S&P 500 and Copper Bearish - And a Great Big Ho Ho Ho!

I take it back. We got a beautiful bunch of fluffy snow this week to cover everything in a great big layer of snow just in time for Christmas. The wood stove is fired up, and we're as excited as can be for Santa up here in Quebec's Eastern Townships.

If only the news was so good coming out of the grinch-like trader positioning reflected in this afternoon's Commitments of Traders report from the U.S. Commodity Futures Trading Commission. As you'll see from my newly updated latest signals table, derivatives positioning has turned pretty sour pretty much across the board. Setups turning bearish on next week's open of trading: S&P 500 and copper. Crude oil, the Nikkei and natural gas were already bearish. The rest of my setups are in cash. None are bullish at this point.

But try not to think about that too much this holiday weekend! Happy holidays to all.

Out of Gold, Bearish for Gas and Nikkei

Three signals take effect on next Monday's open of trading, coming out of my trading setups based on the weekly Commitments of Traders report from the U.S. Commodity Futures Trading Commission:

- Gold goes from bullish to cash. This is based on excessive bullishness in the large speculator total open interest starting several weeks ago. We could be in cash (or potentially bearish) for awhile.

- Natural gas goes from bullish to bearish. This signal will last two weeks.

- Nikkei goes from bullish to bearish. This signal will last two weeks too.

In other news, the S&P 500 data is still flipping around like a fish on the dock. The latest COT data issued this afternoon shows that the wrong-way small trader crowd has reduced its net positioning to the point that it's actually bullish. So that puts the overall setup, which goes to bearish on Dec. 26, back into cash on Jan. 9.

Hope you have a good weekend, and good luck next week! It's beginning to feel a lot like Christmas - except where's all the snow?! This time last year, we'd had weeks and weeks of non-stop snow up here in Quebec ski country. This year, we've just had lots of rain. I'm dreaming of a muddy Christmas. Thanks for nothing, global warming!

Cash for SPX, Bearish for Bond

Short post this week - apologies! My signals table is now updated based on Friday's Commitments of Traders data. Signals for Monday's open: cash for the S&P 500 and bearish for the 30-year Treasury bond. Some of my other setups also have new signals for later in the month. See the signals table for all the details on how trader positioning looks right now. Hope you have a good weekend, and good luck next week.

Late December Awash in Bearish Red

I somehow missed doing my promised update after Monday's holiday-delayed Commitments of Traders report came out. Very sorry! All the latest data based on today's new COT report has now been crunched by my chastized yet keen team here at COTs Timer central, and my latest signals table has been updated.

As it happens, last Monday's data didn't add any other signals than the ones I mentioned in last Saturday's post. 

The new data from today, however, is a different story, as you'll see on my signals table. No new signals to report for next week's open, but after that, watch out. I think the best way to describe the latest COT data is "Yikes." Or perhaps "bahumbug." Santa will not be pleased. Late December is awash in bearish red. But try not to think about that right now! Tis the season to be jolly. Hope you have a great weekend, and good luck this coming week.

Holiday Delay - A Few New Signals

Hope U.S. readers had a yummy turkey last week. The holiday delay means Friday's Commitments of Traders report will come out Monday, so I'll only update my latest signals table after that. But there are still a few signals taking effect on Monday's open based on data until now. To whit:

- S&P 500: Goes from cash to bearish

- Crude oil: Goes from cash to bearish

- Natural gas: Goes from bearish to bullish

- 30-year Treasury bond: Goes from bullish to cash

These signals are all marked on my signals table. But please note that I haven't updated the rest of that table, including the column for the coming week's "current signal," because of the holiday-delayed data. Thus, the signals in that column are for last week. Have a good weekend, and see you back here after Monday's data release.

Copper to Cash, Bond Bullish

Two signals taking effect this coming week's open of trading: copper goes to cash, while the 30-year Treasury bond goes bullish. See my newly updated latest signals table for more details on these and the other markets I follow using the weekly Commitments of Traders reports.

Trader Data Good for Nikkei, Bad for Gas, Toss-up for Bond

Some signals taking effect on this week's open: the Nikkei goes to bullish, natural gas goes to bearish and the 30-year Treasury bond goes to cash. See my newly updated latest signals table for more details on trader positioning in these and other markets as reported in the weekly Commitments of Traders reports.

The S&P 500 data is notably striking lately, with the "smart money" commercial hedgers getting highly bearish in their net positioning as a percentage of the total open interest, while the not-so-smart small traders remain super-bullish (whose signal I fade in my setup). My setup goes bearish the week of Nov. 28. What could it mean? These traders seem to be betting the cock-up in Europe gets even worse.

But meanwhile, the data for copper looks interesting too. The setup for the "smartest metal" remains bearish another week, then goes to cash. The data has just now also turned bullish, which historically has tended to mean price rises starting six to eight weeks down the line, depending on the trader group.

Hope you stay out of trouble this week! See you back here Friday.

Holiday Delay

Friday's Commitments of Traders report is delayed until today due to a holiday delay with Remembrance Day. See you back here later today with a post about the latest weekly trader data. Meanwhile, as you'll see on my latest signals table, my natural gas trading setup goes from cash to bearish on this morning's open of trading owing to data from recent weeks.

BKX, Gas to Cash, Bond Bullish, Late Nov. Doldrums in Sight for SPX

Signals taking effect on Monday's open: cash for the BKX U.S. Bank Index and natural gas, and bullish for the 30-year Treasury bond. To see more details on these markets and for other signals taking effect in coming weeks, check my newly updated latest signals table based on Friday's trader positioning as reported in the weekly Commitments of Traders report. Hint: New signal coming up for SPX, and it doesn't look good for bulls, no sir. Good luck this week!

Nikkei, Crude to Cash

Two signals taking effect on today's open of trading. My trading setups for the Nikkei and crude oil both go to cash. See my latest signals table for the details on these and my other setups based on trader positioning as reported in the weekly Commitments of Traders reports issued by the U.S. Commodity Futures Trading Commission. In other markets, my natural gas signal goes from bearish to cash on Nov. 7, while my copper setup goes from bearish to cash on Nov. 21. Good luck this week, and Happy Halloween.

Nikkei Bullish, Bond to Cash

A couple of signals taking effect on Monday's open of trading: cash for my 30-year Treasury bond setup and bullish for the Nikkei. See my newly updated latest signals table for more details on trader positioning and signals for these and the other markets I follow using the Commitments of Traders reports issued weekly for free by the U.S. Commodity Futures Trading Commission.

Existing signals that continue this coming week: bearish for the BKX U.S. Bank Index, bearish for crude oil (that setup goes to cash on Oct. 31), bullish for gold, bearish for natural gas and bearish for copper (that setup goes to cash on Nov. 21). Hope you had a good weekend, and good luck this week.

Trader Positioning Bearish for Copper and Natural Gas

Two signals for Monday's open of trading: bearish for my natural gas trading setup and bearish for copper. Check my newly updated latest signals table to see details on trader positioning and signals for these and the other markets I follow using the weekly Commitments of Traders reports issued by the U.S. Commodity Futures Trading Commission. Good luck next week.

Slew of Sells From Latest Trader Data

Woah - a slew of red bearish signals on my newly updated latest signals table. Looks like the bloodbath that is the markets these days. So you thought the correction was over and we're in the clear with this little bounce? Ha. The Commitments of Traders data does not agree with you.

Of course, the traders whose positioning the COT data reflects aren't always right. Nobody is. Here's a snapshot of some of those signals. You'll have to check the signals table for details on the COT positioning for each market.

- S&P 500: still in cash after being stopped out of a bullish signal in August.

- BKX U.S. Bank Index: bearish on next week's open of trading.

- Crude oil: bearish on next week's open.

- Gold: last week's bullish signal still in effect next week.

- Nikkei: in cash like last week.

- Natural gas: last week's bearish signal ends. This setup goes to cash on next week's open.

- 30-year Treasury bond: bullish last week, still bullish next week.

- Copper: in cash next week, going bearish the week after (on the open the week of Oct. 17).

Hope you have a good weekend, and good luck next week. Should be nutty! Happy Thanksgiving to Canadian readers.

Data Bullish for Bullion and Bond

A slew of new signals to report for tomorrow's open of trading and the coming weeks. See my newly updated latest signals table for all the details based on the latest weekly Commitments of Traders data on how the biggest market players are positioned in the markets. For newbies, my COTs Timer trading strategy gives signals in eight markets based on past patterns of COT trader derivatives positioning that reliably signaled moves in price action. Here are some highlights from the latest COT data:

- Gold: The huge sell-off in bullion has spooked lots of folks. Good time to buy? Or is that just "losers averaging losers," to paraphrase Paul Tudor Jones. (Smart guy!) In this case, the COT data suggests the wrong-way large speculator crowd is at extremes of bearishness in its futures and options positioning. As my table shows, the large spec net position is now down to 2.5 standard deviations below average as a percentage of the total open interest. That's historically tended to lead to upward price moves.

- 30-year Treasury bond: My setup for the bond also goes bullish on Monday's open of trading.

See my signals table for more upcoming signals. Good luck next week.

Banks Go to Cash, Gas Still Bearish

Only one new signal for execution on next week's open. My setup for the benchmark BKX U.S. Bank Index, which was bearish last week, goes to cash on Monday. My other bearish signal - for natural gas - stays bearish this coming week. Everything else is in cash this week.

My newly updated signals table based on the Commitments of Traders data also includes two bearish signals coming down the pipeline for mid-October. My setup for crude oil goes from cash to bearish on the open of Oct. 10 based on bearish positioning by the commercial hedgers and small traders (both of which are the "smart money" in this market). Also, I've finally included more details about my new setup for copper on that table. That setup goes bearish on Oct. 17 because of bearish positioning by the large speculators and small traders.

Reader feedback time: I'm curious how you use the COT data in your trading. Also, what are you doing that's working - and that isn't working - these days?

Good luck this week!

Banks, Gas Positioning Bearish for Next Week

Two signals to report coming out of the latest weekly Commitments of Traders data. Trader positioning has turned super negative in the three-month Eurodollar contract. That's led my trading setup for the benchmark BKX U.S. Bank Index (a basket of the major U.S. financials) to go bearish for Monday's open of trading.

Also, my setup for natural gas goes bearish on Monday's open after the large speculators and small traders both put on highly bearish positioning in recent weeks.

See my newly updated latest signals table for all the details on these and the other setups I'm following. I still haven't added my new copper setup to that list. It's in cash for the next few weeks, but large spec and small trader positioning has turned very bearish here too lately. That's led the setup to give a bearish signal with a four-week delay - meaning for the open the week of Oct. 17. Good luck next week.

BKX, Copper to Cash

A few new signals on my newly updated signals table: cash on next week's open of trading for the BKX U.S. Bank Index and bearish for my natural gas setup with a one week delay (i.e. for execution on the open of trading on Sept. 19). Also, my copper setup goes from bullish to cash on next week's open (on Sept. 12). See my signals table for more details on the Commitments of Traders positioning in these and other markets. Hope you did okay this week, and good luck next week!

Banks Bearish, Gold to Cash, Copper Bullish

My trading setup for the BKX U.S. Bank Index goes to bearish on next week's open of trading, while my signal for gold goes from bullish to cash. Also, my new setup for copper goes from cash to bullish - but only for a single week; that signal then goes back to cash.

See more details stemming from Friday's Commitments of Traders report on my newly updated latest signals table (not including the data for copper, which I haven't put in that table yet). Hope you have a good weekend, and good luck next week!

Long Gold

Gold goes back to bullish on today's open of trading, according to my latest signals based on the weekly Commitments of Traders reports. See my newly updated signals table for more details on this and the other markets I'm following. All other signals remain in cash. Sorry for the late update this week - Irene knocked out our power yesterday. Hope you got through Irene okay, and good luck this week!

Gold, Copper to Cash

Just updated my latest signals table. Sorry for the late update! Two setups going to cash this morning on the open of trading: my gold setup, which was bearish, and my copper setup, which was bullish. See the signals table for more details on these and other markets. Good luck this week!

Bearish on Bullion

Has gold topped? The Commitments of Traders data seems to be saying so. My trading setup for gold has gone bearish for Monday's open of trading. This is based on excessive bullishness by the large speculators.

See the details for this and the other markets I'm following with my COTs Timer trading strategy on my latest signals table, which I've updated based on Friday's COT data from the U.S. Commodity Futures Trading Commission. Hope you survived last week's nuttiness intact, and good luck next week.

BKX Bullish Trade Stopped Out After One Day

Yikes - these markets are murder. I got stopped out of my BKX Bank Index bullish signal yesterday - just one day after buying the position. Not good! The bullish copper position is still holding on, for now. But my stop isn't too far below. Good luck the rest of this week.

Trader Data Bullish for Bank Index, Copper Starting Monday

Woah - that was just plain nutso. I was expecting a big bounce off the debt deal, but this week we got something like Godzilla meets 2008 meets 1929. I got stopped out of my bullish S&P 500 signal, as reported in my post earlier today. When that happens, my rule is to look for possible discretionary trades in the other direction. But I'm not anxious to get short either. We're close to a completed 9 count of a DeMark Sequential Setup in most equity indexes (see more on analyst Tom DeMark's system here), so there could be a vicious snap-back rally early next week that will screw up a lot of bears.

That's also the take I get from today's Commitments of Traders data. As you can see on my newly updated latest signals table, my setup for the BKX U.S. Bank Index has gone from cash to bullish, taking effect on next week's open of trading.

Also turning bullish on Monday's open is my brand new copper trading setup, as noted in previous posts. Sorry I haven't posted the full testing or other info on my signals and testing pages. I'll do so soon. My maximum portfolio allocation for this setup is 6.53 percent, and my stop is 11.49 percent below the entry price.

See my signals table for more details based on the CFTC's latest data. Have a good weekend, and good luck next week.

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

Stopped Out of S&P 500 Trade

Woah - this crazy market is reminding me of 2008 all over again. Imagine the carnage that would have happened if the idiots in D.C. hadn't signed the debt agreement! The action this morning stopped me out of my S&P 500 long trade, which I had on since July 18. On the other hand, it's been pretty sweet for my bullish signal for the 30-year Treasury bond. Only problem - I didn't put on a trade for that signal because I didn't have any free money at the time in any of my accounts! See you later this weekend for an update based on this afternoon's Commitments of Traders data. Hope you're faring okay this week.

S&P Commercial Traders Get Negative, But not Worryingly So

Not one new signal in my trading setups based on the Commitments of Traders reports issued weekly by the U.S. Commodity Futures Trading Commission. My S&P 500 setup remains notably bullish for a fourth consecutive week, perhaps signalling that all will work out in the U.S. debt standoff craziness.

Mind you, the "smart money" commercial hedgers have gotten considerably more bearish in their derivatives positioning in Friday's data. See my newly updated latest signals table for more details on this and the other COT markets I'm following. Nonetheless, the commercials are far from being at any kind of historic extreme in their holdings, which means my setup remains in bullish mode for the time being. Good luck next week.

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

Gold, Nikkei to Cash

Couple of signals taking effect on next week's open of trading: My trading setup for gold goes from bullish to cash, and the same for my signal for the Nikkei Stock Average. Otherwise, everything's the same as last week: bullish for my new S&P 500 trading setup and the 30-year Treasury bond (meaning bearish for the yield) and cash for crude oil, natural gas and the U.S. BKX Bank Index.

My new setup for copper is also in cash for two more weeks, then goes bullish. Check my newly updated latest signals table for more details on how the Commitments of Traders positioning data sees these markets.

Have a good weekend, and good luck next week!

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

S&P 500 to Bullish

Just updated my latest signals table with the Commitments of Traders data from Friday's weekly release on trader positioning by the U.S. Commodity Futures Trading Commission. My S&P 500 trading setup based on the COT data is going from cash to bullish on this coming week's open of trading (i.e. on Monday). The COT data for this market looks good for at least the next three weeks (the trade delay for this setup) - meaning it's going to be bullish at least three weeks out.

I've now also updated my S&P 500 setup based on new backtesting to include data since 2007. The new setup is the one I'm using for the new signal. Like my old setup, the new one uses the same two component signals: trading alongside the commercial traders when they hit certain extremes of trader positioning and fading (trading opposite to) the small traders, who are usually wrong at extremes of positioning. The new setup uses slightly different parameter values.

I've updated the latest signals table to include the new stop and portfolio allocations I'm using for the new setup. Please ignore the parameter values now listed on my backtesting results page, which I haven't updated yet. Please also ignore for the time being the parameter value information on the DIY page. I've disabled the spreadsheet linked there and will soon replace it with a new one using the new parameter values.

In other markets:

- BKX Bank Index: My setup for U.S. financials goes from bearish to cash on the coming week's open of trading.

- Copper: My new setup is in cash but goes to bullish on Aug. 8.

- Gold: Don't get too comfortable with the bullion rally. At least not if the COT data is right. My gold setup remains bullish one more week, then goes either to cash or bearish on July 25.

- 30-year U.S. Treasury: My setup goes to bullish on Monday's open after three weeks in cash.

See my latest signals table for more details on the other markets I'm following. Good luck this coming week.

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

S&P 500, Crude to Cash... Plus, See What My New Setup Says About Copper

A couple of signals take effect on Monday's open of trading in my COTs Timer system: My S&P 500 setup goes from bearish to cash for a single week (then it goes to bullish the week following), and my crude oil signal goes from bullish to cash. Check out my newly updated latest signals page for details on trader positioning in these and the other markets I follow based on the CFTC's nifty little weekly Commitments of Traders reports.

In other news, I've developed a new trading setup for copper. I haven't included it yet in my signals or backtesting results pages, but I'll do so soon. The setup was bearish for two weeks in mid-June, then went to cash last week and will remain in cash four more weeks before going bullish. It's based on trading on the same side as the large speculators and small traders in copper futures and options (their net position as a percentage of the total open interest, to be exact).

This is my first setup from a new round of backtesting I'm doing on all my setups to incorporate COT and market data since 2007. My existing setups are based on backtesting data from 1995 to 2007, so I'm working now on bringing all that great new data - including a wild bear market and just-as-wild recovery - into my testing. It's lots of fun. Have a good weekend, and good luck next week.

Happy News for Gold Bugs

One new signal for execution on the coming week's open: My trading setup for gold goes from cash to bullish. This signal will last at most three weeks. It's based on excessively negative trader positioning in gold futures and options by large speculators, whom my COTs Timer trading system fades. See my newly updated latest signals table for more details on this setup and my others based on the weekly Commitments of Traders reports from the U.S. Commodity Futures Trading Commission. A few other highlights:

- Financials: My setup for the BKX U.S. Bank Index remains bearish for a second week. This is based on highly bearish trader positioning in three-month Eurodollar futures and options.

- Crude oil: My crude signal remains bullish but will go to cash in a week's time.

To Canadian readers, hope you enjoyed a good Canada Day. To American readers, have a great 4th of July. And good luck to all this week!

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

Banks Bearish Today, S&P 500 Bullish in Three Weeks

Good news for bulls in the latest Commitments of Traders report issued Friday afternoon by the CFTC. "Smart money" commercial hedgers remain net bullish in their S&P 500 futures and options positioning, while wrong-way small traders have suddenly gotten hugely net bearish. See my newly updated latest signals table for details. Readers might recall I reported last week that my S&P 500 signal had gone from bearish to cash with a three-week trade delay (i.e. for execution on July 11). Now, the latest data has pushed the signal into the bullish column for the week following - i.e. on July 18.

But there's also good news for bears. Everyone can be happy! Trader positioning in the three-month Eurodollars has soured considerably. It's given my BKX U.S. Bank Index setup a bearish signal for execution on Monday's (tomorrow's) open of trading. This signal tends to be shorter-term and on average has lasted 2.6 weeks in real-time trading (as opposed to 6.5 weeks on average for my S&P 500 signals). So it's entirely possible that both of these signals will turn out to be right.

Also, my 30-year Treasury signal goes from bearish to cash on Monday's open.

In housekeeping notes, I've started an update of my backtesting of my system - a necessary step after real-time trading a mechanical system for 20 to 30 percent of the original dataset, since the robustness of the signals tends to deteriorate the longer they're used. The original dataset was 1995 to 2007 for most of the signals, so they're due for an update.

My real-time trading experiences and all this juicy new data should help me come up with a more robust series of setups to replace the existing ones. I should start introducing new setups in the coming weeks. I've also been able to speed up a few aspects of my testing, which should allow me to find time to bring in setups for a few new markets.

Good luck this week!

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