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!)