COTs More Upbeat on Equities, Still Depressed On Energy

Energy is again getting a slew of bearish renewed signals, while the equity forecast looks a little more upbeat, according to Friday's Commitments of Traders report released by the Commodity Futures Trading Commission.

My COTs composite equity indicator has improved slightly to a reading of -0.1. Plus or minus 1 means a historic sell or buy signal. A "-1," for example, would mean that on average all of my U.S. equity setups just gave a sell signal. It's happened only a handful of times since 1995, when the CFTC started releasing combined futures-and-options data for free.

I've adjusted my indicator to drop the S&P 400 setup because the COTs reports have failed to update futures and options holdings in this market since the report dated June 12. Thus adjusted, last week's reading of my composite equity indicator was a decidedly gloomier -0.23.

As well, the latest report gives two renewed bullish signals in equities and no bearish ones. The report didn't give me any new signals.

On a personal note, I've been in the midst of moving house so that's taken away some of my attention from working on developing my COTs Timer system and answering your emails. I should get back into it as things settle down in the coming couple of weeks. Thanks for your patience.

New Signals*
BULLISH
None

BEARISH
None

Renewed Signals**
BULLISH
-Dow Jones Industrial Average
-NASDAQ 100

BEARISH
-Soybean Oil
-Natural Gas***
-Crude Oil, Light Sweet***
-S&P/TSE Canadian Energy iUnits ETF, XEG.TO
-Oil Service Holders, OIH

Existing signals (date of original signal in parentheses)****
BULLISH
-30-Year Treasury Yield (3-Jan-07)
-10-Year Treasury Yield (17-Apr-07)
-S&P/TSX Composite (15-Aug-06)
-NASDAQ 100 (27-Mar-07)
-Dow Jones Industrial Average (20-Mar-07)
-Russell 2000 (1-Aug-06)
-Silver (3-Jul-07)
-Gold (29-May-07)
-US Global Investors Funds US Gold Fund, USERX (12-Jun-07)
-S&P/TSE Canadian Gold iUnits ETF, XGD.TO (22-May-07)
-Gold Bugs Index, HUI (29-May-07)

BEARISH
-13-Week Treasury Bill (27-Feb-07)
-S&P/TSE Canadian Energy iUnits ETF, XEG.TO (3-Apr-07)
-Oil Service Holders, OIH (3-Apr-07)
-S&P 500 (26-Jun-07)
-NASDAQ Composite (26-Dec-06)
-Semiconductor Index, SOX (20-Mar-07)
-S&P 400 Mid Cap (3-Jan-07)
-Nikkei Average (19-Dec-06)
-Soybean Oil (11-Nov-06)
-Copper (10-Apr-07)
-Canadian Dollar (10-Apr-07)
-U.S. Dollar Index (3-Oct-06)

NEUTRAL
-Crude Oil, Light Sweet (3-Apr-07)***
-Natural Gas (27-Mar-07)***

Notes
* For an explanation of what I do after a new signal, click “How It Works” above.
** A “renewed” signal is when a market is already on a bullish or bearish signal, and traders again register an extreme net trading position in the same direction. I normally ignore renewed signals unless I don't already have a trade on in this market. I haven't studied the profitability of trading on renewed signals.
*** See my special caveats for my Crude Oil and Natural Gas setups (click “The Trading Setups” above and check the table footnotes).
**** The date in parentheses is the date of the COTs report that gave this signal - not the date I would have executed the trade (which can be up to five weeks later). The existing signals are often several months old and are listed here as references, not trading recommendations.