Legal Insider Information

The Commodity Futures Trading Commission’s comprehensive breakdown of who owns what in the futures markets is legal inside information, which makes the U.S. Futures the most transparent markets in the world. If you trade, you need to know what the COT report reveals. 

You can monitor this report yourself at www.CommitmentsOfTraders.ORG, where Steve provides free COT charts and free COT data—and not just partial teaser files, the whole shebang from 1983 to the most current report is provided free. Why would Steve provide data and charts free when every other source charges for this? Principle. He believes in a level playing field and the COT report provides it. (When you get his book you will understand why you should not get your data anywhere else—let alone pay for it.) 

The key to using the COT report to uncover markets with mega-move potential can be described in once sentence: Follow the lead of the large commercial hedger. You may read other advice, such as “follow the large speculator” in older trading books. Certainly the trend-following funds move markets. However, they are almost always fully invested in the wrong direction at important market turns. 

Commodity markets were invented by commercials in order to transfer their inventory risk to speculators. We have been at the mercy of these market insiders ever since. But by knowing what commercials are up to—by following their actual market manipulations through the COT report—you can pinpoint major trend changeshort coveringer analysis method will detect. 

Strong claim? 

It’s really quite simple. Bullish Review provides original research and insights not available anywhere else. Every expert has a niche. Steve’s thirty-three year experience in analyzing the COT report allows him to uncover trading opportunities long before conventional fundamental and technical analysts become aware of them. 

After reading Steve’s book—or even his Subscribers Guide—anyone can tell when large commercial hedgers are bullish or bearish. This is the conventional analysis. And it might be enough of an edge to make you profitable, because these market insiders catch market extremes about two-thirds of the time. 

Steve’s subscribers, of course, demand more. And he delivers, or he would not have readers who have subscribed continuously for 23 years! They expect to be advised when commercials are likely to be wrong. Some of the biggest and fastest moves are tipped off by the Commitments of Traders report.

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Bullish Review is the only market letter exclusively devoted to analysis of the Commitments of Traders report for 25 years. Steve Briese, the Editor spends about 12 hours reviewing each weekly release. This would be a huge time investment for most futures traders. If professional money managers use Steve’s expertise instead of relying on in-house research, shouldn’t you take the same advantage?

Bullish Review provides professional-level research in the two areas of market analysis conventional techniques often miss:

Fundamental Analysis: Who knows the fundamentals better than the trade? Much of what passes as fundamental information actually originates from the large commercial houses. Even assuming that the information is factual, do you know how to interpret it? Do you think commercials release actionable research before they take action on it? What we want to know is whether commercials think fundamentals are bullish or bearish and—this is the most important detail—at what price levels they are acting.

Sentiment: There are all kinds of sentiment measures available. Most are based on surveys; what traders say they are going to do. Why count on surveys when you can get a true reading of the market sentiment of large speculators (commodity and hedge funds) and small traders from their actual market positions, revealed by the COT report? This is gospel, not hearsay. 

Natural gas is a good example of using the COT data to gauge market fundamentals AND sentiment to your advantage. Many people assume that natural gas prices are no more predictable than the weather. To make matters worse, we now know that Enron and others manipulated natural gas prices in 2000-2001. Although at least 25 companies and individuals ended up paying $250 million in fines to the CFTC, this was little solace to California or the hundreds of natural gas traders torn up by commercial price manipulation. The next chart shows direct quotes from Bullish Review. The market manipulators could not hide from the COT report or Briese’s analysis. 

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Stock indexes had two bull runs between 2003 and 2011 separated by a nasty bear market. Steve Briese was one of the first to see the 2003-2007 bull market coming…

Bullish Review March 28, 2003:

“The Commitments figures for March 25 show commercials net long in both S&P 500 and Nasdaq futures. This is the first commercial foray since last June into net long territory in the NASDAQ, and the first time since the last bull market peaked in the S&P! We don’t think traders dare ignore the current commercial buying interest because it could signal a significant recovery.“

This started a four year bull move, with the public and advisors becoming more and more bullish.

By October 2007 commercials were not buying it, they were selling, triggering a major sell signal. To overcome the nearly universal bullishness, Steve printed bearish advice for 52 straight weeks following the sell signal.

The markets eventually lost more than half their value.

If you would like to hear about trading opportunities like these, click here to get a special introductory price to Bullish Review…

On March 16, 2009, Steve noted significant new commercial buying in Bullish Review: “If we knew for how long and how much commercials were going to buy, we could pretty closely guesstimate the likely extent and duration of this rebound. What we can say is that commercials are holding a huge net short position at a good profit, providing the potential for an extended recovery”

That recovery lasted three years and three months until August 2011.

On July 18, 2011, Steve issued a “STOCK INDEXES SPECIAL SITUATION” that took up two pages of the newsletter, and ended with this timely advice:  ”Aggressive bears may want to use the current signal to establish anticipatory short positions using stops above the May price peak. A break of the June low would be the unambiguous signal for bulls to abandon long positions, moving short or flat.”

Stock indexes recovered to new highs. Is this the start of a new bull market or a “sucker rally”? Knowing which could be the difference in whether you can retire. 

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This was not the first time the market insiders pointed the way in stock indexes.
It all began in 1987.

Black Monday 1987
It may not look like much on a long-term S&P 500 chart today, but
if you were there, you will never forget the surreal hour after hour
unprecedented volatility, panic and decimation. Seemingly no one was
prepared for this market crash.

But this is not entirely true. The smart money — commercial hedgers — actually prepared for a downturn two months ahead of the the crash, triggering a sell signal in Commodity Insiders market letter in mid-September 1987. At that time, the Commitments of Traders was a monthly report, issued on the 11th or 12th of the next month. Among subscribers to Commodity Insiders was Steve Briese, and it was this signal that convinced him to buy the newsletter, COT Indexes, and research from Curtis Arnold, the pioneer in Commitments analysis. Steve began publishing Bullish Review in March 1988, and the COT continued its magic in predicting major market turns.

In 1991, following a three month correction, commercial insiders began heavy long accumulation, triggering a major buy signal, which was followed by a 43% rally into year-end…where commercial selling triggered a major sell signal that ushered in a 10-month, 10% correction.

It was 1995 that the stock index charts began taking on a whole new scale — the one we are familiar with today. Commercials were there to signal the start, just ahead of a price breakout from a year-long sideways consolidation. Talk about timing. 

1997 and1998 each saw significant corrections. But commercials did not just call the market tops, they also triggered COT buy signals at each market bottom.

There were dire predictions ahead of the millenium New Year. Despite the fact that the calendar switched with nary a hiccup, commercial insiders were major sellers in December 1999, triggering a major sell signal, that led to a three year bear market.

Commercials signaled not one, but all 3 major tops in late 1999 and early 2000. 

If you would like to hear about trading opportunities like these, click here to get a special introductory price to Bullish Review…

In the Fall of 1998, Steve invited futures traders to a series of seminars in six U S cities . He called this the ”Turning Point Tour” and hundreds of traders heard him predict a:

“a major bottom in the oil complex due in  December 1998 to be followed by a generational-type bull market.”

It may be difficult now to understand how incredulous this forecast sounded in 1998, when oil prices had fallen 74% over the previous eight years to nearly $10 per barrel, and in the process brought gloom and doom to the oil industry.

Prices bottomed exactly as Steve predicted, on Dec. 11, 1998.

But very soon after the apparent bottom, heating oil moved to a new price low. This was followed by a minor rally into March 1999. At this point, large oil companies (commercial hedgers) started selling. Many analysts assumed this was a bearish sign. They were wrong, of course, but Steve got it right:

“We have posted minor CoT sell signals across [oil] the complex in this issue. This reflects normal Commercial selling into the rally. As you know, we generally respect these signals in a bear market. If these signals do not trigger a resumption in the bear trend, we will have our first confirmation of a major trend change. A failure swing bottom has been confirmed by consecutive higher closes in Unleaded. We believe the picture for the entire complex is turning quite bullish and that long-term traders should be approaching these markets from the long side. Based on the patterns to-date, we can anticipate that any additional price weakness threatening market lows will be met by overwhelming Commercial buying interest.”–March 15, 1999 Bullish Review.

A single crude oil contract gained $23,000 over the next year alone. 

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There were not a handful of bullish analysts who, like Steve, called the beginning of the greatest commodity bull market of all time in 1998. And 20 years later it was the same story. There was nary a bearish advisor in sight, when this Gene Epstein cover story featuring Steve’s research appeared in Barron’s March 31, 2008:

“Briese’s analysis of commercial hedger positions leads him to believe that commodities in general were fully valued in terms of the fundamentals as of early September 2007. Based on the 24-commodity S&P Goldman Sachs Commodity Index, that would mean about a 30% collapse from present levels. But, he adds, ‘Given the tendency for prices to overshoot, commodity values could be cut in half before they stabilize.’ Maybe it’s time to start listening to the smart money.” -Steve Briese Mar 31, 2008

The GSCI Commodity Index dived 65% by year end.

Barron’s declined to print Steve’s prediction of $30 crude oil (then trading above $100), calling it “implausible.” Implausible, maybe. Impossible?

Oil prices hit $34.10 on Jan. 16, 2009.

Most people blame futures speculators (CTAs) for record commodity prices–although Commodity Index Traders (CITs) are the largest buyers of commodities according to the CTFC’s COT-Supplemental report. But the 2008 commodity bull market saw commercial hedger buying boost prices 37% between March and the July top. After forcing commercials to cover their short hedges, both CTA’s and CIT’s managed to sell their longs, banking significant profits ahead of the top.

Seeing commercials trampled by speculators is a rare sight and nobody seemed to notice this, even to this day. But Steve recognized the commercial capitulation and new it would not last long. Bullish Review subscribers received their own private warning of the commodity market top. The entire June 30, 2008 issue was devoted to the imminent end to the commodity boom. The last paragraph read:

“the risk on the long side of the commodity game now exceeds potential gains. Getting short may not be easy, but it could offer unusual profit potential. We recommend liquidating longs now (ahead of the crowd) and looking for short entry opportunities on signs of a breakdown.” — Steve Briese, Bullish Review, June 30, 2008.

Commodity markets topped just two days following this advice.

UPDATE: Steve just saved his subscribers from another commodity market plunge. The Sept 19, 2011, Bullish Review was devoted, once again to a commodity top, and carried this warning:

“We finally have the COT sell signal we have been awaiting, in this case the COT-Fisher variety in the Continuous Commodity Index. Because the CCI is not actively traded, I combine net positions for the 17 underlying markets to arrive at a COT Index. The COT-Fisher sell signal is based on these composite net positions… As we saw in 2008, when we made the call two days ahead of the market top, commodity prices slide (fall) faster than they glide (rise).”

Commodity markets plunged just three days following this advice.

What’s ahead for commodity prices. Steve believes big moves are coming. If you are interested early entry AND exit advice,

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 Cotton made an historic round trip, first rising 188%, then declining 58%, all within the course of 12 months. Bullish Review subscribers were not left out.

Commercials bought at the bottom and sold at the top.

Bullish Review June 14, 2010 COTTON:
“Prices rebounded last week were due to commercial buying, which triggered both a COT-Fisher and minor COT buy signal. A similar dual buy signal marked the March 2009 failure swing (double) bottom. And a COT-Fisher buy signal marked the January 2010 reaction low. The current buy signals come at an ideal cycle point. Both the major and intermediate cycles are in up modes, with the short-term trading cycle in a down mode. This pattern identifies a bull market correction.”

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Bullish Review March 14, 2011 COTTON:
“The lack of follow-through on the early March breakout has created a potential failure-swing top. (Attendees of my 2002 Master Chart Trader seminar are aware that a failure swing top is not necessarily invalidated by a short spike to new highs. In this case the “breakout” only lasted two days, and this was in only the front months; the December delivery did not make a new high. This sets up the intervening low of February 25 at 175.13 [basis nearest futures] as key support. (You should check the low for the contract month you are trading. May, July, and December are all viable deliveries.) If still long, I will suggest once more that you consider banking profits. In any case, please do not get caught up in the bullish news. News is always bullish when prices are rising to record levels. If the February 25 low is taken out it is a sure sign that the market is no longer bullish.”

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RISK WARNING: The risk of trading can be substantial and trading is not suitable for everyone. Each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.

All prospective investors are encouraged to visit http://www.investor.gov/ before investing.

Futures Trading Risk Warning: Transactions in futures and options on futures carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract, meaning that transactions are heavily “leveraged”. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the clearing firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.

CFTC warning on hypothetical profit claims.

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.

One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Past performance results is no guarantee of future profits.

More from the CFTC:

Commodity Trading Systems and Advisory Services

The CFTC issued a Consumer Advisory warning that these web sites falsely claim that you can earn high profits with little or no risk by using their trading program or by following their advice. They also claim falsely inflated performance histories, and claim that advertised performance results are based on real trading when, in fact, the results are based on hypothetical trading.

Be skeptical of claims made by promoters of trading systems and advisory services. The commodity markets are highly volatile and risky under any circumstances, and no program can guarantee profits. In addition, actual trading differs dramatically from hypothetical or paper trading because of market movements, commissions and fees.

More at the CFTC website http://www.cftc.gov/

http://www.cftc.gov/ConsumerProtection/FraudAwarenessPrevention/CFTCFraudAdvisories/fraudadv_tradingsystem

http://www.cftc.gov/ConsumerProtection/FraudAwarenessPrevention/index.htm