Weekly Fundamentals - 20 November 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
THE COT FIGURES WE USED IN LAST WEEK'S REPORT WERE ERRONEOUS SO THIS WEEK'S COT FIGURES ARE COMPARED TO THOSE OF TWO WEEKS AGO. 
 
In conclusion to our report two weeks ago we wrote:
"Wow what a difference a week makes!
A large number of changes in COT readings.
The Trump victory would seem to spell a return to a FED normalization of rates and so the USD soared.
Interestingly so have precious metals and the YEN.
Risk on the other hand has remained virtually unscathed.
Whilst this does mean that our recommendations below are markedly changed from the last few weeks the recommendations do come with a very strict warning, the uncertainty of what Trump has said and what he will do are very, very different things so the only thing we can say with any certainty is that volatility will remain heightened.
 
Therefore our recommendations for next week are:
Sell the EURO and GBP
Buy YEN
Sell risk in small amounts
Buy precious metals
Stay overly cautious!"

Now let's see how we fared on our recommendations:
Selling both the EURO and the GBP were good calls
Buying the YEN was awful
Buying precious metals was wrong
Staying cautious on risk was also incorrect.
 
A mixed week.
 
A very quiet week in terms of data.
 
USD: The US$ Index rose sharply closing on its highs for the week.
All USD data takes place on Wednesday.
Core Durable Goods Orders is expected to rise from 0.1% to 0.2%.
Unemployment Claims is thought to rise from 235,000 to 241,000.
We also have Crude Oil Inventories.
Finally and most importantly we have the FOMC Meeting Minutes.
COT data shows that large commercials marginally decreased their net short position in the US$ Index from -60,123 to -53,240 over the two weeks. We therefore remain SLIGHTLY BULLISH.
 
EURO: The EURO fell against the USD and closed near its lows last week.
Only two items for the EURO this week.
On Monday the ECB President speaks.
On Thursday we have the German Business Climate indicator expected to remain virtually unchanged at 110.6.
COT data for the Euro shows that large commercials decreased their net long position from +156,389 to +130,972 over the two weeks. We therefore remain SLIGHTLY BEARISH.
 
GBP: The GBP fell against the USD last week. The GBP continues to trade near a 31 year low against the USD.
Only one item for the GBP this week which is the GDP number on Friday expected to remain static at 0.5%.
COT data shows that large commercials slightly decreased their net long position from +96,565 to +94,327 over the last two weeks. We therefore remain BULLISH.
 
YEN: The YEN fell against the USD last week, closing on its lows.
Only one item for the YEN this week which is on Thursday when we have Tokyo Core CPI expected to remain at -0.4%.
COT data shows that large commercials massively decreased their net short position from -28,157 to -6,905 over the last two weeks. We therefore remain BULLISH.
 
AUD: The AUD fell against the USD last week closing on its lows.
There is no newsworthy data for the AUD this week.
COT data shows that large commercials slightly decreased their net short position from -46,709 to -45,563 over the last two weeks. We therefore remain NEUTRAL.
 
CNY: here is no data for the CNY this week.
There is no COT data for the CNY.
 
COT data of note on products we regularly comment on in our DAILY REPORTS and WEEKLY BONUS VIDEOS and for those products which show large commercials with extreme net positions.
 
RISK:
S&P500: The S&P500 rose last week. Large commercials decreased their net short position from -56,964 to -26,282 over the last two weeks. We therefore remain SLIGHTLY BEARISH.
RUSSELL2000: The RUSSELL2000 rose substantially last week closing on its highs. Large commercials decreased their net long position from +6,128 and are now net short -25,268 over the last two weeks. We therefore remain BEARISH.
NASDAQ100: The NASDAQ100 rose last week. Large commercials decreased their net short position from -131,820 to -74,939 over the last two weeks. We therefore remain NEUTRAL.
 
COMMODITIES:
GOLD: GOLD fell last week. Large commercials decreased their net short position from -239,251 to -199,966 over the last two weeks. Now that large commercials hold a net short position which is smaller than 200,000 we turn slightly bullish. We therefore alter our view from NEUTRAL to SLIGHTLY BULLISH.
SILVER: SILVER fell last week. Large commercials slightly increased their net short position from -76,917 to -78,521 over the last two weeks. We therefore remain BEARISH.
COPPER: COPPER rose last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials massively increased their net short position from -6,534 to -43,264 over the last two weeks. Large commercials generally carry a net neutral position. This is now a substantial short position and is a 52 week extreme. We therefore alter our view from NEUTRAL to BEARISH.
CRUDE OIL: CRUDE rose last week. Large commercials decreased their net short position from -375,009 to -277,574 over the last two weeks. We therefore remain BEARISH.
 
The gold:silver ratio increased from 70.71 to 72.95 indicating strong silver underperformance last week.

DEBT:
US 30 YEAR BOND: The BOND fell last week. Large commercials increased their net long +22,024 to +27,236 over the last two weeks. We therefore alter our view from SLIGHTLY BULLISH to BULLISH.

OTHER FX:
CAN$: The CAN$ was unchanged last week. Large commercials increased their net long position +24,770 to +32,534 over the last two weeks. We therefore remain BULLISH.
NZD: The NZD fell last week closing on its lows. Large commercials increased their net short position from -433 to -3,737 over the last two weeks. We therefore remain NEUTRAL.

THOUGHTS FOR NEXT WEEK
We are fast approaching the end of the calendar year.
What this means is dwindling volumes and heightened volatility as funds and traders tey to eke out quick returns to safeguard their bonus'.
We remain of the view that risk is in a precarious position and precious metals a small buy on every dip. However this is our long term view. Our short one will always be dictated and determined by COT findings.
This week there is little in the way of any changes with the exception of Copper and the Bond.
 
Therefore our recommendations for next week are:
Sell Copper
Buy the Long Bond.
 
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