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<DIV><FONT color=#000000 face="Courier New" size=2>Peter wrote:</FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New" size=2> <You are
unfortunately closed to understanding market structure from you sarcastic
remarks...which is sad.></FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New" size=2>Peter....thankyou for your in
depth response.....I guess I did not make myself clear.....let me try to
rephrase it better........</FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT><FONT
face="Courier New" size=2></FONT> </DIV>
<DIV><FONT face="Courier New" size=2>The sole purpose of trading is to make
money....that is the entire purpose of market analysis for trading
purposes....even if that analysis is something that only 1 person in the world
understands....if that 1 person is making money at it....then it is valid as far
as that particular person is concerned.</FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT face="Courier New" size=2>That is why the gist of my previous
comment....included being amused that someone should think their analysis is
more valid than someone else's.....the only analysis that is valid, is the one
that makes each trader the money..........</FONT></DIV>
<DIV><FONT face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New"
size=2>Tom</FONT></DIV></BODY></HTML>
</x-html>From ???@??? Fri Jan 22 10:17:33 1999
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Date: Sat, 23 Jan 1999 04:57:41 +1100
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From: "Peter [ KKD ]" <derivatives@xxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: Elliott wave Monologue- Peter Karaguleski
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<DIV><FONT color=#000000 size=2> <FONT color=#000000>Accuracy
in analysis implies validity of methodology......even a monkey tossing a coins
can make money in a trending bull market with appropriate stops.......... but
the astute analyst only knows when the bull market begins &
ends</FONT></FONT></DIV>
<DIV><FONT color=#000000 size=2><FONT color=#000000></FONT></FONT><FONT
size=2>regards Peter</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 solid 2px; MARGIN-LEFT: 5px; PADDING-LEFT: 5px">
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>Tom Stein <<A
href="mailto:comfut@xxxxxxxxxxxxx";>comfut@xxxxxxxxxxxxx</A>><BR><B>To:
</B><A
href="mailto:derivatives@xxxxxxxxxxxxxx";>derivatives@xxxxxxxxxxxxxx</A>
<<A
href="mailto:derivatives@xxxxxxxxxxxxxx";>derivatives@xxxxxxxxxxxxxx</A>>;
RealTraders Discussion Group <<A
href="mailto:realtraders@xxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxx</A>><BR><B>Date:
</B>Saturday, 23 January 1999 4:51<BR><B>Subject: </B>Re: Elliott wave
Monologue- Peter Karaguleski<BR><BR></DIV></FONT>
<DIV><FONT color=#000000 face="Courier New" size=2>Peter wrote:</FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New" size=2> <You are
unfortunately closed to understanding market structure from you sarcastic
remarks...which is sad.></FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New" size=2>Peter....thankyou for
your in depth response.....I guess I did not make myself clear.....let me
try to rephrase it better........</FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT><FONT
face="Courier New" size=2></FONT> </DIV>
<DIV><FONT face="Courier New" size=2>The sole purpose of trading is to make
money....that is the entire purpose of market analysis for trading
purposes....even if that analysis is something that only 1 person in the
world understands....if that 1 person is making money at it....then it is
valid as far as that particular person is concerned.</FONT></DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT face="Courier New" size=2>That is why the gist of my previous
comment....included being amused that someone should think their analysis is
more valid than someone else's.....the only analysis that is valid, is the
one that makes each trader the money..........</FONT></DIV>
<DIV><FONT face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New" size=2></FONT> </DIV>
<DIV><FONT color=#000000 face="Courier New"
size=2>Tom</FONT></DIV></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Fri Jan 22 10:19:35 1999
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To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: FUTR: When COT data becomes more important, or not!
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When COT data becomes more important, or not!
The Commitment of Traders report gives a dated snapshot of commercial and
speculative positions in the futures and futures options markets. Some
analysts routinely derive some strong opinions about future direction of the
futures markets based on these reports. Regardless of whether they are right
or wrong, it does make a good story.
Some look at the Large Speculator position and say it is too large one way or
another. Others look at the Small Speculator, because they are always wrong.
Right?
Others look at the Commercial positions because commercial are real endusers
and thus potentially have the best fundamental information about the market.
This is where the analysis gets a little fuzzy for me. Commercial futures
positions are really just one component of a variably weighted algebraic
equation. The equation for the complete commercial position in a commodity is
equal to its net futures position + its net cash commodity position + its net
futures options position. The weighting of each of these can vary greatly
depending upon the conditions.
Market movement alone can alter the position significantly, without any
adjustments to any cash, futures or futures options position, due to the
dynamics of options. They could be short futures, short cash and long a
boatload of options (calls and puts) against it.
The COT report comes out with two reports. The first one is futures positions
and the second is the futures + the options. Now the quirky thing about this
is that if the commercial is long a call, any strike call, that is another
unit long. Does not matter if it is in the money or out of the money, what
the delta or gamma is. It is one contract in long or short. Thus, you have a
variable defined as a constant. Makes for some funny math and some fuzzy
conclusions.
OK, that is the downside. What about the upside? Well, in the grains right
now the farmer received a big cash payment, due to low prices, as part of the
transition to freer markets as part of the Freed to Farm Act. This has two
important effects. One, it gives the farmer a cushion so they don't have to
sell their grain at distressed prices, at least right away. Two, it buffers
the natural market effect of pushing high cost excess capacity out of
production. Anyway, I think that because the farmer does not have as much
economic pressure to sell as in the past, they are not selling at a rate that
would satisfy current cash market needs.
This is reflected in the positive corn basis in Decatur, IL. Despite all we
hear about the glut of corn around, the commercials in Decatur (mainly ADM)
are paying above the nearby futures price to get corn today. If they cannot
originate enough cash corn from the country, then they can hedge their needs
in the futures or futures options.
This influence, I believe, means that there is more weight in the algebraic
equation towards the futures and options components and less in the cash
position. This, I believe, gives greater significance to current COT data in
the grains. You still need to deal with the fuzzy math of the options
positions. But, by following the Kevin Nevers grain players sheets you can
glean information about some of the larger trades from all the players,
including the commercials. These players sheets are available from the CBOT
website, www.cbot.com. I have no connection to this service, other than as a
client and I know Kevin. (He tells very bad jokes). Many brokers and
brokerage offices receive the players report, so you might be able to get your
non-discount broker to give you a rundown on any significant trades listed on
the end of the day copy of the report.
These observations were not meant as a recommendation to buy or sell any
specific futures or futures option contract. I can and will change my mind.
Regards,
John J. Lothian
President
Electronic Trading Division
The Price Futures Group, Inc.
www.pricegroup.com
Disclosure: Futures trading involves financial risk, lots of it!
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