Stephen Briese

Regardless of your trading methods, and no matter what markets you’re involved in, there is a Commitments of Traders (COT) report that you should be reviewing every week. Nobody understands this better than Stephen Briese, an industry-leading expert on COT data. And now, with The Commitments of Traders Bible, Briese reveals how to use the predictive power of COT data—and accurately interpret it—in order to analyze market movements and achieve investment success.

Stephen Briese is the leading expert on analyzing the Commitments of Traders data published by the Commodity Futures Trading Commission. Briese has published a newsletter, Bullish Review, since 1988 and has written articles for several industry publications and spoken at a variety of industry trading and technical analysis conferences.

List Of Illustrations.


List Of Tables.


Preface.


Acknowledgments.


Part One. Introduction.


Chapter 1. The COT —Assorted History.


The Grain Futures Administration.


The Commodity Exchange Authority.


The Commodity Futures Trading Commission.


The Modern COT Data.


COT Futures & Options Combined Report.


COT-Supplemental Commodity Index Trader Report.


Chapter 2. COT Reports —Counting 1, 2, 3 …


The Long Form.


The Short Form.


COT–Supplemental Commodity Index Report.


Chapter 3. Player Introductions.


Sizing Them Up.


The Reporting System.


Commercial Hedgers.


Large Speculators.


Commodity Index Traders.


Small Traders.


Chapter 4. Fading Small Speculators And Other Half-Baked Schemes.


TIP: Always Follow Commercials.


TIP: Net Long Is Bullish; Net Short Bearish.


TIP: Always Fade The Small Speculator.


TIP: It Is Only Logical To Compare Hedging To The Seasonal Average.


TIP: The COT Is Old News By The Time It Is Released.


Chapter 5. Net Positions.


Open Interest.


Constructing Net Positions Charts.


Large Speculator Patterns.


Commercial Patterns.


Small Trader Patterns.


Commodity Index Traders.


Chapter 6. The COT Index.


Calculating The COT Index.


Alternative Look-Back Periods.


The COT Index As The Great Normalizer.


Interpreting The COT Index.


Heal Thyself.


Chapter 7. COT Movement Index.


Commercial Movement Index.


40-Point COT Surge Rules (Commercials).


Combining The Indexes.


Fund Movement Index.


Chapter 8. View From The Gallery.


Keynes Theory Of Normal Backwardation.


Can Speculators Forecast Prices (Houthakker, 1957)?


Returns To Speculators And The Theory Of Normal Backwardation (Chang, E, 1985).


Returns To Individual Traders Of Futures: Aggregate Results (Hartzmark 1987).


Luck Versus Forecast Ability: Determinants Of Trader Performance In Futures Markets (Hartzmark 1991).


The Returns And Forecasting Ability Of Large Traders In The Frozen Pork Bellies Futures Market (Leuthold, Garcia, And Lu. 1994).


Hedging Pressure Effects In Futures Markets (De Roon, Nijman, And Veld 2000).


Hedging Demand And Foreign Exchange Risk Premia (Tien 2001).


Investor Sentiment And Return Predictability In Agricultural Futures Markets (Wang 2001).


The Behavior And Performance Of Major Types Of Futures Traders. (Wang 2003)


Exchange Rate Changes And Net Positions Of Speculators In The Futures Market (Klitgaard And Weir 2004).


The Profitability Of Speculators In Currency Futures Markets And Manners 2004).


Summary.


Chapter 9. View From The Pits.


The Study Data.


The Trading Rules.


Trading Rules Test Results.


Trading System Considerations.


Chapter 10. Chart Pattern Validation.


A Brief Charting Primer.


Bottom Formations.


Top Formations.


Continuation Patterns.


Chapter 11. Getting Technical.


COT–Stochastics.


COT MACD–Histogram.


COT–RSI.


Standard Deviation (Bollinger) Bands.


Conclusions.


Part Two. Breaking Down The COT Report.


Chapter 12. Crossing Currencies.


Commercials.


U.S. Dollar Index.


Charts And Correlation Tables.


Chapter 13. Taking Stock.


The COT Beats The Averages.


Stock Index Charts And Correlation Tables.


Chapter 14. Test Of Metal.


Golden Opportunities.


The Gold/Silver Ratio.


The Copper Caper.


Commercials.


Metal Charts And Correlation Tables.


Chapter 15. Oil's Slick.


Barons Of The Oil Pit.


To An Uninterrupted Gasoline Supply.


Commercial Hedgers.


Historical COT Charts And Correlation Tables.


Chapter 16. Interest In Rates.


What Drives Rates?


Commercial Hedgers.


Treasury Charts And Correlation Tables.


Chapter 17. Bean Counting.


The One That Got Away.


Commercial Hedgers.


Charts And Correlation Tables.


Chapter 18. Moonlighting.


At Least You Can Eat Your Mistakes.


It Might Be Corny, But…


Small Can Be Beautiful


Commercial Hedgers


Historical COT Charts And Correlation Tables


Chapter 19. Cedeless Oranges.


And Then There Were Seven


Historical COT Charts And Correlation Tables


Chapter 20. Now You CIT, Now You Don't.


The COT–Supplemental Report.


Historical COT—Supplemental Charts.


Epilogue.


Appendix A. Alternate Net Position Formulas.


Appendix B. Dodging The Pitfalls In COT Data.


References.


Glossary.


About The Author.


Index.