New COT Data Up

I've just updated my latest signals table based on this afternoon's holiday-delayed Commitments of Traders data from the CFTC. No new signals to report, but some interesting shifts in trader positioning, including in natural gas and the three-month Eurodollar data. The latter, which gives me signals for U.S. financials, is now quite depressed, though I still haven't gotten a bearish signal for the BKX U.S. Bank Index. Have a good week!

Holiday Delay

This week's Commitments of Traders report is delayed until Monday afternoon because of Thanksgiving. I'll update the signals table and write up a post Monday. Hope U.S. readers had a good Thanksgiving, and good weekend to all!

Selloff May Not be Over

So is that it? Is the selloff over now and market nirvana on the horizon? Not according to my read of this afternoon's Commitments of Traders numbers, issued weekly by the Commodity Futures Trading Commission. I've just updated my latest signals table with the details. Here's the Coles Notes version:

- S&P 500: My trading setup goes into its eighth straight week being bearish, and it shows no signs of letting up. In fact, the "smart money" commercial hedgers are only a tad less net short relative to recent data than last week, while the wrong-way small traders are going bananas in their bullishness. Not sure how much that matters since week-to-week fluctuations in this market have little correlation with market prices, but the COT data is clearly very far from flipping to bullish.

- BKX U.S. Bank Index: U.S. financials don't look like a good bet, according to Friday's data. My setup remains in cash for a 10th consecutive week, but the COT data shows major panic among large speculators and small traders in three-month Eurodollars (the liquidity measure, not the currency). All three component signals in this setup are now bearish (though with their varying trade delays, the setup remains in cash for now).

- Crude oil: My setup is bearish for a sixth week in a row. The small traders, whom I follow in this market, have, however, significantly boosted their net futures and options position as a portion of the total open interest. Their signal has gone bullish with an eight-week trade delay, so the setup will go to cash or bullish in eights weeks' time. The bearish signal could end sooner depending on what the commercial traders do, but regardless, the setup will stay bearish for at least the next four weeks based on the commercial signal's trade delay.

- Gold: Will the gold and silver rally continue? Silver looks pretty hot right now on the charts, with a nice breakout in the SLV:GLD ratio, for example. My gold setup will be in cash for its seventh straight week, but as the latest signals table shows, the COT data suggests serious capitulation among the large speculators, whom I fade in this market. So that could be bullish for gold.

Hope you did well this week and that you have a great weekend. Check back in early next week for a portfolio update.

TAGS: SPX, S&P 500, gold, BKX, Bank Index, natural gas, Nikkei, crude oil,Treasury, bond, COT, Commitments of Traders,derivatives, Black Swans,market timing,trading system development, CFTC,Commodity Futures Trading Commission,COTs Timer, out-of-sample testing, walk-around testing

No New Signals

No new signals coming out of my trading setups based on today's holiday-delayed Commitments of Traders report issued by the Commodity Futures Trading Commission. My S&P 500, crude oil and 30-year Treasury bond setups are all still bearish, while gold, natural gas, the BKX Bank Index and the Nikkei are all in cash. See my latest signals table for more details. Sorry - no time this week for a more in-depth report or portfolio update. Good luck this week.

Holiday Delay

Last week's Commitments of Traders report will be issued Monday afternoon due to a U.S. government holiday. I'll update my latest signals table Monday evening with the new data. Meanwhile, note that my Nikkei signal goes to cash on Monday's open of trading. Good luck this coming week.

Why I'm (Kind of) Bearish Despite the Rally

Nice breakouts after the U.S. congressional election Tuesday. But with some exceptions, the Commitments of Traders data remains generally bearish, according to my take. I've just updated my latest signals table based on Friday's weekly COT data from the Commodity Futures Trading Commission.

So what should I do? Ignore my signals? Well, no. The fact is signals are sometimes wrong. Actually, quite often. If you look at my backtesting results table, you'll see that my trading setups were profitable only 64 percent of the time on average in historical testing. That's actually not a bad success rate for a mechanical trading system. What's important for me is making money over the long run and cutting losses when the signal goes against me. Also, some signals are wrong for a while, then turn out to show a gain. You never know what's going to happen in the markets. And if I don't use my system with discipline and the right risk control - even when signals don't work - what's the point of having a system in the first place?

Check my FAQs page for more on the question of losing signals, risk management and how I trade my system. All that said, I am actually net long when I include my discretionary trades, so this ramp-up doesn't bother me too much anyway. I like having the COT short positions as a hedge and to help diversify my strategies.

Some highlights from my signals page:

- S&P 500: Still bearish, and no signs of changing its mind. The "smart money" commercial hedgers remain totally unimpressed with the market, while the wrong-way small traders just dig it.

- Nikkei: My trading setup for the Nikkei was bearish for eight weeks, and now it goes bullish for a single week on Monday's open of trading, then it heads to cash on the open of Nov. 15.

- Crude oil: My setup for oil is bearish for a fourth straight week and shows no signs of changing direction either.

- 30-year Treasury bond: My signal was in cash last week, but it goes to bearish for Monday's open of trading (meaning bullish for the yield). The setup will remain bearish for at least the next three weeks.

Hope you did well this past week and that you have a good weekend. Check back here early next week for a portfolio update.

TAGS: SPX, S&P 500, gold, BKX, Bank Index, natural gas, Nikkei, crude oil,Treasury, bond, COT, Commitments of Traders,derivatives, Black Swans,market timing, trading system development, CFTC,Commodity Futures Trading Commission,COTs Timer, out-of-sample testing, walk-around testing