Bullish on Banks, but Still Bearish S&P 500

Is it all over for the bull market rally since... how long has it been now?... since 2009! And what a rally it was. Trader positioning in the futures and options markets gives me a bullish signal for the BKX U.S. Bank Index, taking effect on today's open of trading. On the other hand, my bearish signal for the S&P 500 is still in effect, too. In fact, the latest COT data from the CFTC shows trader positioning in that market getting even worse.

The explanation could be simple: My BKX trading setup uses three component signals and thus tends to go in and out of positions on a shorter time frame than my S&P 500 setup, which is based on just two signals. In other words, both setups could be right. If that's the case, we could see a little rally within a larger decline.

See my newly updated latest signals table for more details on these and my other signals. 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

Gold to Cash, Gas Bearish

Two new signals based on the latest data from the Commitments of Traders reports issued by the CFTC. My trading setup for gold goes from bullish to cash on Monday's open of trading, and my setup for natural gas goes from cash to bearish on today's open as well. See my latest signals table for more details on these and my other setups. Good luck this week!

Is it a Top? Trader Data not Happy

Markets sure feel toppy these days - especially now that the "best six months" seasonally favourable period for most major stock indexes is now over. This afternoon's Commitments of Traders report suggests the weakness could continue. My trading setup for the S&P 500 remains bearish, and trader positioning isn't giving any hopeful signs for bulls. See my newly updated latest signals table for details based on today's COT release. Have a good weekend, and to Canadian readers - a good long weekend. TGIF! Good luck next week.

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

Bullish on Gold, Bearish on Bond

Two new signals based on the latest Commitments of Traders data from the CFTC: bullish for gold taking effect on Monday's open of trading and bearish for the 30-year Treasury bond, also to take effect Monday. See my just-updated latest signals table for all the gory details based on Friday's COT report. All other signals remain the same: bearish for the S&P 500, bullish for the BKX U.S. Bank Index and the Nikkei and cash for crude oil and natural gas. Good luck this week!

S&P 500 Bearish

A few new signals taking effect on this morning's open: bearish for the S&P 500 and cash for natural gas and the 30-year Treasury bond. I updated my latest signals table Friday based on that day's Commitments of Traders report, but didn't have a chance to write a post. Apologies! See my table for more details on the latest COT data. Good luck this week.

Boost for Banks

I've just updated my latest signals table based on this afternoon's Commitments of Traders data. Here's a little run-down of where things sit:

- BKX U.S. Bank Index: New signal for this setup. It goes from cash to bullish on next week's open of trading.

- S&P 500: This setup is in cash for a week more, then goes to bearish on the open the week of May 2. Looks like it'll remain bearish for a while, too, judging by the increasingly bearish positioning of the "smart money" commercial hedgers and the super-bullish stance of the wrong-way small trader crowd.

- Natural gas: One more week bearish in this setup, then she goes to cash.

- 30-year Treasury bond: One more week bearish in this setup, then she goes to cash. Hey, is there an echo?

Everything else stays the same as last week. What was it saying last week? Check the latest signals table to find out. Have a good holiday weekend, and good luck next week. Also be sure to check my portfolio page for an update early 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

Gas Goosed? S&P 500 Snookered? Narley Nikkei?

Here are my latest signals from my COTs Timer trading system, as of Friday's Commitments of Traders report from the good ol' CFTC (see my latest signals table for more details):

- S&P 500: Signal goes from bullish to cash on Monday's open of trading, then to bearish on the open the week of May 2.

- BKX U.S. Bank Index: Still in cash.

- Crude oil: Ditto (still in cash).

- Gold: Ditto again.

- Nikkei: Goes from cash to bullish on Monday's open.

- Natural gas: Goes from cash to bearish on Monday's open.

- 30-year Treasury bond: Still bearish. Goes to cash on the open the week of May 2.

Good luck this week! Check out my newly updated portfolio page with my current holdings and recently closed results. Sorry for not updating that in a while. We were on vacation in Isla Mujeres (Mexico) - beautiful place!

Readers might be interested in my random musings on the markets at The Montreal Gazette's web site (see here), where I'm covering the newspaper's $21,000 Stock Market Challenge. It's open only to Quebec residents of majority age, but if you're one of those and haven't still entered, you should. All entrants are eligible for a weekly $500 random draw. If you're not eligible, check it out anyway. I'm playing along myself, too, though I can't win any of the prizes. (Some silliness about conflict of interest... blahblahblah.)

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

Flip-Floppy Traders Give Bearish Signal for Early May

Oh-oh. Some dark clouds for equity markets coming out of the latest Commitments of Traders report issued this afternoon. The CFTC's COT report has given me a bearish signal in my trading setup for the S&P 500.

That's based on the "smart money" commercial hedgers getting suddenly a fair bit more bearish in their net futures and options positioning as a percentage of the total open interest. Meanwhile, the wrong-way small traders - whom I fade in this setup - have been at extremes of bullish net positioning for the past three weeks.

See my latest signals table for more details on this and my six other market signals based on the COT data.

My bearish signal takes effect with a three-week delay - meaning on the open the week of May 2. That's about in line with the end of the S&P 500's favourable seasonal period.

In fact, my S&P 500 setup is going to see a lot of action in the coming weeks. Earlier data had given it a bullish signal for this coming Monday's open of trading. Then, the signal was going to flip to cash on the following Monday's open (i.e. on April 18). The data sure seems volatile.

In other news, my gold setup goes from bullish to cash on Monday's open. And my natural gas setup goes bearish with a one-week delay - i.e. on the open April 18. My 30-year Treasury bond signal remains bearish for a fifth straight week. And my other signals are in cash (crude oil, the BKX U.S. Bank Index and the Nikkei). Have a good weekend, and best of luck next week!

BKX, Nikkei Flip from Bullish to Cash

A couple of new signals to report based on the latest Commitments of Traders data from the CFTC: My signals for the BKX U.S. Bank Index and the Nikkei both switch from bullish to cash as of the open of trading on Monday. See my newly updated latest signals table for more details about the COT data released Friday and how it impacts all seven of my trading setups. The data I follow for signals for the BKX has especially turned negatory, as you'll see on that table. All my other setups remain the same... for now. Good luck this week!

Bulling Bullion

Hola from Mexico's Isla Mujeres. I'm winding up a two-month extended family vacation down here, and we love this place. It's sad to leave, but I'll be returning to my more usual pace of portfolio updates and fuller Commitments of Traders posts when I get home to Canada, where we've had a pretty brutal winter this year. Or so I hear from depressed friends... Cheers!

But I digress. Friday's Commitments of Traders report gave me two new signals: bullish for bullion and my trading setup for the S&P 500 goes to cash on April 18. Check out my newly updated latest signals table for more details based on the CFTC's latest COT data release. My other setups remain the same: cash for crude oil and natural gas, bearish for the 30-year Treasury bond and bullish for the Nikkei.

For gold, the signal goes from cash to bullish on Monday's open of trading. For the S&P 500, readers may recall that the wrong-way small traders got highly bearish last week, which gave me a bullish signal for the setup with a three-week delay (i.e. on April 11). Friday's COT report showed the same small trader crowd suddenly getting super-bullish in their net futures and options positioning as a percentage of the total open interest. That pushed my setup back into the cash column. (Recall that the "smart money" commercial hedgers have been bullish, but I need both groups of traders to give the same signal before I will take a trade.)

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

Disaster Finds Nikkei, S&P 500 Smart Money Super-Bullish

Boy did that Nikkei bullish signal seem bad at the beginning of the week. Now, however, it seems spookily prescient. After a huge gap down in the wake of the tsunami disaster, then more turmoil as the nuclear catastrophe unfolded, my position in the Japan iShares (EWJ) is now actually in the money. Who knows how it will turn out, but this past Friday's new Commitments of Traders data is even more bullish for the Nikkei. I've updated my latest signals table based on the new numbers from the Commodity Futures Trading Commission.

The data for the Nikkei shows the "smart money" large speculators and small traders - the two groups of traders I follow for this market - ramping up their net futures and options positioning as of Tuesday. Yes, that was just as the gravity of the disaster was really sinking in and its nuke implications were sowing panic.

On the same day, the COT data also show the "smart money" commercial hedgers in S&P 500 futures and options got suddenly much more net bullish. Meanwhile, the wrong-way S&P 500 small traders - whom I fade - freaked out and got highly bearish. So much so, in fact, that their signal flipped to bullish. That has given me a new bullish signal for the S&P 500, which takes effect with a three-week trade delay.

See more details on these and my other signals on my table. Good luck this week!

Nikkei Bullish, Gold to Cash, Bearish on Bonds

The latest Commitments of Traders numbers are in, and here are my new signals from my latest signals table: gold goes to cash on Monday's open of trading, Nikkei goes to bullish, and the 30-year Treasury bond goes to bearish. Check out the signals table for more details on the latest COT data and my other trading setups based on this weekly data. I'm temporarily away from my office for a few weeks, so apologies for not updating my portfolio page and the lack of more detailed reports here. Good luck this coming week!

Bullion Bullish

A few new signals to report on my newly updated latest signals table: gold goes to bullish on Monday's open of trading, natural gas goes from bearish to cash on Monday's open, and my setup for the 30-year Treasury bond goes to cash as well. All other signals remain the same: S&P 500, Nikkei and crude oil are all in cash, while my signals for the BKX U.S. Bank Index is bullish. Good luck this coming week!

Gold to Cash, Banks to Bullish

A couple of new signals on my latest signals table: gold goes from bullish to cash this week, BKX Bank Index goes from cash to bullish. Also, on Monday, March 7, natural gas goes from bearish to cash. Sorry for the tardy post about last week's Commitments of Traders numbers. I updated the signals table on the weekend, but didn't have a chance to post on it until now. Good luck this week!