Using our online tools and data,
members learn how to do the following and much much more!
Learn to anticipate future
turning points before they happen using statistical COT measures
and price patterns.
Track large speculator (fund)
activity to determine when markets are vulnerable for a sell-off
or a rally.
For example, we know markets are more vulnerable for a sell-off
when a great deal of speculative longs are in the market. We
call this a "wound up spec long position". This scenario
indicates large speculators are holding profits on a large
net-long position. They are very exposed at this point. If the
market simply experiences a small hiccup, a great deal of their
profits can evaporate. Think about it. If you are long a
market and adding to positions as prices move higher and higher,
you essentially continue to double up with the trend. At the
extreme high you will be very vulnerable. A small counter-trend
move (down) can quickly wipe out your profits. At this point in
time you become more nervous and aware of the risk. Your finger
is on the Sell Button! This is precisely what we monitor and
look for using the COT data! And it works the same and just as
well in reverse. When large speculators are holding a large
short position, they can become overexposed in this side as
well. A small bounce can wipe out a significant portion of
their profits and they become very aware and nervous about
this. Thus, the market becomes more "vulnerable" to
short-covering, and that is FUEL for a RALLY!
Spot divergence in large
speculator positioning versus price. We've seen this time and
time again. Large speculators are the "smart traders"! They
often begin exiting bull or bear markets BEFORE a major top or
bottom is formed.
Many new traders make the mistake
of thinking the commercials are the "smart traders", but they
are not. The commercials are hedgers in the physical markets.
They do have greater access to the underlying fundamentals, and
that's why we also pay very close attention to their hedging
activities. But they are not speculating in the way that the
large traders (funds) are. We must get into the minds of both
participants (speculators and physical hedgers) to gauge market
vulnerabilities and longer-term price direction. Traders learn
these tactics here!