COT Commitment of Traders

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Corey on COT


Do you use Commitments of Traders data? How large of significance do you place on that type of information?

CoreyRosenbloom:
I do, and the data can be very helpful. I've started publishing these charts in addition to my standard analysis in my Weekly Intermarket Reports and have found those insights to be very valuable...

CoreyRosenbloom:
This chart came from last week's report:

CoreyRosenbloom:
We want to compare the green line - "Professional Speculators" to the Red line - "small speculators" (non-reportables)...

CoreyRosenbloom:
The professionals (green) became net long just before the March 2009 low while the red line - public - started getting net short...

CoreyRosenbloom:
this chart only shows from July forward, but you can see that the professionals are net long 161,000 @ES contracts (as of last week) while the 'non-reportables' are net


CoreyRosenbloom:
Despite all the chart evidence like the divergences into the 50% Fibonacci line of the bear market at 1,121... professionals are reported to be net long while the 'public' is reported to be net short...


CoreyRosenbloom:
Like market internals such as breadth, etc, the CoT data can give you insights into what's "really" going on in terms of the supply/demand relationship, and honestly that is what moves price - not indicators...

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Invest With the Smart Money (Or the Dumb)
I use the net percentage-of-open-interest position of each group of traders to get signals - or the trader group's total open interest (long plus short positioning).

COTs Timer: How It Works

User Comments on the post


Portifolio shown updated every week with net positions
http://cotstimer-portfolio.blogspot.com/2009/01/long-gold-bullion-20.html

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Commitments of Traders – Is it a Useful Tool to Time Markets?
Aug 19th, 2008 by Doug Tucker Printer Friendly

So it seems that of the three groups of traders, the obvious group worth watching to stay of the correct side of a trade is that of the large trader. In a trending mode this would seem to be the correct assumption. It seems wise to follow the money going into a market with the group that is speculating on the direction that price seems to be moving, rather that betting with the group that has other reasons for being in the market

The lowest sub-graph is a stochastic based on the large trader net position with a lookback period of one year. You can see that when the stochastic reached the lower reference line (blue ellipse drawn) that prices started the next leg of the long uptrend. On the right side of the chart you can see when the trend turned into a bubble that the large trader net position started to show signs of divergence. It was somewhat subtle looking at the actual COT data, however the stochastic displayed a very clear divergence pattern. The large traders as a group were not increasing their long position at that last high.

In many instances the turning point of a market will occur by an extreme reading in the large trader net position, and then a sudden reversal, indicating that the funds that have been fully invested are now heading for the exits. Most often there is a corresponding opposite extreme reading in the commercial net position with a quick uptick indicating that the commercials are beginning to cover their shorts. This is always very clear in hindsight, but in real time this can be deceptive. What can look like a top in the market can be nothing more than some profit taking with the large traders eventually moving back into the market in even larger in size, with prices pushing higher that what seems logical. One can often trade the resumption of a trend by keeping close watch on the large trader net figure as viewed by the stochastic. If the uptrend is still intact, often an oversold reading of the stochastic will produce a good entry point. But it is important to keep a watch on the pattern of new highs if accompanied by lower highs, or divergences, in the large trader net position, viewed either directly from the COT large trader net position line, or by the stochastic indicator of that line.

http://www.timingcharts.com/index.php - at the bottom you have COT sub graph window
- http://www.timingcharts.com/index.php?c=cot

I also use the COT reports but I use the ready-made graphs available at –
http://www.timingcharts.com/

Your mention of the use of stochastics to detect trend changes in the COT reports is very useful.
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- there was one blog specalized in COT , check I noted somewhere in our blogs

http://www.amazon.com/Commitments-Traders-Bible-Insider-Intelligence/dp/0470178426/ref=pd_cp_b_3

http://www.amazon.com/Trade-Stocks-Commodities-Insiders-Secrets/dp/0471741256 -- seems I have this book