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Hi-Yo Silver!

By Alex Roslin      Printer Friendly Version
Apr 1 2008 11:23AM

www.cotstimer.blogspot.com

How about that! Crazy market action last week capped off by an equally crazy Commitments of Traders report last Friday, March 28. As faithful readers will know, I use this free weekly data on trader positioning issued by the U.S. Commodity Futures Trading Commission to trade a number of markets. Here are some highlights from the latest data:

  • Silver, I’m baaaack! The “smart money” commercial traders have cut their net short futures and options position back from its recently bearish extremes. My trading setup for silver had been on a bearish signal dating from the Feb. 19 COTs report, but last Friday’s data flipped it back to bullish. This setup works with no trade delay, so I went long on the open on Monday.

  • My setup for the HUI Gold Bugs Index and Canadian iShares Gold Fun (XGD) remains on its bullish signal, as it has since May 2007. That setup is based on fading the “dumb money” small traders in gold futures and options. That stoicism hasn’t been shared of late by my setup for gold itself. This setup, based on trading on the same side as the large speculators, has been flipping around like a fish on a dock for the past few weeks. Unusual, yes, but the average trade for this setup is only four weeks, so the action not completely out-of-character. The latest COTs report put the gold setup back in bullish mode. As the table below and my notes below that explain, the upshot is this: the setup says to go long this week, then short April 7, and finally back to long April 14.

Visit my free blog COTs.Timer.Blogspot.com to see my other signals for equities, currencies, energy and Treasuries and to learn more about how my system works. Good luck this week!

COTS SIGNALS FOR 28-MAR-08

 

New signal 1

Execution date for next pending signal 2

Existing signal (signal date) 3

COTs system profit 4

Index profit 5 

COTs vs. Index profit 6

Trade delay 7 

Traders to watch 8

Gold 9

BULLISH

7-Apr
(Bearish)

Bullish
(11-Mar-08)

660.7

208.2

317.3

2

Large Specs

Silver

BULLISH

31-Mar
(Bullish)

Bearish
(19-Feb-08)

4,775.3

274.1

1,742.0

0

Commercials

Gold Bugs Index (HUI)

-

-

Bullish
(8-May-07)

23,298.0

224.9

10,637.5

0

Small Traders

TSE Gold (XGD.TO) 10

-

-

Bullish
(8-May-07)

1,437.4

253.9

566.0

0

Small Traders

Platinum

-

-

Bullish
(8-Jan-08)

950.6

350.6

271.1

8

Commercials

Copper (high grade) 11

-

28-Apr
(Bullish)**

Bearish
(22-Jan-08)

1,810.5

202.3

894.9

8

Small Traders

U.S. Dollar Index

-

-

Bearish (3-Oct-06)

185.8

87.2

213.1

0

Commercials

* My gold setup has a two-week trade delay. It presently has two pending signals: (1) sell short on April 7 and, from the latest COTs report dated March 28, (3) buy again for April 14.

** The copper setup works with an eight-week trade delay. It is now on a bearish signal from the Jan. 22 COTs report, but flipped back to bullish with the Feb. 26 COTs report, with that bullish signal to be executed April 28.

NOTES TO TABLES

  1. Visit COTsTimer.Blogspot.com to see how I trade new signals.

  2. Date for pending signals including trade delay for the setup. Execution is always on the weekly open of trading.

  3. In parentheses are the dates of the COTs report that gave this signal.

  4. Past return using the signals of my COTs Timer system, starting from a baseline 100. This is the theoretical return from buying the security on a buy signal and shorting it on a sell signal.

  5. Past return from buying and holding the underlying cash market, starting from a baseline of 100.

  6. Ratio of the COTs Timer return versus the underlying market’s return.

  7. This column shows how many weeks the trade was delayed to maximize past results and statistical robustness. For example, "0" indicates that the trade was executed for the open on the Monday after the COTs report was issued. In case of holidays, calculations are based on the weekly open price. In my own trading, in case of holidays, I execute trades for the open on Tuesday.

  8. The group of traders that had the best historic return in this market. My signals are given when this group reaches specific extreme levels of bullishness or bearishness. Unless otherwise noted, my system trades in the same direction as the commercials and fades the large speculators and small traders.

  9. My gold setup trades on the same side as the large speculators. It goes long when the large speculator net percentage-of-open-interest position is -1.2 standard deviations below its five-week moving average or above. It sells gold short when the net position is -1.2 or more standard deviations below its five-week moving average.

  10. Signals for the iShares Canadian S&P/TSX Global Gold Index Fund (XGD trading in Toronto) are based on the gold COTs data.

  11. My copper setup trades on the same side as the small traders.

Alex Roslin

 

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Disclaimer: This report isn’t meant as financial advice or a recommendation to buy or sell any security. Please do your own homework before trading. My system isn’t for everyone, involves substantial risk and has experienced large drawdowns in some past trades. Past results are no guarantee of future profits. I’m not a certified financial advisor. While I consider my information to be reliable and accurate, I make no guarantees. Please see COTsTimer.Blogspot.com for other disclaimer information.