Monday, 6 February 2012

Bearish for SPX and Treasury

Two signals take effect this week based on recent trader positioning as reported in the Commitments of Traders reports: bearish for the S&P 500 and bearish for the 30-year Treasury bond. My other signals remain the same: bullish for my trading setups for the BKX U.S. Bank Index, gold and natural gas and bearish for crude oil and the Nikkei. Copper is in cash.

See my latest signals table for more details on how COT trader positioning has shaped up lately. Good luck this week. Pura vida.


singingtradr said...

Alex, correct me if I'm wrong but large Commercial Traders of Natural Gas have been consistently net short per COT reports. I wonder why your table has computed bullishness on Nat Gas these past three weeks (as NG has fallen to the floor) - during this time Commercials have been shorting?

Alex Roslin said...
This comment has been removed by the author.
Alex Roslin said...

Hi Singingtradr,

Thanks for your message. As you will see on my latest signals table, my setup is based on trading alongside the large speculators and small traders. The setup doesn't include the commercial traders in the signal.

Through backtesting, I found that following the large specs and small traders gave the most reliably profitable signals. That may suggest that the commercials are, in fact, best faded, as they in many markets tend to trade opposite the large specs and small traders (though I can't promise that's been the case in natural gas).

As well, the net positioning of any trader group isn't as important to me as their relative positioning - i.e. their current positioning compared to their recent positioning.

My natural gas setup has had a gain of about 100 percent since I started trading it about two years ago, even as the price of gas has fallen, so I'm not too worried if one particular signal or two doesn't work. Mind you, past results in backtesting or real-time trading don't guarantee future results.

Read more about how my trading system works on the FAQs and other introductory pages.

Best regards,