Friday, 18 May 2007

Equities Bulled Again

The Commitments of Traders are still overall bullish equities, according to today's data. Large investment firms and hedge funds (aka the "large speculators" or just the "dumb money"!) got super-bearish in NASDAQ futures and options. That gave a renewed buy signal for the NASDAQ and SOX Semiconductors Index.

When the large specs get to specific historical extremes of bearishness, it tends to be a good time to buy. Makes you wonder how they stay in business. Wait a second. I know. That's where you and I come in with all our savings!

Meanwhile, commercial hedgers (aka the "smart money") are highly bullish the S&P 500. My setup correlating the S&P 500 data with Canada's S&P/TSX index just gave its eighth consecutive renewed buy signal for the TSX following the initial buy given back in March. (Click the COTs intro links on the right if you don't know what I'm talking about.)

The Canadian dollar of course has broken to new highs this week, but the COTs data suggests this won't last. We shall see!

New Signals*


Renewed Signals**

-Soybean Oil
-Canadian Dollar

Existing signals (date of original signal in parentheses)****
-30-Year Treasury Yield (5-Jan-07)
-10-Year Treasury Yield (23-Mar-07)
-S&P 500 (1-Sep-06)
-NASDAQ (30-Mar-07)
-Semiconductor Index, symbol: SOX (30-Mar-07)
-Dow Jones Industrial Average (23-Dec-05)
-Russell 2000 (4-Aug-06)
-Nikkei (6-Feb-04)
-TSX (23-Mar-07)

-S&P/TSE Canadian Energy iUnits ETF, symbol: XEG.TO (6-Apr-07)
-Oil Service Holders ETF, symbol: OIH (21-Apr-06)
-S&P 400 Midcap (8-Jan-07)
-Soybean Oil (5-May-06)
-US Global Investors Funds US Gold Fund, USERX (2-Feb-07) -
S&P/TSE Canadian Gold iUnits ETF, symbol: XGD.TO (2-Feb-07)
-Gold Bugs Index, HUI (16-Feb-07)
-Canadian Dollar (13-Apr-07)
-U.S. Dollar Index (6-Oct-06)

-Crude Oil, Light Sweet (6-Apr-07)***
-Natural Gas (30-Mar-07)***

* For an explanation of what I do after a new signal, click “How It Works” on the right.
** A “renewed” signal is when a market is already on a buy or sell signal, and traders again register an extreme net trading position in the same direction. Click “Glossary” in right-hand column for more details.
*** See my special caveats for Crude Oil and Natural Gas (click “Profit/Loss Results” in the right-hand column and check the footnotes).
**** The date in parentheses refers to the day on which the COTs Report was released that gave this signal. For details on how these trades work, including trade delays and portfolio allocation, click on "How It Works" and “Profit/Loss Results” in right-hand column. Please note that my system gave these existing signals months ago in many cases. My profit/loss calculations were based solely on taking trades right after the signals were given as indicated in the “Trade delay” column on the “Profit/Loss Results” page.

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