FOLLOW THE TREND THE TREND IS YOUR FRIEND

On a bar-chart, the high and low for the time period is indicated by the top and bottom of the vertical line.

When there is a series of higher highs and lower lows, a trend can be spotted on the chart. A trend-line can be drawn above and below the trend and gives some support and resistance indications.

Different time periods should be used to detect major trends because some smaller trends on a daily chart may only be part of a major trend on a weekly or monthly chart.

NET TRADERS POSITIONS data

The net traders positions show you what the traders in the market are doing.

The information is compiled and released by the CFTC every two weeks on Friday afternoon.

Commercials are the large businesses which are offsetting their risk in the underlying commodity.

Large specks are large scale traders, like fund managers.

Small specks are the individual, small scale traders.

Generally, the most watched position is the large specks. They are the trend followers. If the line is moving up during a trend, they are building their positions.

The commercial market can also be important to watch, but takes considerable study. The commercials use the market differently than the speculators do.

MARKET SENTIMENT data

Market sentiment data is a reading of the attitudes of a sampling of leading market advisors. It's not a perfect indicator, but it is helpful.

Since the market usually turns when everyone thinks it couldn't get any better, this indicator is best used as an "overbought" or "oversold" indicator. Or a "contrarian" indicator.

When market sentiment reaches an extreme high, the market is considered overbought, and a downturn is likely.

When market sentiment reaches an extreme low, the market is considered oversold, and an upturn is likely.