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The weekly Disaggregated Futures-Only Commitments of Traders (DCOT) report came out today. It covers the time from Aug 3rd to and including Aug 9th. Gold futures increased almost $100 in that time frame.
The Commercial traders decreased their net short position by about 10,000 contracts. They got out of 4,300 shorts and added 5,600 longs.
The Index traders decreased their net short position by 28,300 contracts. They got out of 22,900 shorts and added 5,500 longs.
These 2 categories of traders contributed to the price increase with their bailing on their short positions.
What did the Money Managers (Hedge Funds) do? They dropped, and probably took a profit on, 36,500 longs! They added 870 shorts.
Other Reportables decreased their net long position by 6,200 because they added 10,200 shorts and added only 3,900 longs.
The only group that added net longs was the Non-Reportable (small specs) category. They added 6,200 longs and added 1,000 shorts.
So you could say that most of the reason for the large Gold price increase was probably due to large institutions bailing on short positions rather than traders adding longs.
OI for Gold futures decreased by 19,200 in this time period.
@ron99 I know this is an old thread and I am on the late late night show. Anyway I am trying to understand what setup you are looking for in the DCOT.
1) Is it a decrease in OI? If so, is there a percentage you take into consideration?
2) Once you notice the OI decrease what group do you pay more attention to (Producer/Swap/MMoney)? It would seem that the Hedge funds could have hold their positions for a little longer based on your example...
3) Do you look for a decrease in the Shorts from the Producers/Merchants(this are the commercials right?)? Similar to what Larry Williams proposes.
Any advice you can give me on Fundamentals is very much appreciated. I feel I am a little savvy on the technicals but the Fundamentals is new ground for me and it is hard to "backtest".
I mainly sell far out of the money options so I don't look at fundamentals much for ES. If I am selling options on other commodities I look at fundamentals a lot. I never look at technicals.
Thanks a lot for the detailed discussion. My conclusions:
Selling outright futures to add further puts does only make sense if the ES moves up significantly slower than in average or moves sidewards or downwards. In 2015 the move upwards was only 53 …
