Friday, 8 October 2010

Gold Gone, S&P 500 Smart Money Slams on Brakes

The "smart money" commercial traders continue their sixth consecutive week of reducing their net position in S&P 500 futures and options, according to today's Commitments of Traders report issued by the Commodity Futures Trading Commission. Their net positioning is now in its third week of being more than two standard deviations below average - an indicator of super-bearishness on their part.
My signal for the S&P 500 went to bearish last week, based on the commercial positioning and the contrarian bullishness of the wrong-way small trader crowd. The signal was wrong last week, but the COT data shows no sign up turning around for either group of traders. The setup will remain bearish for at least the next three weeks.

See my latest signals table for an update based on today's COT data for this and other markets. Some other highlights:

- U.S. financials: Fourth week in cash this week.

- Crude oil: Also in cash, with a bearish signal kicking in on the open the week of Oct. 18.

- Gold: This setup goes to cash on the coming week's open of trading after six weeks bullish. Nice run, but the wrong-way large speculators have gotten excessively bullish.

- Nikkei: A fifth week bearish this week, with a one-week bullish signal to kick in Nov. 15, followed by cash on Nov. 22.

- Natural gas: Both groups of traders have gone bullish, but their trade delays mean the setup remains in cash. We'll see what happens next week.

- 30-year Treasury bond: This setup goes bullish on the coming week's open of trading (meaning it expects the yield to fall).

Thanks for tuning in, and hope you did okay this week. Have a good weekend, and Happy Thanksgiving to Canadian readers! Check back in early next week for a portfolio update.


Dave Narby said...

Just wanted to offer thanks for sharing this with us, week in, week out. Kudos!

Joseph said...

Totally agree !!!!!!!!!!