Monday, 6 June 2011

Bullish on Banks, but Still Bearish S&P 500

Is it all over for the bull market rally since... how long has it been now?... since 2009! And what a rally it was. Trader positioning in the futures and options markets gives me a bullish signal for the BKX U.S. Bank Index, taking effect on today's open of trading. On the other hand, my bearish signal for the S&P 500 is still in effect, too. In fact, the latest COT data from the CFTC shows trader positioning in that market getting even worse.

The explanation could be simple: My BKX trading setup uses three component signals and thus tends to go in and out of positions on a shorter time frame than my S&P 500 setup, which is based on just two signals. In other words, both setups could be right. If that's the case, we could see a little rally within a larger decline.


Turning Japanese said...

Thanks for the work, Alex. There aren't a lot of comments on your blog, but I imagine there are quite a few people following your COT analysis.

Alex Roslin said...

Hi Turning Japanese,

Thanks for your message. This blog gets 300 to 500 page views a day. It used to get a lot more comments, which were mostly questions about how the system works. Then I created my FAQs page to answer the most commonly asked questions, and the comments have dropped off significantly. I also find the comments increase when there's a bull market or confidence. These days, even with the long rallies, many market participants have an overriding sense of nervousness. That makes many people cocoon!