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