33 replies to this topic

[maineman]

Great stuff, I really appreciate it. Thanks for the clear explanations. mm

[U.F.O.]

Thx. maine. danz'll probably come back online and tell me I missed the point entirely, but that's OK too. I love doing this Sherlock Holmes schtick. U.F.O.

[thespookyone]

Nice work and takes, UFO, thx.

[danzman]

Thx. maine. danz'll probably come back online and tell me I missed the point entirely, but that's OK too. I love doing this Sherlock Holmes schtick.

U.F.O.

You missed it completely! Just kidding. Keep it simple though. Just worry about
the one piece of data that matters. You've still got a ways to go before you
see it. Rome wasn't built in a day. This is IT timing, and I don't make much out
of the week to week moves.
D

[danzman]

can you imagine what would happen if the commercial herd stampedes and goes from short to long?

Well, that would mean the specs are shorting or dumping longs. What's going to make
them do that? Seems to me the easiest way is to crack the lows.

D

[U.F.O.]

danz, you've got me flummoxed here. What am I missing? Falling open interest preceding a move down? Remember...Sherlock Holmes gets pi$$ed if he's wrong for long. U.F.O.

[U.F.O.]

How about this. It's more difficult for market makers to move (control) the market during periods of high open interest. There's a "sweet spot" in the contract expiration cycle where between -60,000 and -20,000 open interest they can catch the most players wrongfooted (large and small specs potentially) and still have the ability to manipulate the market. We're about to enter such a period now.

U.F.O.

[humble1]

the way i see it: the commercials ("they") are not thinking at all about anyone but themselves. "they" are not playing a bust 'em game with small specs. the key point is that they have started buying futures. they are lifting hedges. they are starting to believe the water is safe. it's that simple, imho.

[U.F.O.]

Who are they buying from h1? No-one's a seller down here but them. Remember, it's a zero sum game. If you add all the longs above the line (small specs) and subtract all the shorts below the line (commercials and large specs) the total is zero. The commercials can't just decide to go long unless someone is willing to sell them contracts. It looks like the commercials are less short recently primarily because the large specs have sold their long positions.
U.F.O.

Edited by U.F.O., 25 January 2009 - 05:30 PM.

[humble1]

yes, the large specs have been capitulating/selling spec longs (outright longs). the commercials, which are hedgers, and so should feel no margin pressure, are willing to assume risk.

Edited by humble1, 25 January 2009 - 05:38 PM.