What a Week. Buy for Silver, Sells for Natgas, Russell and Banks, Cash for NASDAQ 100

A crazy Commitments of Traders report this week suited to a crazy market. I can't recall when I had so many new signals. Really, truly interesting stuff from this afternoon's report on trader positioning in the major markets, as released by the kind souls at the U.S. Commodity Futures Trading Commission. Thanks, fellas. Check out my newly revamped signals table linked on this page for all the weird and wonderful details. Here are some highlights:

- Natural gas is a sell! Wow. We had some good times, natgas, didn't we? Up a whole bunch (see how much here) since the buy signal in February. The bearish signal takes effect with no trade delay for this setup, meaning I go short for Monday's open, June 16.

- Silver is a buy! Wow again. One of my favourite metals to trade is back in the bullish column after a six-week stint on the short side. Again, no trade delay means going long Monday. But wait... What does my risk-control rule for highly correlated markets say? (This rule says I don't enter a trade unless a majority of highly correlated markets are signaling in the same direction. Read more about it here.) As of Monday, four of the six correlated commodities markets I follow will be bullish (silver, gold, heating oil and crude oil) while two will be bearish (copper and platinum). That means I can take the silver signal. This, incidentally, also means I will take my copper bullish signal that takes effect Monday, June 23, and ignore the bearish signal for heating oil that takes effect also on that day.

- Lots of action in the equities. My trading setup for the Russell 2000 just flipped to bearish. The "smart money" commercial traders, whom I follow for my Russell setup, haven't been this net short as a percentage of the total open interest since Dec. 2003. Mind you, they're nowhere at any record extreme in comparison with the moving average and standard deviation values I use for this setup. Still, they're short enough to put me in the bearish column. This setup has no trade delay, so execution is for Monday, June 16.

- Also note that my BKX Bank Index setup, based on the three-month Eurodollars contract action, flipped to bearish last Friday. That setup uses a one-week delay, so the trade takes effect Monday, too. Looking at my table of highly correlated markets, I see BKX is closely tied to the Russell 2000 and Dow Jones industrials. Since two of those three markets will be bearish as of Monday, I'll take both the BKX and RUT trades.

- Finally, my NASDAQ 100 setup has gone to cash. This is because one of my signals for this setup (the one based on the commercial traders) went to sell, while my small trader signal remains on buy. When the two signals don't agree, I cash in.

Thanks for tuning in and hope you have a great weekend, Happy Father's Day and lots of luck next week. As if it hasn't been wild enough already, it promises to be a nutso week.

TAGS: Commitments of Traders, COT, Dow Jones industrial average, NASDAQ 100, NDX, Russell 2000, natural gas, copper, 10-year Treasury, silver, heating oil, Commodity Futures Trading Commission, CFTC, banks, BKX