According to Daniel Ghali, the Senior Commodity Strategist at TDS, despite the visible signs of purchasing from China, the market has been experiencing pressure due to the selling activities of CTAs (Commodity Trading Advisors).
Recently, we’ve moved past the most intense phase of CTA selling, and now the conditions are shaping up more favorably for a rise. With the exhaustion of this selling pressure, there’s a promising setup for increased upward momentum.
Looking ahead, we anticipate some significant shifts in how trend followers position themselves. Based on our analysis of future price movements, there’s a noticeable imbalance expected in the flow of activities. Even if prices take a downturn, we don’t foresee much additional selling; conversely, if prices rise, we predict a substantial boost in buying activity. This could lead CTAs to transition from a net short position to building a net long position, reflecting a positive market adjustment in the weeks ahead.
