Monday, 3 September 2012

Silver, Banks Bearish Based on CFTC Data

Add silver and the BKX U.S. Bank Index go my growing list of setups in the bearish column based on the weekly Commitments of Traders data from the CFTC. The latest COT data gave those two setups a bearish signal for this week's open of trading.

See my latest signals table for more details on these and the other markets I follow.

Now I'm heading back to the Brome County Fair and more fun (including blooming onions - yum!) Hope you have a good long weekend too, and good luck this coming week.


I_Got_Prechterized said...

once again it's clearly evident there is no way to trade this COT data. After following this blog for many months, I haven't seen evidence of correlation.

Alex Roslin said...

Hi I_Got,

Thanks for your message. You're right that the silver and BKX bearish signals I referred to in this post aren't working out at this point, but as I discuss on my FAQs page, it takes more than a few days of a wrong-way signal - or even a few months of trading a signal - to get a good idea of how the signal is doing, so I'm not going to write the COT data off yet, especially when I see the results in my natural gas setup.

So far, I've been trading my new setups four months and half of them have been profitable with their closed trades so far, not including my current trades, which include bullish gold and bond signals that have been doing quite well (crossing my fingers). It took me a year or two of trading my natural gas setup to be confident of the results for that setup, which I've discussed recently.

Regarding correlation, you may be surprised to learn that there are very high correlations between the week-to-week COT data and market prices that week or the week or two following. For example, there's been an 84% correlation between the large speculator total open interest and gold prices the next week, while there was a 60% correlation between the small trader total open interest and next-week natural gas prices.

For more on my thoughts on losing signals, I invite you to check out my FAQs page if you haven't already done so. But I do understand your frustration. Trading mechanical systems, especially ones still under development, isn't for everyone. We all need to find or develop the trading styles best suited to our personalities. This is my approach, and I'm sharing it publicly in case someone else can benefit from my research and experiences and also to learn from the input of others, which I have done in spades. Good luck in your trading.

Best regards,