Friday 28 December 2007

Mixed News

Hope you're having a nice holiday. Mixed signals for equities from the latest Commitments of Traders data issued this Friday afternoon by the U.S. Commodity Futures Trading Commission. See my updated table on my "Latest Signals" page for all the details. I'll be back early next week with some analysis of the new data.

Also, I'm going through a year-end process of refining some of my trading setups based on the COTs reports. I'll update you on that soon. Some rather exciting news on that front. Have a great weekend!

Monday 24 December 2007

Mess of New & Renewed Signals

Wow! A whole mess of interesting new and renewed signals from last Friday's Commitments of Traders report. Take a look at the table on my "Latest Signals" page (see link in the Navigation bar on the right), which I updated yesterday with all the gory details. I'll be back to my regular posting schedule later this week. Hope you have a great holiday, and best wishes for the New Year!

Saturday 15 December 2007

COTs Predict Santa Coming, Dollar to Sink

Is Santa coming this year, kids? Sure looks like it. My COTs U.S. Equity Index is giving its fourth straight renewed bullish signal, based on the latest Commitments of Traders data issued Friday. This index is based on my trading setups for the S&P 500, NASDAQ 100, Dow Jones industrials and Russell 2000 - all built around the COTs reports, which report how major traders are positioned in the markets.

My U.S. equity index has been on a bullish signal since last March. It now stands at a super-bullish 0.97, up from last week's reading of 0.88. Regular readers will recall that a "1" reading means all four setups are effectively giving a bullish signal on average, for execution on next week's open of trading. So I'd say this is happy news for equity bulls. (See the table on my "Latest Signals" page for all the signals from my setups based on the COTs reports.)

In other developments, the latest data portends still more horrors for the greenback. The commercials are dumping their U.S. dollars faster than you can say "Gisela Bundchen." It's been 12 straight weeks of steadily lower net long futures positions for the "smart money" crowd. My U.S. dollar index setup is now giving its third straight renewed bearish signal. Oh-oh.

The other interesting developments are taking place in the ag sector. My COTs Agriculture Index, based on my setups for wheat, corn, soybeans and sugar, has fallen to -0.44, down substantially from last week's 0.12. This setup provides me signals for the DBA Agriculture ETF. The index now stands not far from flipping to bearish for DBA.

Looking at some of the specific sectors, corn small traders have lowered their net short position in futures and options to a bullish extreme, flipping my setup for corn to bearish. The small traders are now 180 percent above the signal line I use for this setup. (See the explanatory links in the navigation bar to learn more about how my COTs Timer trading system works.) Note that the trade delay for this setup is three weeks.

As well, the sugar commercial traders have suddenly put on a huge net short position. After only a two-week bullish signal, this setup has now flipped back to bearish. Note that my setup for sugar is a little special. It works by going long on the bullish signals and going to cash on bearish signals (not going short).

I'm still on vacation this coming week, but I'll be back next week with more regular posts. Good luck.

Tuesday 11 December 2007

"Commercials Jettison Greenback"

Just posted my weekly report for on my "financial stories" page, titled "Commercials Jettison Greenback." I'm in vacation mode, so that's it for me for this week. I'll be back next weekend with my latest signals from this Friday's Commitments of Traders report. Good luck this week!

Sunday 9 December 2007

Sunny Outlook for Equities, Loonie - Not So Hot for Greenback, Treasuries

Sorry about the delay in my weekly update. I'm traveling and kind of groggy from this beautiful warm weather here in sunny Florida, especially since we just had about 850 feet of snow back home in Quebec. Mohito cheers!

Some interesting new developments from the latest Commitments of Traders report issued last Friday by the U.S. Commodity Futures Trading Commission. To you newbies out there, these are the free weekly reports that list trillions in futures and options holdings in 100-odd markets like gold, crude oil and the S&P 500.

My trading system based on these reports has given two new signals based on last Friday's data:

- Bullish for the Canadian dollar. After an incredible rally, the loonie has corrected smartly since the beginning of November. My trading setup for the C$ is based on trading opposite to the "dumb money" large speculators when they hit specific extremes in their net futures position as a percentage of the total open interest. They've dramatically cut their net long position since it peaked in mid-October. The latest COTs report gives me a bullish signal. This setup has a four-week trade delay. (Click my "Latest Signals" page for more details and other signals from the latest COTs report. Also, click "How It Works" and "Intro to COTs" on the right to learn how my trading system works.)

- Cash for the 5-year Treasury. This setup flipped to bullish in July, but it's now back to bearish (meaning the setup thinks the 5-year yield will go up). This setup has a trade delay of zero, meaning execution for this Monday's open. The signal is based on trading with the large specs and fading the commercials when both groups of traders concur. The large specs have just built a historically extreme net short position, but the commercials haven't yet concurred by going super-long. So this setup is now in cash.

Incidentally, this new signal for the 5-year Treasury follows a new bearish signal in my 10-week Treasury setup that came in the Nov. 20 COTs report. Another sign that hitherto falling Treasury yields have found a bottom.

And a few interesting renewed signals:

- More woes for the greenback. In my setup for the U.S. dollar index, based on trading on the same side as the commercials, I've gotten a second renewed bearish signal. The commercials haven't been this bearish relative to the historic data since Oct. 2006, when this setup first flipped to bearish.

- Good news for equity bulls. My setup for the Dow Jones industrials has given its second straight renewed bullish signal, based on extreme optimism by the commercial traders. Also, my COTs U.S. Equity Composite Index has given its third straight renewed bullish signal, after rising to a reading of 0.88, up from last week's 0.62. (A "1" means the four setups that make up this index - the SP500, NASDAQ 100, Dow Jones industrials and Russell 2000 - have all just given a bullish signal on average, for execution on next week's open of trading.)

- My COTs Composite Agriculture Index, which is based on my setups for wheat, corn, soybeans and sugar, has fallen to a sad-sack 0.12, down from last week's 0.37. The setup, which gives signals for the DBA Agriculture ETF, is still on a bullish signal, but the latest data warns of possible weakness ahead.

Wednesday 5 December 2007


Hi all. Here are some additional highlights from the latest Commitments of Traders report issued last Friday, Nov. 30:

- Overall, a happy picture for the seasonal equities trade seems to be forming from around here into the New Year. Happily, COTs Timer appears to have managed to convince "Helicopter" Ben to lower the Fed Funds rate, after some initial noises that he didn't want to play helicopter any more. You're welcome, world.

- As I mentioned Friday, my COTs U.S. Equity Composite Index is giving a second renewed bullish signal. And the "smart money" commercial traders in Dow Jones industrials futures and options are now also supremely bullish, giving my setup for this market a renewed bullish signal. Their net position is 50 percent above the signal line I use for this setup. Meaning: they're looking positively Christmasy.

- At the same time, the "dumb money" large speculators are really quite gloomy about the Russell 2000, judging by their rapidly growing net short position as a percentage of the total open interest. Their net position has fallen to 2.1 standard deviations below its 23-week moving average, triggering a renewed bullish signal for this setup.

- Could the high-flying Canadian dollar soon be due for a bounce? Even before it started correcting at the beginning of November, the "dumb money" large speculators were already cutting back on their all-time-high net long futures position (which peaked in early October). They've steadily reduced their net long position until it now stands just a hair above a new bullish signal.

- Similar situation for copper. Here, the large specs are building a large net short position, just as copper prices have collapsed. How do these guys stay in business? Not quite enough to flip this setup to bullish, but getting steadily closer.

- My COTs Agriculture Composite Index has fallen back to a less-than-stellar 0.37 reading, down from last week's 0.90, which had triggered a renewed bullish signal for this setup (which gives me signals for the DBA PowerShares Agriculture Fund).

- Sugar is looking sweet. (Yeah, I know, that's lame.) The commercial traders have suddenly shortened their net short position to a historically low figure, flipping my sugar setup to bullish.

Good luck this week. I'll be traveling for the next two weeks, so my next COTs update won't come Friday afternoon as usual, but more likely sometime over the weekend. But since this COTs stuff is so low-maintenance (see "How It Works: My 10-Minute Workweek" in the Navigation bar), my reports should continue more or less on schedule while I'm visiting with Mickey Mouse.

Monday 3 December 2007

New Story: "Data Grim for U.S. Buck"

Could barely open the front door today after a month of near-continuous snow up here in Quebec's Appalachians. Where are my skiis! Just posted a new report I did on bullion site about what the Commitments of Traders reports have to say about gold and the other metals (also the buck). It's titled "Data Grim for U.S. Buck," so you may be able to guess the gist. See it here.