Bank Signal Goes from Bullish to Cash

Mostly quiet this week in Commitments of Traders land. This afternoon's COT release from the Commodity Futures Trading Commission resulted in one new signal in my COTs Timer trading strategy based on this weekly derivatives data: cash for the BKX U.S. Bank Index. Here's a little round-up of some of the action. For more details, see my latest signals table.

- U.S. financials: My trading setup for the benchmark BKX index goes from bullish to cash on Monday's open of trading. That's because the large speculators, whom I trade alongside in this setup, have suddenly reduced their net futures and options position as a percentage of the total open interest. The other two components of the setup remain in bullish mode, so the overall setup goes to cash. It had been bullish for three weeks.

- S&P 500: The "smart money" commercial hedger crowd is still heavily bearish, as they've been for the past six weeks. Meanwhile, the wrong-way small traders remain just as heavily bullish - as they've been for the last seven weeks. It all adds up to a bearish signal for my S&P 500 trading setup, which has been short since the week of May 2. Both sides are moderating their relative extremes of positioning, but just barely. No sign of any impending change of signal for some time.

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