Loading ...GOLD COT Index
The COT Index of the Commercials is approaching the 50 line that usually confirms an uptrend (or a pullback) .
The calculation is similar to the Stochastic and use the Net position:
COT index = 100 x (current Net – Minimum Net) / (maximum Net – Minimum Net)
As you can see in the chart below, the Commercial activity is often in the OPPOSITE direction of the markets trends.
The closing of the Comex last Friday (13h30 EST) was probably a good time to drop gold below the 200 DMA …
So on 6 out of 7 occasions since 2012, the COT index dropping through 50 was a sign of an imminent uptrend. It’s about to fall through 50 again, so the odds of an upward move in gold price is high.
This is a great chart. Gold actually rallied every time the cot dropped through the 50. The one time that it didn’t, it bounced off the 50. If it bounces off the 50 we may see more downside but it would likely be somewhat limited.
Exactly.
In general, looking at the Comm., the “Buy Zone” is 80+ and the “Sell zone” is 20 but it is safer to wait for 50 …
From an EW perspective, the drop from Friday can be the wave c of an Expanded Flat with a target of 1250 or 1236 before the next leg up …
Gabe, how does this jibe with your comments yesterday and Fully’s today? Thanks.
Music Man,
Everything is possible. If you look at the chart of gold (COT Index), you will see that the COT stayed in the “Buy Zone” for
the first half of the year in 2016 and gold climbed …
I think they are doing everything they can to protect the 200 DMA and the trend line from 2011.
Actually I am expecting a pullback for gold (1236 possible) and we’ll see from there…
Thank you.