My 1st Million At 33 – yes, you can do it too

Crude Oil [ http://www.buythebottom.com/wtic.html ]

Net-commercial position increased by 8,088 contracts last week. This marks the end to three consecutive weeks of commercial selling, totaling a 29,056 contract net-decrease between November 7th and November 21st.

Looking back at the oil market, the commercial setup remains to the upside barring a new wave of commercial selling; so keep an eye out on this week’s COT data. On a shorter-term basis, the oil ETF (above) is displaying a bull-flag pattern. Confirmation of this pattern will take place when/if USO moves above the 54.5 – 55 dollar range. If oil indeed breaks out, this will – in my mind – confirm a bottom set around November 20th. If not, then we could expect another push down, perhaps re-testing the lows. Notice the green-arrows; each one represents a false-breakdown…which I find typical in a market that is setup to rally.

This market has been setup for at least a month now, yet there is hardly any sign of a rally. In spite of this, keep in mind that patience is a virtue; a rally may be literally hours away. Pay close attention to this market, the lack of volatility over the last four/five days is a telling sign that a big move is imminent: up or down.

Broad Markets

Russell 2000 [ http://www.buythebottom.com/rut.html ]
Net-commercial position decreased by 208 contracts.

S&P 500 [ http://www.buythebottom.com/spx.html ]
Net-commercial position decreased by 7,797 contracts.

NASDAQ 100 [ http://www.buythebottom.com/ndx.html ]
Net-commercial position increased by 194 contracts.

Dow Jones [ http://www.buythebottom.com/indu.html ]
Net-commercial position decreased by 635 contracts.

From a commercial perspective, the Russell 2000 and NASDAQ 100 look descent while the S&P500 is deteriorating and the Dow Jones remains largely unchanged in negative territory for the last little while. It looks like the markets will continue higher for now, until we see significant selling in the NDX and RUT.

Also of important note, commercials are recent buyers of the VIX (volatility index). In other words watch out for additional volatility to enter the market which typically translates into lower prices for stocks. In other words, watch the VIX, if commercials maintain their elevated net-long position, be wary of market declines. If on the other hand commercials sell volatility, I would anticipate less volatility in the near-future which typically translates into higher prices for stocks. I will advise everybody on the mailing list about the VIX position when the COT data is released.

Commodities

Gold [ http://www.buythebottom.com/gold.html ]
Net-commercial position increased by 1,252. From a long-term perspective I am bullish on gold, but in the intermediate-term I am turned off by the recent wave of commercial selling. As of right now I am somewhere between neutral and bearish on this market. All that means is that from a commercial-perspective I currently see more downside than upside potential.

Currencies

US Dollar [ http://www.buythebottom.com/usd.html ]
Net-commercial position increased by 8,833 contracts. What I find interesting is that this market declined from $87 to $85 as commercials were big sellers. However, right after that, commercials turned around and started buying the US Dollar index, rather aggressively might I add. And during this buying, the USD actually broke down and is only now finding support in the $82 area. The USD index is setup for a rally as long as commercials remain buyers at this level. With the current commercial setup I do not expect the selling pressure to continue much longer, I would watch for a bottom and a subsequent rally to materialize.