Weekly Fundamentals - 18 December 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
THIS IS OUR LAST WEEKLY REPORT UNTIL THE NEW YEAR. WE THANK AND WISH OUR READERSHIP A VERY HAPPY AND HEALTHY 2017
 
In conclusion to our report two weeks ago we wrote:
"Not a great many changes in COT readings this week so therefore our thoughts and recommendations remain intact.

Therefore our recommendations for next week are:
Stay flat on the USD
Go long on AUD
Stay wary of risk
Continue buying gold on any dip.
Continue buying the EURO on any dip."

Now let's see how we fared on our recommendations:
Staying flat on the USD was wrong as it rallied strongly

Going long the AUD was also wrong as it fell
Staying wary of risk was a good call as the SP500 closed unchanged
A good call on gold as it fell allowing for more accumulation
The EURO fell allowing for more accumulation.
 
An average week.
 
A quiet week in terms of data as we approach the holiday period.
 
USD: The US$ Index closed higher on the week.
On Wednesday we have Crude Oil Inventories.
On Thursday we Core Durable Goods Orders which excludes transportation items. It is expected to fall from 0.8% to 0.2%. This is followed by GDP expected to be 3.3% from 3.2% and finally the usual Unemployment Claims figure expected to be 255,000 from the previous 254,000.
COT data shows that large commercials marginally increased their net short position in the US$ Index from -61,536 to -63,239 last week. This is close to a 52 week extreme so we therefore alter our view from NEUTRAL to SLIGHTLY BEARISH.
 
EURO: The EURO fell against the USD last week.
Only one item for the EURO this week.
On Monday we have German Business Climate figure thought to rise very slightly from 110.4 to 110.7.
COT data for the Euro shows that large commercials decreased their net long position from +126,616 to +99,301 last week. We therefore remain SLIGHTLY BEARISH.
 
GBP: The GBP fell slightly against the USD last week.
Only one item for the GBP this week.
On Friday we have the Current Account figure thought to improve slightly from -28.7B to 28.3B.
COT data shows that large commercials slightly decreased their net long position from +89,639 to +83,840 last week. We therefore remain BULLISH.
 
YEN: The YEN fell strongly against the USD last week.
Three items for the YEN this week.
On Monday we have both the BOJ Policy Rate and the Monetary Policy Statement.
On Tuesday we have the BOJ Press Conference.
COT data shows that large commercials significantly increased their net long position from +57,093 to +87,429 last week. We therefore remain BULLISH.
 
AUD: The AUD fell against the USD last week.
Two items for the AUD this week.
On Monday we have the Monetary Policy Meeting Minutes and the Mid-Year Economic and Fiscal Outlook.
COT data shows that large commercials decreased their net short position from -19,803 to -15,825 last week. We therefore remain SLIGHTLY BULLISH.
 
CNY: There 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 closed unchanged last week. Large commercials slightly increased their net long position from +73,358 to +76,902 last week. We therefore remain NEUTRAL.
RUSSELL2000: The RUSSELL2000 fell last week. Large commercials slightly increased their net short from -57,477 to -58,449 last week. This is a 52 week extreme. We therefore remain BEARISH.
NASDAQ100: The NASDAQ100 rose slightly last week closing on its high. Large commercials increased their net short position from -51,400 to -89,344 last week. We therefore alter our view from NEUTRAL to SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD fell last week. Large commercials decreased their net short position from -154,944 to -149,886 last week. Now that large commercials hold a net short position which is smaller than 200,000 we are slightly bullish. We therefore remain SLIGHTLY BULLISH.
SILVER: SILVER fell strongly last week. Large commercials increased their net short position from -75,740 to -81,131 last week. We therefore remain BEARISH.
COPPER: COPPER fell strongly last week closing on its low. Copper is an important metal as it is a leading indicator for many commodities. Large commercials increased their net short position from -57,469 to -60,670 last week. Large commercials generally carry a net neutral position. This is now a substantial short position and is a 52 week extreme. We therefore remain BEARISH.
CRUDE OIL: CRUDE fell slightly last week closing on its highs. Large commercials substantially increased their net short position from -399,361 to -447,841 last week. This is now a 52 week extreme. We therefore remain BEARISH.
 
The gold:silver ratio increased from 68.98 to 70.60 indicating strong silver underperformance last week.

DEBT:
US 30 YEAR BOND: The BOND fell last week. Large commercials decreased their net long +72,706 to +51,662 last week. We therefore remain BULLISH.

OTHER FX:
CAN$: The CAN$ fell last week. Large commercials decreased their net long position +22,893 to +20,121 last week. We therefore remain SLIGHTLY BULLISH.
NZD: The NZD fell strongly last week. Large commercials slightly decreased their net short position from +2,318 to +2,122 last week. We therefore remain SLIGHTLY BULLISH.

THOUGHTS FOR NEXT WEEK
We turn ever more increasingly bearish on risk assets
We turn ever more increasingly bullish on the precious metals
We like bonds
We do not like the USD
We particularly like the EURO and the YEN.
 
Therefore our recommendations until our next report are:
Use rallies in risk to sell into
Buy precious metals especially gold on dips
Buy bonds on dips
Sell the USD on any rallies especially against the AUD and YEN.
 
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