Saturday, 14 December 2013

Seachange in Latest COT Data

Lots of change in the latest Commitments of Traders data.

After a brief lull of indecision that put most of my signals into cash, Friday's COT report from the CFTC has riled up most of my setups and put them back into positions.

You have to see my latest signals table to appreciate the remarkable upheaval.

New signals taking effect on the coming week's open:

- cash for the BKX U.S. Bank Index
- bullish for the Nasdaq-100 and silver
- bearish for natural gas, copper, crude oil and the 30-year Treasury

Bullish On Balance?

On balance, this dramatic trader realignment seems to be a progression of the slightly more positive news I reported in last week's post.

Banks had previously been bearish, while the Nasdaq-100 now becomes bullish. A bearish signal for the bond would also tend to be bullish for equities.

The commodities are a real grab-bag, but you have to discount the bearish natural gas signal. Natural gas isn't correlated at all with equities.

Of those remaining, copper and crude going bearish may be a continuation of the ongoing decline in commodity prices. That may be longer-term bearish for equities, but for the shorter term it's probably not relevant.

Silver is now joining gold in the bullish column, which may be more of a portent for the U.S. dollar than equities. And in fact, a decline in the greenback tends to be bullish for equities.

All in all, it's just a bunch of speculation! And next week's COT data could erase everything I've just said, as so often happens.

Good luck this week.

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