Silver finished the week on a strong move up. Silver is at, or slightly above, a three-year trend line. The COT shows the net position of commercials at a multiple year low; meaning the majority of commercials (the big buyers and sellers) have short positions on silver. As do we. Difficult to hold through, but that is the strategy.
Gold provides, as it so often does, a similar picture to Silver.
Crude oil ventures up towards the position suggested on my charts last week. A possible short on crude may present itself this coming week.
USD CAD had little movement in weekly chart terms.
Copper dipped early in the week and gave us a reasonable out position. Copper reversed back up by the end of the week as anticipated.
The strategy on commodities is to go long or short reasonably early based primarily on commitments of traders (COT) information and supported by analysis of weekly charts. We use weekly charts as that corresponds to the weekly COT release. The COT is released UK time late Friday evening and is based on the previous Tuesdays collation of information by the CFTC.
This strategy often calls for a significant period of time, several weeks or even months, where the trade is out of the money. Treat the COT as turning a large tanker ship analogy – it ain’t quick!
To balance this ‘slow’ strategy we’ve decided to include a portion of the Slow Trader fund in our intraday trading. That sounds fancy, but is just a way of saying we trade with charts that are incorporated within the day. In our case 1, 2, 15 and 60 minute charts.
In this instance we take as many as 9 to 15 trades a day and normally complete all trades before the end of the day. I’ll discuss our strategies for intraday trading in next week’s blog.