super bullish, so buy, there is only 1, one, person to get the true read of the COT report that’s Norcini……………
MACD is oversold, again that’s not a reason to buy, when it turns positive that’s a far better indication of a trend change.
THE BIGGEST MISTAKE is suggesting any position ahead of the ECB decision and Fri NFP data, sure if your a pro trader sitting on a desk your paid to have a position heading into these key events BUT as someone who is investing/trading their own portfolio trying to keep ahead of street level inflation or just plain grow your wealth waiting to see the results is THE BEST approach.
its no different than the average economists as they have no humility… as their calls regarding global growth or currencies are so off the mark but they don’t hold any positions just opinions…BIG difference as my example of the baseball commentator of 30 years, does he know baseball, you bet….but the pro who actually takes a pitch at home plate is a completely different expert, just as the fan who yells from the bleachers, your a bum!….lol, must be a gold bug……
Trader Dan :
Amen to your points. Markets can remain oversold or overbought for long periods of time. Even at that, they may work off their oversold readings by merely moving sideways. In other words, the correction can be in terms of “time” and not in price.
Regarding the COT being interpreted as bullish. That is simply a rookie mistake by an amateur. Buying a market because the specs have moved over to the short side of a market betrays a fundamental misunderstanding of reading sentiment. Those who propose that sort of foolishness generally have NONE OF THEIR OWN MONEY at risk. They are happy risking the money of their subscribers however as it is no skin off of their own back.
Good traders cannot afford the “luxury” of pontificating over the COT report as if it is some sort of Holy Grail of trading, the interpretation of which can make the devotee untold hundreds of thousands of dollars.
There is a good reason that the hedge funds have become bearish on gold – guess what that is? The TREND IS DOWN and the TREND in the DOLLAR is up and there is no signs of inflation while commodity prices are falling overall.
In other words, the large specs, after BEING LONG AND WRONG on gold for so long, have finally decided that the better way to make money in gold is by shorting it. They finally realized that. Now along comes some self-appointed entrail reader of the COT like this Maund who proclaims to them that they are now on the wrong side of the market because he says so! Perhaps he will be right; perhaps he will be wrong. But the simple facts are is that he has no more idea of which direction gold is going to go than the Man in the Moon.
This is the problem with the gold bug world… there is NO HUMILITY anywhere. For all we know gold could fall through 1050, then 1030 and all the way back to 1000 if the Dollar starts pushing even higher.
Guys like Maund sell newsletters for a living. It is more than obvious, that they are incapable of supporting themselves by trading. No professional trader EVER TAKES a position based on the COT reports. They let the charts tell them when there might be a potential change in the trend.
Matrix – the problem that so many of these guys have is that they simply do not understand what is involved in becoming a successful trader. Like the two of us old coots, they need to have the market kick in their teeth a helluva lot more in order to teach them about trading “opinions” and “guesses”.
Dans cot reports are the best in the business.. as many have said here.. dans cot reports are worth the price of the subscription alone
Maund advised his followers to back up the truck and buy cheap miners in winter 2013. GDX was 50ish I believe.