- S&P 500: Trader positioning has just made a major course change in S&P 500 futures and options, as that table of mine shows. Commercial hedgers (the smart money) are getting substantially less bearish, while small traders (the not-so-smart) are suddenly much more negatory. This, of course, overall could prove to be bullish. But not yet. My signal is still a leap and a jump away from flipping course and this week remains bearish. In fact, it can often be during this kind of trader repositioning that a big moves come.
- U.S. financials: The data still looks sad for the banks, although the large spec and small trader total open interest are both seriously less bearish this week. My setup is still bearish.
- Gold: My setup for bullion has suddenly had a major change of heart. It's going to cash after two weeks being bearish. The large spec (dumb money) net percentage of total open interest has seriously plummeted in the latest report. In fact, it has more or less steadily dropped for the past three months, but it's only this week that the signal based on this positioning has finally switched to bullish. (I fade the large speculators in this market.) It's a big move as this signal has been bearish since the beginning of August. The setup overall now goes to cash since both signals have to agree for me to take a position in this market.
But if the large spec net position signal remains bullish for three more weeks, which is very likely considering the long-term nature of that signal (it's based on a 33-week moving average), the setup will go bullish at that point.
Good luck this week, and be sure to tune back in within a day or two for an update of my portfolio page.
4 comments:
Been following your site for awhile. Really like the concepts and your approach.
One question I would like to ask is about your targets. You have a clear system for stops but I was curious if you ever "take profits" on a nice gain before the week is over.
So if Oil drops 5 bucks in a day do you take the profits (if your system is short oil) rather than wait for the signal to complete?
Seems like it would make sense because the COT folks might sell / buy during the week on big swings as well.
What are your thoughts on this?
Thanks again for the great site--keep it up--I am sure I speak for many who really appreciate the weekly updates
Hi Anonymous,
Thanks for your comment. It's an interesting idea. I have considered something like that, but I don't have a strategy like that in place right now. I haven't tested whether that would increase profits or perhaps cut them short due to further gains. The latter would be the risk.
Regards,
Alex
I have long wanted to spend some time seriously examining/learning your amazing work. Now that I have the time, I notice some unexpected changes. I seem to recall that some months ago there were more markets traded/tracked, which seem to have disappeared. Specifically the US dollar. Were some markets dropped from your system? If so, can you share the reason why?
Thanks for all the great work!
Hi Anonymous,
Yes, I used to track a couple of dozen markets up to the fall of 2008. Take a look at the posts from around that time to see that I decided to revise all my setups with new testing procedures. You can see more details of my current backtesting on my FAQs page. I started trading with the first of the new setups at the beginning of 2009.
Regards,
Alex
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