Saturday, 4 September 2010

No More Bull for U.S. Banks

Wow - nice little rally last week. Just the thing to further confuse all the bears expecting a "fall fall." But just as more money is being pulled into the market, things are looking murkier and murkier in the Commitments of Traders data.
After seven weeks bullish, my trading setup for the BKX U.S. Bank Index has gone to cash for execution on this week's open of trading. (Those seven weeks being bullish were, incidentally, the longest this signal has been bullish since the fall of 1995, when the signal also went bullish for the same length of time.) See my newly updated latest signals table for more details on this and my other trading setups based on the COT data. Some other highlights:

- S&P 500: The wrong-way small traders are again boosting their net futures and options position in the S&P 500. It's now 2.1 standard deviations above the average. That's really leaning hard for a rally. Unfortunately, these guys tend to be wrongly positioned at key market junctures. Still, the "smart money" commercial hedgers are somewhat bullish themselves, too, so there's no clear signal in this market based on my read of how the data works. My setup is bullish right now and will go to cash on the open of Sept. 20.

- Crude oil: My setup is now bearish, but it's just gotten a new signal that will put it in cash in four weeks' time - i.e., on the open Oct. 4.

Hope Canadian and U.S. readers have a great long weekend - we're having a blast at our local, 154-year-old Brome County Fair - and good luck this coming week. Check back in early in the week to see my updated portfolio page.