Using DCOT futures only data this chart shows that speculators are the least long (total longs / total positions for 20 commodities) since early 2009. And that is even though they are the longest NG since 2006.
They have been getting ready for the drop, or causing it, for two months.
Good reason to be cautious with puts right now.
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The following 4 users say Thank You to ron99 for this post:
Yes....However, when selling 30, 40, etc. days out this is where the longer term (weekly) charts may be more useful to see that time-frame of a trend. I use the daily time frame to try to judge a timing signal. My definition of a timing signal is not to pick a top or bottom of a market but more of a pullback against the underlying trend where I 'think' there may be some profit taking occurring and option premiums per the direction of the trend can deflate quickly. If this area of price action lines up with seasonal trends...even better.
Do I sell puts in a downtrend and vice verse? Yes, but only when I see strength to the upside as described above. I may buy back the puts (for profit hopefully) and not hold them until expiration in the event that downtrend does continue...
I think the recent violent movement in the metals and energies is a good thing as far as trading psychology is concerned. You have to remain humble as a trader. Losses in trading can be a good thing because they are a learning experience. Were you over-positioned? Did you enter a marker because you felt that you must be in a trade = no patience to let the market come to you? Under-capitalized? No exit plan?
Losses are part of trading and the markets always have the final answer.
I'm flat right the markets now and being gone for the week has caused my non-grass weed species trend to rise so I'm off to invest in some lawn mower futures for the next few hours....
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