Monday, 28 December 2009
Data Frowns on Banks and Bullion
Two new signals this week on my latest signals table, which I've just updated with the data based on the holiday-delayed Commitments of Traders report released Monday afternoon. My trading setups for the BKX U.S. Bank Index and gold bullion have just gone bearish for this week's open of trading. I'll execute the trades as of Tuesday's open. Check the signals table to see the new data for those and the other markets I'm following. Some other highlights:
- Banks: The data for this market is looking positively unholiday-like. The large spec and small trader open interest in three-month Eurodollars, which give me signals for U.S. financials, has fallen into the eggnog, as you can see from my signals table. The open interest data is highly correlated with next week's BKX price, so this could spell post-holiday trouble for the markets.
- Gold: My gold setup has gone bearish again, potentially for up to five weeks depending on how the two signals align that make up the setup. The large spec net position has really stumbled in the latest COT report; that positioning correlates strongly with bullion prices the next week.
- S&P 500: Commercial hedgers are still stubbornly bearish in S&P 500 futures and options. However, as I noted Wednesday, my bearish signal for the S&P 500 got stopped out last week. At the same time, small traders, the usually wrong-way money who have been actually correct in their bullish positioning recently in this market, have started to get more antsy, as witnessed by their sharply reduced net long position this week. What can it mean? The setup remains officially bearish, despite me being stopped out, and it shows no signs of going bullish any time soon.
I hope you're having a great holiday. Check in tomorrow for an update of my portfolio page. Apologies for the missed updates during my time off this month. Please note that the next COT report will again be delayed and is due out Jan. 4. Good luck this week, and best wishes in 2010!