Housekeeping: No Morning Rundown next week as am working on overdue pieces for a book. There will be posts emailed of relevant research highlights.
1. Market Behavior Over the Analyzed Period
Review of eight days of trading activity, including five down days followed by three recovery days.
Emphasis on unchanged open interest despite higher prices, suggesting speculative money has not yet entered in size.
2. Short Covering and Bear Flag Patterns
Breakdown of daily candle patterns showing short covering rallies, profit-taking, and eventual capitulation.
Identification of a classic bear flag structure with weak longs exiting and shorts re-entering.
3. Futures and Options Positioning
Analysis of futures flows: managed money and weak hands selling into bullion bank short covering.
Options activity: swap dealers buying calls, other reportables hedging with futures and options, and implications for positioning strength.
4. Open Interest Baseline and Trading Range
Long-term chart review showing open interest bottoming at consistent levels, signaling market cycles.
Establishment of a new trading range for open interest, with bullish implications until the upper bound is reached.
Discussion of producer selling at higher levels versus central bank/China buying at lower levels.
5. Conclusions and Tactical Outlook
Near-term bullish bias of roughly $30 upside, but tempered by recognition of producer selling and seasonal “sell season.”
Stress on monitoring open interest as more reliable than price for directional cues.
Final trading framework: bullish above ~3356, cautious near ~3395, with risk/reward managed through partial profit-taking.
