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To Steve and Scheier and others who wrote
"... My experience with the commercials is that they accumulate a long
position often well before the bottom has arrived, and even more of
interest, will begin dumping this position long before the top. ..."
Commercials are not a monolithic block but are composed of two separate
"hedger" groups in the grains complex: Users or "millers and bakers and
cereal makers, etc." and Producers i.e., farmers, elevators, etc..
Both are hedging from different points of view.
Users are usually long and Producers are usually short in the market.
Because Producers are going to deliver product against their short
positions, they rarely go long. The reverse is true for Users.
This simplified explanation is how I understand the COT positions. Maybe you
could explain some more about how to think about how to trade against
(contrarian maybe) hedging strategies Steve.
Commercials are positioned for a longer time frame.
The Funds are where the "danger" or "opportunity" lies. This is why the
Research Departments track their positions so carefully.
Best regards
Walter
PS: For others who wrote here's an end-on look at the last 30 years of SK
front months. It'll give you an idea of how flat they are and cheap Vs dear.
You can do the same with the spreads. Seasonalities are different. If you
don't like using Demetra then you can use "P" values for the dailies.
----- Original Message -----
From: "scheier" <scheier@xxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Wednesday, April 26, 2000 9:55 AM
Subject: Re: KW0K/KW0N
| The question I guess is whether you should ever buck the
| commercials in the commitment of traders report as they
| accumulate a position, in this case, the grains. I think you have
| to consider whether your system is designed to trade short term
| signals or you're a longer term trend follower. I don't see it very
| relevant for Adam's P&L techniques, and even's Steve K's
| oscillator signals could continue to give accurate calls for short
| term cycles while the commercials continue to accumulate.
| My experience with the commercials is that they accumulate a
| long position often well before the bottom has arrived, and even
Attachment Converted: "f:\eudora\attach\SxxK_FrontMonth.gif"
|