Thursday, 10 January 2008

Nikkei Large Specs Hit Record Net Short

My newly revised trading setup for Japan's Nikkei Stock Average is super-bullish. I've just posted the results and signal info for my newly revised setup on my table at the Latest Signals page (see the Navigation bar on the right).

Like all my other setups, it's based on the futures and options data released each week by the U.S. Commodity Futures Trading Commission. My Nikkei setup trades opposite to the large speculators when they hit specific extremes of bullishness and bearishness. Last Friday's Commitments of Traders report showed the Nikkei large specs having built a record large net futures and options position as a percentage of the total open interest. They stand at a rare historic extreme of bearishness. This gave my Nikkei setup its 16th straight bullish signal. This could be a sign that the markets in general are more likely to head up from here than down.

Finally, thanks again to reader Dave for his invaluable help with this new setup.


JR said...


You have made some great calls, thanks! I looked at the lastest COT report, and here is my question. While you are correct that Large Specs are extremely bearish, the Commercials are not bullish at the extreme, and the dumbest Small Traders are slightly bullish. These are confusing to me. Can you explain why you only look at the Large Specs, and what you would put your money on Nikkei average: EWJ, UJPIX, or else? Thanks in advance!


Alex Roslin said...

Hi JR,

Thanks for your message. Some good calls, some not so good. Gotta be humble when it comes to the markets!

I look at the large specs because that's where my testing shows the most reliable signals come from. I'm personally in the CJP ETF traded in Toronto for this signal, but I've also traded EWJ in the past. For a good list of ETFs, check Don Vialoux's website. (See special reports.)

Best regards,