S&P 500 Smart Money Sentiment 9/12/19 – Is The Silver Breakout A Fakeout???
The Commitments of Traders (COT) is a weekly market report issued by the Commodity Futures Trading Commission (CFTC) listing the positions held by commercial traders and the “Smart Money”, the hedge funds and bank institutions in various futures markets in the United States. Since the COT measures the net long and short positions held by speculative traders and commercial traders, it is a great resource to gauge sentiment in the Markets.
Since breaking out of the long term down trendline in July, Silver has climbed more than 30%. However, last week, Silver formed an inverted hammer candle on the weekly chart. A hanging man is a bearish reversal candlestick pattern that occurs after a price advance and hints at the reversal of an uptrend.
So is Silver’s breakout a fakeout?
Well, for the Silver Bulls out there, what we see is as price is increasing, so is the open interests, meaning the Smart Money is buying long futures contracts.
The buying frenzy is also being supported by the bullish sentiment, which has increased from 10% in June to almost 70% today.
But the raw data to put the Silver Bulls at ease. There was selling back in May, but since then, the Smart Money net positions continue to increase. Thus, the Smart Money has confirmed, this isn't a fakeout, but a pullback before the continuation higher.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.