Monday 30 December 2013

Dramatic Bearish Turn in S&P 500 Data

When will this melt-up in equities end?

Maybe soon. Or at least, it could be in for a hiccup.

At least, that's what the latest Commitments of Traders data seems to be saying.

Last week's data on trader positioning in the S&P 500 has pushed my signal from bullish (which it's been since Sept. 9) to bearish in two weeks' time. The signal has a two-week trade delay, so it takes effect only on the open of trading the week of January 13, 2014.

In fact, the "smart money" commercial hedgers in S&P 500 futures and options are extraordinarily bearish. Their net position as a percentage of the total open interest hit 2.07 standard deviations below the moving average I'm using for that setup.

Natural Gas Signals Flip-flop

The COT data move coincides with a massive negative divergence on the weekly and monthly S&P 500 charts between the rising index and the Tick Index, a good indicator of market sentiment.

In other news, as noted last week, my natural gas setup went from bearish to bullish on this week's open, while my 30-year Treasury bond signal went to cash.

The natural gas signal lasts just one week, then goes to cash on the open the week of January 6.

See my latest signals table for more details on trader positioning and signals in the 10 markets I trade using the COT data issued free weekly by the U.S. Commodity Futures Trading Commission.

Good luck this week, and Happy Holidays.

Also, best wishes for the New Year to you and your family for those of you using the new calendar. (Us Ukies know New Year's Day is actually Jan. 14!)

Sunday 29 December 2013

Holiday Delay

Last week's Commitments of Traders report is delayed due to Christmas until Monday. Hope you're having a good holiday!

See you back here after Monday's COT release.

Sunday 22 December 2013

Christmas Week Signals: Banks to Bearish, Crude to Cash

New weekly trader data has given me two new signals taking effect on the coming week's open of trading and two other signals taking effect in a week's time:

- BKX U.S. Bank Index: This signal goes to bearish on Monday's open of trading.
- Crude oil: Crude goes to cash on Monday's open.

As well, in a week's time, my signal for natural gas goes bullish, while my signal for the 30-year Treasury bond goes to cash (i.e. on the open the week of Dec. 30).

See my latest signals table for more details on Friday's Commitments of Traders data from the U.S. Commodity Futures Trading Commission.

Good luck this week, and holiday best wishes to all!

Saturday 14 December 2013

Seachange in Latest COT Data

Lots of change in the latest Commitments of Traders data.

After a brief lull of indecision that put most of my signals into cash, Friday's COT report from the CFTC has riled up most of my setups and put them back into positions.

You have to see my latest signals table to appreciate the remarkable upheaval.

New signals taking effect on the coming week's open:

- cash for the BKX U.S. Bank Index
- bullish for the Nasdaq-100 and silver
- bearish for natural gas, copper, crude oil and the 30-year Treasury

Bullish On Balance?

On balance, this dramatic trader realignment seems to be a progression of the slightly more positive news I reported in last week's post.

Banks had previously been bearish, while the Nasdaq-100 now becomes bullish. A bearish signal for the bond would also tend to be bullish for equities.

The commodities are a real grab-bag, but you have to discount the bearish natural gas signal. Natural gas isn't correlated at all with equities.

Of those remaining, copper and crude going bearish may be a continuation of the ongoing decline in commodity prices. That may be longer-term bearish for equities, but for the shorter term it's probably not relevant.

Silver is now joining gold in the bullish column, which may be more of a portent for the U.S. dollar than equities. And in fact, a decline in the greenback tends to be bullish for equities.

All in all, it's just a bunch of speculation! And next week's COT data could erase everything I've just said, as so often happens.

Good luck this week.

Monday 9 December 2013

S&P 500 Smart Money Pulls Back From Bearish Posturing

Not much to report after the latest Commitments of Traders report Friday.

All my signals remain the same as last week, as you can see on my latest signals table.

The "smart money" commercial hedgers in the S&P 500 have pulled back a little from their recently fairly bearish posturing. 

They didn't get bearish enough to affect my bullish signal, though they got close in mid-November, according to the U.S. Commodity Futures Trading Commission data.

As well, my natural gas signal will go from cash to bearish in a week's time on the open of trading the week of Dec. 16. 

We woke up to a nice dusting of snow here in Quebec's Eastern Townships, and there's more coming down. Hope your holiday season is going happily too.

Good luck this week!

Tuesday 3 December 2013

Four Markets Go to Cash After Latest COT Data

The holiday-delayed Commitments of Traders data is in, and I've just updated my latest signals table with the results.

The weekly COT data has given me a bunch of new cash signals taking effect on this week's open of trading. The following markets go to cash: natural gas (though that's a signal we knew about last week; see my previous weekly update); silver, crude oil and the 30-year Treasury bond.

All other signals remain the same:

- bullish for the S&P 500 and gold
- bearish for the BKX U.S. Bank Index (a basket of U.S. financials)
- cash for the Nasdaq-100Nikkei and copper

Thanks for your patience with the latest delayed COT update. Good luck this week!

Sunday 1 December 2013

This Just In: Gobblers Delay Important Data

Holiday delay this week due to Thanksgiving in the U.S.

Us Canadians already had our bird a few weeks ago. To American readers, hope yours was as tasty as ours!

I'll be back here with a Commitments of Traders update after Monday afternoon's data release.