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TopStep's COTlive.com website. Our mission is to follow the flow of the money and at all costs, don't fight the river of cash. This website gives all traders equal footing with the pros that control the exchanges. The focal point is the CFTC Commitment of Trader's numbers (COT) To find a complete breakdown of 43 different markets go to http://www.cotlive.com

Topic: Crude Oil | Spot Contract is July 2009 | Date: 06/2009 | Week 22 of 2009

CLN9 Techinicals: High 146.17 on 07-14-08 | Low 42.22 on 02-19-09 | 38% = 81.80 | 1x3 this week is 71.00 or 33 cents per market days.

First off, the commodity traders keep a watchful eye on the Stock Market. Typically, the short-term trading memory lasts about 2 years. So Crude Traders remember all to well the power the Index Funds had on last year's monster bull! And then the reverse pyramids that came crashing down soon after. This is the problem of how the ETF's and Index Funds are created. ETF's Index Funds sell more commodity contracts at the lows when redemptions come in and buy the most contracts at the highs of the market as the public finally believes that they can't lose on those ETF stocks.

These sharp price rebounds we've seen in the crude and other markets most be considered corrections in a bear trend. Excluding the last bull market, the highest the crude ever traded was in the mid 40's. Now, traders believe $70 is cheep, with large supplies globally??? With the large swings experienced in the last 12 months, many institutional trades have lost too much capital and the commercial hedgers that normally rely on borrowing funds for hedge margins are now on the slippery slope of borrowing capital in uncertain banking sector. Institutional traders find themselves trading their positions instead of scaling more positions.. This psychology creates more volatility and sharp drops and pops in market place. Let's take a look at the CFTC Commitment of Trader's numbers to get a visual to see the number of contracts they're actually trading.

CRUDE OIL, LIGHT SWEET - NEW YORK MERCANTILE EXCHANGE

RECORDS!

OI

FL

FS

CL

CS

Fund_Vol

Comm Vol

Spec Vol

7-YR low

420657

27209

22872

243698

265921

64142

514136

76082

7-wk low

1093976

170991

139810

569025

624670

314857

1193695

138790

7-wk high

1246806

185237

194988

673149

690277

375371

1363426

236658

Record H

1549425

264395

245251

944649

1034076

462548

1956109

236658

Record H

7/17/2007

7/31/2007

11/11/2008

9/11/2007

7/10/2007

2/10/2009

5/13/2008

5/12/2009

7-YR low

9/25/2001

12/4/2001

5/1/2001

7/30/2002

12/18/2001

5/1/2001

8/6/2002

9/25/2001

HISTORY!

OI

FL

FS

CL

CS

Fund_Vol

Comm Vol

Spec Vol

5/26/2009

1095865

185237

145115

569025

624670

330352

1193695

151251

5/19/2009

1093976

175047

139810

578870

626843

314857

1205713

152702

5/12/2009

1246806

170991

167925

673149

690277

338916

1363426

236658

5/5/2009

1197954

175443

186728

667069

662705

362171

1329774

179701

4/28/2009

1139336

174308

174000

650007

642918

348308

1292925

155251

4/21/2009

1140230

180383

194988

635931

633346

375371

1269277

138790

4/14/2009

1192619

180982

176020

671472

685580

357002

1357052

142664

OI=Open Interest FL=Fund Longs FS=Fund Shorts CL=Commercial Longs CS=Commercial Shorts Vol=Total of Shorts + Longs | CFTC Data is derived on the previous Tuesday.

Funds Longs have mounted a sizable position and a 7-week high at 185237 contracts as the Fund Shorts just came off a 7-week low and have added to their short position this last week. Commercials, in my opinion have less at stake then the Funds because the Commercials are hedging cash positions but the data shows them exiting more positions, longs and shorts, on a weekly basis. One would expect the open interest to increase on a $40 dollar rally in crude prices, but that's not the case. Without looking at the breakdown of the COT numbers, traders will get the wrong impression. In the coming weeks one must watch the Fund Longs positions. If their numbers begin to drop, this rally maybe over, as liquidation and profit taking has begun. But, if the Funds Longs continue to add to their positions, don't fight the flow of money and stay long and buy dips.

The Bullish Consensus numbers show that 82% of the weekly traders interviewed are bullish. This is historically high and expresses to traders to use caution if implementing a new long positions. Many professional traders use this data as contrary thinking. Selling calls and /or buying puts against current long future positions may provide some protection in case this is possible top.