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• Top: COT Net Positions
• Middle: COT Group Open Interest
• Bottom: Price Data

Note: When it comes to COT where there are a lot of Commercial players (Blue) as well as Non-Commercial players (Green), they should be on opposite sides of the trade from each other.

Spot #1. First sign of information. (10/20/2006, the day that we actually received the data).

The Commercials and the Non-Commercials have changed their positions. The Commercials have changed to a Net-Long side while the Non-Commercials have moved to a Net-Short side. As the Non-Commercials have been moving from long to short, they have been adding into their short positions (as seen by their Open Interest increasing). This is the first sign.

Spot #2. Confirmation. (11/17/2006, the day that we actually received the data.)

The Commercials now have many more long positions than before, and the Non-Commercials now have many more short positions than before. The Net-Positions are more separated than normal (the blue and green lines are further away from each other than what we normally see in the history), but the important part to this is that the open interest is still increasing. The Commercials are adding into their long-positions smoothly and more consistently than in the past. The Non-Commercials here are also interesting. They are adding into their short positions to the point that they have more short positions held now than at any past time on the chart (they believe that a move is going to occur and they want to take advantage of it).

As we follow the result, we see that the price begins to go down and the Commercials and Non-Commercials continue to make extremes in both the net positions as well as the number of actual positions held.

Note: Back at the end of July the Non-Commercials moved short for a couple of weeks. The Commercials did not. Also, neither group was adding into their positions when it happened. There was nothing to push the market so this would have not been seen as the time to go short. No reason for a reversal.