COT Money Flows

As previous suggested, time does not support a material counter trend rally in the dollar. While media spin encourages this perspective, it conveniently ignores the money flows in the futures and options market. The long awaited turn in the commercial traders flows has occurred. I am watching the nonreportable flows closely now. They have yet to turn, but are expected to do so soon. These conditions suggest that the dollar will resume its decline despite the calls for the contrary.

U.S. Dollar Index and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

U.S. Dollar Index and the Nonreportables Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


COT Money Flow Table:


As expected, the COT money flow table reveals that the invisible hand in the long bond market continues to beat the grass to startle the snakes. In other words, it supports price. The long bond market is acting way too predictable for a competitive, diversified market. Maybe the invisible hand has become too influential to discreetly influence direction.

Money flows into the Yen have eased a bit but still look favorable. This strength suggests a test of overhead resistance is imminent. A website search, keyword Yen, will provide further discussion about the Yen and it's technical position.

A quick note on gold:

I suggested awhile back on jsmineset.com that this C-wave advance would be different in terms of money flows and relative short or net long position. Back in September, many gold bears were predicting a decline in the gold market due to the extreme short, or negative net long position of the commercial traders. On 9/22/09, their net long position was below -50% of total open interest. At the time, I suggested that gold, similar to 2005-2006, would rally despite the short position and well-publicized concerns. I also suggested that the short position would be reduced into strength as the rally matured. The Net Long As A % of Open Interest chart (below) illustrates this outcome.

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Net Long As A % of Open Interest:


Where do we go from here? The C-wave is not done. An increase in commercial net longs should not be interpreted as a positive until the start of the D-wave. These counter intuitive money flows, illustrated in the chart below, are a reflection of centralized control and the tactics used to maintain that control.

Gold will pause only when TIME is right. At that point, money flow interpretations will change.

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest: