The concept of COT appears very logical. There are a couple of issues to be aware of :
a) Commercials are usually off in timing the market (reasons unknown) but their NET OI, especially when compared to non-commercials OI, can be pretty accurate evidence of market direction.
b) Commercials COT by itself is usually not quite sufficient to determine tops or bottoms. It is more precise when the reading is more extremed; ie. very low or high.
c) CCOT as an index; calculated as |Net Open Interests| / (Average Total OI, 26 weeks period), provides for better information.
- It shows the relative strength of commercials COT
- If the index goes <25>75, reversal signals maybe interpretted
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