Monday, 26 March 2012

Bank Setup Short While SPX Stays Long

U.S. financials could be headed down, according to my trading setup for the benchmark BKX U.S. Bank Index. My setup goes bearish on Monday's open of trading.

This is based on bearish positioning in the 3-month Eurodollar contract, as shown in the weekly Commitments of Traders reports issued by the U.S. Commodity Futures Trading Commission.

Meanwhile, my brand new S&P 500 setup goes into its third week of being bullish. How can one market say to go long while the other says to go short? How very strange, you say?

It could be that the BKX setup says the coming week will see a short-term decline in a broader overall rally that the SPX setup is trying to capture.

But this is also the kind of weirdness we see all the time in this very peculiar data. It's one of the reasons analysts and traders haven't been able to make heads or tails of the COT data for decades. Seemingly more often than not, the data just doesn't agree with itself.

See my latest signals table for more details on these and other markets I'm following with my COTs Timer strategy. Good luck this week.


RickJ said...

you new signals then are not posted into your spreadsheet…since your spreadsheet shows sp500 in cash this week?



trendline said...

maybe th banks exposure to a dropping eur is offset by long equities and the banks /ben will continue to prop them up,the banks would be the closest to any info or logic pointing towards future qe

Alex Roslin said...

Hi guys,

Thanks for your comments. Rick, which spreadsheet do you mean? The latest signals table shows that setup as bullish.