Flow State #39
Federal Optimistic Market Carnival
Welcome back, everyone!
This week, we will delve into another aspect of my trading strategy, which will be focused more on swing trading. Afterward, we will proceed to discuss the key events taking place this week that you definitely won't want to overlook. I will be providing earnings picks accompanied by clear guidance regarding my projections for the direction of the stocks after their reports. Additionally, I will share the Value Areas for the Indices, helping us maintain a favorable position in the market, both concerning indices and individual stocks. Lastly, we will conclude this newsletter by outlining my Daily Levels for 8.14.23. With such a wealth of topics to cover this week, let's jump right in and explore them all!
If you're curious about what's in store for our valued paid subscribers, I invite you to take a look at last week's post, which we've made accessible for our free subscribers to read and enjoy.
What is COT?
The Commitments of Traders (COT) report is a weekly publication by the U.S. Commodity Futures Trading Commission (CFTC) that provides insights into the positioning of different types of market participants in the futures markets. The report categorizes traders into three main groups: commercial traders, non-commercial (large) speculators, and non-commercial (small) speculators. These categories are defined based on the nature of their trading activities and positions in the market.
Commercial Traders:
Farmers: Imagine a corn farmer who grows corn crops for sale. The farmer's main source of revenue comes from selling corn, but the price of corn can be quite volatile due to factors like weather conditions and global demand. To protect against potential losses caused by a drop in corn prices, the farmer may enter into futures contracts to lock in a future selling price. This way, even if the actual market price of corn drops, the farmer's hedge in the futures market helps offset those losses.
Producers and Manufacturers: Consider an oil refinery that requires a steady supply of crude oil to produce refined products. Fluctuations in the price of crude oil can significantly impact the refinery's profitability. To mitigate this risk, the refinery may use futures contracts to secure a stable supply of crude oil at a predetermined price, thus reducing exposure to price volatility.
Non-Commercial (Large) Speculators: