Once again, we got what we were looking for in the silver market. Gold also continued to fall before finding a bit of support. The big picture doesn’t suggest these moves are over. It looks like the copper and platinum markets are heading south in sympathy.

Speculative traders in copper have bought approximately 56,000 contracts since mid-January. This is the time of purchasing from speculators when they expect a big spring building season. Unfortunately for the speculators, the market tends to top shortly after the buying splurge wears off. Correspondingly, the commercial producer selling suggests that those delivering copper are more than happy to take the current prices offered. This is indicative of a top, and the commercial traders could cap the market’s rally below $3.01 per lb.

We sent a special alert to our readers Friday, March 1, regarding the platinum setup. We noted that this was a seasonal setup for a short trade that also came with the bonus of commercial selling near the tail end of a six-week rally. We had reason to believe the platinum market was out of gas. We think the platinum reversal has further to fall as the recently long speculators are forced to bail. I expect the net speculative position, which currently stands near 21,500 contracts to be much smaller next week.

The interest rates closed strongly in price as the stock market softened. While none of the swing highs have been taken out, the covering of the commercial short position suggests the timing might not be quite right. Offset any interest rate positions and look for a better re-entry point. I’ll be discussing the setup for a significant inflection point in the interest rate sector in my advance COT analysis class at the TradersExpo New York.

I’ll close with an examination of the grain sector. I don’t have any specific trades ready to go, but I do see the cycles setting up for a grain rally of some sort as we head into planting season. Commercial trader momentum has turned positive in all of the grains but oats. Additionally, the four-week trend is higher in each of the grain markets’ commercial position. When we combine the COT action with recently low volatility near the bottom of oversold levels, it’s easy to see that there could be some pent up strength in the grain markets. Watch the grain markets closely. This is the time of year, and type of setup that can lead to the best buys of the year.

Enough for now, See you in New York.

COT Table