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COT 9/27-10/3 *PIC*

So we have the cut-off for the COT on Tuesday as the market was putting in a good deal of time int he vicinity of 1.25. As it goes, the low for the cycle was made on Tuesday, 12530. The high , 13215 was achieved the first day of the period and in periods where the market trends lower it is not uncommon to have the high/low to fall this way. Quite a period it was , with declines of nearly 7 cents and over 12 trading days nearly 18 cents from the 14325 high achieved on September 18. What was most impressive to me during this period was the very large build in open interest. We saw Z7 OI build by +10,531, and total OI jump +18,663. Most of what we saw in this report was not surprising, though there were some interesting developments.
With the OI build, we have quite a bit of "NEW" activity.
NEW BUYERS : Commercial LONGS, Large Traders and small traders alike. To me, the high % builds by both the large trader LONGS and small trader LONGS was very impressive. I recall was the OI continued to rise throughout the period, Tango had expressed interest in what "other participants" were doing , buying new or selling new ? I think we get some answers here.
NEW SELLERS : Managed money SHORTS. Now the large fund short stands at 79.62% of the max short.

We saw quite a bit of buying down near the lows. Forward buying (H8, K8) was fulfilled in large quantities and reflected by the increased position of the commercial longs. We now have a double bottom in place in the area of 12440/430. As the market bounced off the low, the question becomes where do systems begin to reverse ?? Consensus seemed to agree it was somewhere between 12950-13050. Clearly with Fridays spike, we began to see this take place. Friday's settlement was on the 1.30 strike, making for an interesting week ahead. The numbers we see in this report are IMO staggering. Via the supplemental, we the large fund NET short add 13,167. The commercial NET short declined by 10,307 as we saw commercial shorts covering on top of the commercial long "new" buying. We see nearly 4K EFP's. Options delta on both sides of the ledger was moving and we have November expiration this coming Friday. While a serial month, as mentioned , we could see certain strikes act as magnets.
What to expect from here?? I think this report is quite friendly. We have seen this movie before. As Tango pointed out in response to Flavio, we will likely begin to see OI decline if the market continues higher. I believe systems will in fact be buyers as they seemed to have overstated the short side. However, what I liked in this report from the large and small traders (quite active on the buy side) , will likely create an upside struggle if the rally continues. Also, we see commercial SHORTS step up on the sell side anytime we begin to trade in the mid to upper 1.30s. Phil has mentioned an overhead gap (1.34) and I think it will be within reach. I would expect the market to move higher. Does it stall at familiar grounds?? At some point we will see a change or have catalyst to propel the market beyond the resistance of the past year. Last November we saw an impressive spike to the upside. IS the market primed to repeat this ??? For now, all we can do is take the hints/signs that the market provides.
Other thoughts??
Good trading.

Messages In This Thread

COT 9/27-10/3 *PIC*
Re: COT 9/27-10/3
Re: COT 9/27-10/3/THANK YOU !
Cocked Hammers & Misfires/COT 9/27-10/3 *PIC*