This Week's CoT: Futures And What Hedge Funds Are Buying

Medium term, both weekly and monthly – way overbought – have tons of unwinding left. This week’s action produced another weekly hanging man; the pattern was also formed last week. This followed a gravestone doji before that and a dragonfly doji the week before. These are potentially bearish candles and need confirmation.

Euro: Currently net long 93.9k, up 9.1k.

The euro ($1.2141) hit the wall just under $1.22 for three consecutive sessions before retreating on Wednesday. It is still comfortably above horizontal support at $1.19-$1.20, which goes back 18 years.

Last week, the currency broke through a falling trend line from January 6 when it ticked $1.2345. A loss of $1.19-$1.20 will have negated the breakout.

Gold: Currently net long 192.3k, up 21.5k.

Gold ($1,838.10/ounce) on Friday rose as high as $1,847.10 to just about test its 200-day ($1,854). The average is flattish, even as the 50-day ($1,757) is now rising. The 200-day also lines up with horizontal resistance at $1,850s.

Gold has hammered on $1,840s for six sessions now. The metal is itching to break out.

In the week to Wednesday, for the first time in 16 weeks, GLD (SPDR Gold ETF) saw positive flows, gaining $340 million (courtesy of ETF.com). In the prior 15, $8.7 billion was redeemed.

In the meantime, non-commercials raised net longs in gold futures to a 11-week high.

Last week, the metal jumped 3.6 percent after repeatedly defending $1,760s-$1,770s. As long as this level is intact, it is gold bugs’ ball to lose. Nearest support lies at $1,800, and of course $1,760s-$1,770s after that.

Nasdaq 100 index (mini): Currently net short 6k, down 10.8k.

Since bottoming on March 5, the Nasdaq 100 has made higher lows, including the one this Wednesday when it tagged 12967.18. By then, the tech-heavy index was down 7.8 percent from the intraday high of 14073.48 posted on April 29.

For the week, the index (13393.12) lost 2.4 percent, having impressively recovered from down 5.5 percent at the lows to close right on the 50-day.

The daily can rally. But the medium- to long-term picture is worsening. The index already breached a rising trend line from the low of March last year, starting January with a monthly long-legged doji, followed by a dragonfly doji in February and a gravestone doji in March. It tried to negate all these potentially bearish candles by rallying 5.9 percent in April, but with 10 sessions to go this month, the Nasdaq 100 is down 3.4 percent.

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