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Give me six hours to chop down a tree and I will spend the first four sharpening the axe.

Abraham Lincoln

The COT index number this week stands at +0%. This continues the trend of lower COT index numbers over the last four weeks. This has correlated with the market that has topped out and last week moved lower. This week’s number would therefore suggest further weakness in the market, and potentially a weaker market for the moment. Thus I would avoid buying the dip for any longer term positions. I would only consider any new long positions for a swing, counter trend type of trade.

Technical

However the technical picture suggests that a counter trend move higher may well be on the cards. On this basis, with support at circa $177.oo, I would be looking for the market to bounce, but, it would be a counter trend trade until the current short term downtrend is reversed, if indeed that is the outcome. I would look to close any swing long positions circa the $181.oo area, but be prepared to close any trades quickly.

Longer Term Positions

These positions can be managed, or simply be left to themselves currently until a trend develops. As they are market neutral and can profit from a move higher or lower, no decisions need be taken currently, unless they are currently sitting in profit, where locking in that profit may be an option.

Federal Reserve.

There is again chatter in the market with regard to a December taper. Really? With the economy a mess, unemployment static and corporate profit growth largely non-existent, the chatter is just that chatter. Of course, those that can offset short term positions may do so, which is one reason why the COT number has been trending down the last four weeks. The message is simply wait until the market is satisfied that there is no taper to be announced by the Fed, and the COT trend to reverse.

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