Saturday, 20 February 2010

Data Looking Up

Will this small rebound soon exhaust itself, or is the selloff over? The Commitments of Traders data seems to be leaning toward the bullish case. My trading setup for the S&P 500 has given a bullish signal to take effect on Monday's open of trading. The latest COT data issued Friday continues to look optimistic for the S&P 500, with the "smart money" commercial hedgers remaining heavily bullish in their net positioning compared to recent data, while the wrong-way small trader crowd is again set up very bearishly.
Check out my just-updated latest signals table for more details about Friday's data and my current signals for the various markets I'm covering. In the other data:

- U.S. banks: My setup for the benchmark BKX U.S. Bank Index, which is based on the three-month Eurodollar contract (the liquidity measure, not the currency!), is in cash again this week, the second in a row. But this data is looking up this week, too. The large spec and small trader open interest, which correlate nicely with next-week BKX prices, has risen decently, according to Friday's COT report.

- Crude oil: My crude oil setup is still on track to go bullish on the open on March 8, but this week's data shows the small traders, whom my signal trades alongside, getting dramatically bearish in their net futures and options positioning in relation to recent data. That has pushed their signal to bearish. But that signal works with a delay of eight weeks. So it won't take effect for quite a while. My bullish signal will remain in effect until that point, which I will update you on as we get closer.

- Gold: My trading setup for bullion is still bullish, as it's been since Feb. 1. Moreover, this week's data has rebounded back into somwhat more bullish territory. You may have noticed that last week's COT data for gold had shown a sudden, rather significant drop in large spec net positioning and total open interest. I fade both of those datasets, but week-to-week that data correlates strongly with next week's gold prices. Friday's data, on the other hand, shows the large specs getting more net long and building back their open interest relative to recent data. Those could be bullish portents for the coming week.

Hope you did well last week. Please tune back in early this coming week for an update of my portfolio page. Good luck this week!

1 comment:

Anonymous said...

hi
the S&P technicals do not look good on the medium term, my guess is for a bounce than a larger risk of further slide in the S&P.