Monday, 30 November 2009

Small Traders Jump Into Market

Small traders seem to be shrugging off this long, painful grind that continues unabated in the markets. In S&P 500 futures and options, the wrong-way small traders have increased their bullish positioning this past week, probably hoping to get in on the year-end seasonal play, according to today's Commitments of Traders report. Meanwhile, the "smart money" commercial hedgers are slightly more bearish than last week - and maintain the pessimistic stance they've had since early October.

Check my latest signals table, updated with the holiday-delayed data this afternoon, to see how my trading setups see the new data.

- U.S. banks: The data I use to get signals for U.S. financials is also looking a little more sad-sack this week, as you'll see from that table. Mind you, my setup remains bullish.

- Nikkei: My punishing bullish signal for the Nikkei Average has finally given up the ghost and gone to cash.

- Natural gas: My setup for natural gas is in its second week of being bearish. The data has turned down as well in the latest COT release, signaling that the setup will remain bearish for at least three weeks in total.

- Gold: Here's we go again! My last gold bearish signal didn't quite work out, and now the setup's back in the bearish column again. Large speculator total open interest and net positioning are both in excessive territory, which historically has meant a decline in the price of gold by the time the large specs get bullish. As usual, I will use a stop and proper positioning sizes to control my risk in case the signal is wrong. See my FAQs and How It Works pages for more details.

Good luck this week, and check back shortly for an update of my portfolio page.

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