COT
Time for the latest market positioning check. Below are a few graphs of our favorite securities and the non-commercial, or speculative positioning. The data is of last Tuesday (latest available) so it is free of the Dubai noise and the Black Friday shopping scare. Also its void of any Tiger bait (sorry).
Still I'm not to sure those events really altered positioning all that much given the little change in prices in Euro, Gold and the rest:
The first chart is of the Euro (not EURUSD remember) and specs have certainly pared their Long positions. They basically got it right this year, became greedy in March and have tapered off this Autumn. Obviously EURUSD has not tapered back nearly as much therefore a divergence is being created so it may be an interesting December yet.
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Crude - Does the chart look familiar? It should although Oil traders have not pared back their bets on Crude as much as Euro traders have. There are certainly some other factors such as supply and demand during the upcoming holiday driving season, but still its a battle of risk-on / risk-off. Right now Crude traders are either a bit more optimistic or slow to pare their bets.
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Gold - There should be no surprise here. Onward and upward. No taking off risk before the holidays. If anything Dubai, the RBA, the SNB, the BOJ and all others making noise right now give reason to be Longer Gold for some time to come.
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Looking at Gold since 2003 you could argue two ways:
1) Positioning is up (on the Long side) 5x since 2003 and the price of Gold is up 5x as well. Therefore traders have been correct
or
2) Traders have pared their Long positions all too frequently in this one-way move and too many missed out on the major gains. Typical traders that sell too soon and fail to obey their stop losses.
I'll let you decide but it was interesting digging up the Gold data as one thing you do notice are the proliferation in the contracts that specs can trade now. Basically they've doubled in just a few years and Gold now has two types of contracts.
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Elsewhere I see and hear about people bottom-fishing in USDJPY and its been an ongoing concern for a few weeks, if not months. Specs do not agree. Given the way that Gold is flying high says a lot about confidence in central banks and with US rates at 0% for at least another year specs are loving the Yen. The BOJ has started to become a bit more vocal but until they act I'd assume that traders will not reverse course here.
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