Sunday, 13 April 2014

S&P 500 Bearish Signal This Week

Trader positioning continued to get more bearish across most equities and commodities, according to the latest Commitments of Traders report released Friday.

"Smart money" commercial hedgers in S&P 500 futures and options have steadily reduced their net position as a portion of total open interest for six weeks.

They now stand at 1.39 standard deviations below my moving average.

The decline in their positioning started the week mass protests ousted Ukraine's pro-Moscow president Viktor Yanukovych and Kremlin responded with an armed takeover of Ukraine's Crimea peninsula.

My S&P 500 signal goes bearish on the open of trading this coming week.

Also going bearish this week is copper.

My latest signals table now shows a wall of red bearish signals for six of my 10 trading setups based on the free weekly COT reports.

Three signals are in cash, and only the Nasdaq-100 is bullish.

Good luck this week.

Saturday, 5 April 2014

Commercial Hedgers Keep Up Heavily Bearish S&P 500 Stance

Was yesterday's market bloodbath a one-off -- or the start of something more serious?

Could be more of the latter, if trader positioning in S&P 500 futures and options is anything to go by.

As discussed in previous posts, the upward trend of positioning by "smart money" commercial hedgers that started in December is over. 

(Why "smart money"? That's because the S&P 500 commercial traders tend to get heavily bullish in their positioning when markets are about to go up and vice versa.)

That uptrend coincided with a nice little rally.

Friday's COT data shows the commercials at 1.32 standard deviations below my moving average in their net position as a percentage of total open interest. 

Gold Joins Silver in Bearish Column

The downturn in trader positioning has pushed my S&P 500 signal to bearish on the open of trading the week of April 14. 

See my latest signals table for more details.

As usual, though, the news from the COT data is somewhat mixed. My signal for the BKX U.S. Bank Index goes bullish for Monday's open of trading. And my signal for the Nasdaq-100 continues to be bullish.

In commodities, my signal for gold goes bearish on Monday's open, too -- joining my already bearish silver signal.

Natural gas also remains bearish.

Good luck this week.


Saturday, 29 March 2014

Smart Money Traders Go Bearish on S&P 500

"Smart money" commercial hedgers have thrown in the towel on the S&P 500 rally since the New Year, according to Friday's Commitments of Traders report from the U.S. Commodity Futures Trading Commission.

The commercial net futures and options position as a portion of the total open interest dropped to 1.34 standard deviations below my moving average based on the latest COT data.

That was enough to change my S&P 500 signal from bullish, which it's been since Feb. 10, to bearish. The signal will take effect in two weeks' time on the open of trading the week of April 14.

Gold to Cash

As noted last week, S&P 500 commercial trader positioning had climbed 10 straight weeks starting in December, but started to reverse immediately after Russia's invasion of Ukraine's Crimea.

See my latest signals table for more details on how traders are positioned in the 10 markets I trade using the free weekly COT data.

In other COT data, gold goes to cash on the coming week's open of trading.

Good luck next week.

Wednesday, 26 March 2014

Sunday, 23 March 2014

Russia Gloom Stalks Market

Last week's bullish trader positioning -- seemingly on optimism over the West's mild sanctions against Russia -- has given way to oodles of gloom in the latest Commitments of Traders report.

Most startling is the collapse in "smart money" commercial hedger positioning in Nikkei futures and options.

From last week's astonishing 3.87 standard deviations above the moving average, Friday's COT report saw commercial total open interest cleavered to 2.22 standard deviations below the average.

I don't think I've ever seen such a massive reversal in the history of the data. My Nikkei signal remains in cash.

See my latest signals table for more details on the positioning in this and the other nine markets I trade using the weekly COT data.

Banks, Gas Bearish

A similar, though less drastic move took place in the 3-month Eurodollar, a key international liquidity measure.

The Eurodollar gives me signals for the BKX U.S. Bank Index.

My bullish BKX signal last week goes to cash on this week's open of trading due to a sharp decline in the large speculator net futures and options position as a percentage of total open interest.

It's also worth noting what's going on in S&P 500 futures and options. Here, commercial hedgers for the second straight week are reversing their net position as a percentage of the total open interest.

While my signal is still bullish for now, the two-week decline has put an end to 10 straight weeks of increasingly bullish net positioning that started in December.

Reversal Started After Russian Invasion

Notably, the decline in S&P 500 positioning started the Tuesday after Russia invaded Ukraine's Crimea peninsula and organized a widely condemned, fraud-riddled referendum there in an attempt to annex the strategic region.

Meanwhile, gold goes bullish on this week's open -- another sign of market fear.

My signal for silver remains bearish, and the two precious metals rarely diverge.

The explanation could be that traders see value in gold purely as a safe haven, while silver is being seen from the more conventional prism of commodity-positive growth, which traders are now nervous about.

Also noteworthy: Natural gas goes bearish on this week's open.

Good luck this week.

Saturday, 15 March 2014

Bullish Traders Hopeful on Crimea -- Or in for Surprise?

The bullish move in trader positioning in the S&P 500 futures and options is now being confirmed in other equity markets, according to Friday's Commitments of Traders report.

The free weekly data from the U.S. Commodity Futures Trading Commission has pushed my signals for the BKX U.S. Bank Index and the Nasdaq-100 to bullish for the coming week of trading.

As well, my signal for the Nikkei, which had been bearish, has now gone to cash for this week's open of trading.

The commercial hedgers and small traders, both of whom I follow for my Nikkei signal, are now at astonishing levels of bullish positioning, as you can see on my latest signals table.

(Meanwhile, in commodities, my gold signal, long bullish, also moves to cash on the coming week's open.)

Market Hopes for Resolution in Crimea?

What does the bullish equities move mean? Perhaps the market doesn't believe Russia's Vladimir Putin will mount a feared full-scale invasion of Ukraine after Sunday's fraud-riddled referendum in Crimea.

Or perhaps the trader positioning last Tuesday -- which the current COT report reflects -- was based on market hopes of a resolution to the Crimea crisis, which have since failed to materialize.

If it's the latter case and Russian military incursions into Ukraine continue, the next COT report could promise a sharp reversal of bullish equity positioning.

Monday, 10 March 2014

BKX to Cash, Silver Bearish

Two signals take effect on this week's open of trading based on the latest Commitments of Traders report:

- cash for the BKX U.S. Bank Index
- bearish for silver

See my latest signals table for details on trader positioning in these and the other eight markets I trade using the free weekly COT reports from the U.S. Commodity Futures Trading Commission.

Good luck this week!

Sunday, 9 March 2014

Update Delay


My next Commitments of Traders update will be delayed until Monday.

I'm currently on the road in beautiful Costa Rica, but will be back at our temporary home away from home in Samara tomorrow and ready for my next post.

Sorry for the delay.

Meanwhile, I've been closely following the situation in Ukraine and saw the picture to the right, which I wanted to share.

Sunday, 2 March 2014

Natural Gas to Cash, NDX Bearish

Two signals take effect on the coming week's open of trading based on the latest Commitments of Traders data from the U.S. Commodity Futures Trading Commission:

- bearish for the Nasdaq-100 index
- cash for natural gas

See my latest signals table for detailed data on trader positioning in these and the other eight markets I trade using the CFTC`s free weekly COT reports.

Good luck this week.

Sunday, 23 February 2014

Natural Gas, Bond Bearish

Four signals take effect on the coming week's open of trading based on the latest Commitments of Traders data:

- bearish for natural gas and the 30-year Treasury bond
- cash for silver and crude oil

See my latest signals table for details on trader positioning in these and the other markets I trade using the free weekly COT reports from the U.S. Commodity Futures Trading Commission.

Good luck this week, and a special message to Ukrainian readers:

Deepest sympathies to those who lost loved ones in the revolution of the past few days in Ukraine.

Their sacrifice is an example to the world of the power of the people in fighting oppression and corruption. Bічнaя пам'ять.

Monday, 17 February 2014

Bullish Equities Move Solidifies in CFTC's Latest COT Report

The bullish move in trader positioning in equities seems to be solidifying a little, according to the latest Commitments of Traders data.

Signals taking effect on this week's open of trading:

- bullish for the BKX U.S. Bank Index
- bearish for the Nikkei
- bullish for the 30-year Treasury bond

My signal for the S&P 500 went from bearish to bullish last week. Net "smart money" commercial hedger positioning in S&P 500 futures and options remains at extremes of optimism in Friday's COT update.

The Nasdaq-100 was already bullish.

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

The Nikkei move in the other direction is odd, but no one can say the COT data makes complete sense and doesn't leave you guessing.

Good luck this week.

Saturday, 8 February 2014

S&P 500 Smart Money Boosts Bullish Positioning

Bullish positioning has gotten even stronger among "smart money" commercial traders in S&P 500 futures and options, according to the latest Commitments of Traders data.

Friday's COT report puts the commercial net position as a portion of total open interest at 2.58 standard deviations above the average of recent data, the Commodity Futures Trading Commission data shows.

My signal for the S&P 500 goes bullish on next week's open of trading based on the recent data. The signals aren't always right, but the recent move could mean the correction in equities has a good chance of being over.

See my latest signals table for more details on the latest positioning in the 10 markets I trade based on the free weekly COT reports.

Note that I've never found a significant correlation between week-to-week changes in COT positioning and S&P 500 prices. But the extent of the bullish net positioning could mean a longer-lasting up-move is coming, rather than a shorter-term rebound in a bearish downturn.

Other signals taking effect on next week's open: cash for the BKX U.S. Bank Index and bullish for silver. Also, my signal for the 30-year Treasury bond turns bullish in a week's time on the open the week of Feb. 17.

Good luck this week, and Happy Valentine's Day

Sunday, 2 February 2014

Sharp Bullish Move in S&P 500 Commercial Posture

Silver turns bearish on the coming week's open of trading, while the 30-year Treasury bond goes to cash.

This, according to my trading signals based on the free weekly Commitments of Traders data issued by the U.S. Commodity Futures Trading Commission.

Recent COT data has also moved my currently bearish signal for the S&P 500 to bullish, with the signal taking effect in a week's time on the open of trading on Feb. 10 (i.e. the signal remains bearish one more week due to the trade delay I use for that setup.)

That's due to highly bullish positioning by the "smart money" commercial hedgers in S&P 500 futures and options. In fact, the commercials are more relatively bullish than any time since last summer in their net positioning as a percentage of the total open interest.

See my latest signals table for more details on how traders are positioned in the 10 markets I trade using the COT reports. Good luck this week.

Sunday, 26 January 2014

Gas to Cash, Crude Bearish

Two signals take effect on this coming week's open of trading based on the latest Commitments of Traders report:

- cash for natural gas
- bearish for crude oil

See my latest signals table for more details on trader positioning in these and the other markets I trade using the free weekly COT data from the CFTC. Good luck this week.

Saturday, 18 January 2014

Natural Gas Bearish for One Week Only

A few new signals take effect on Monday's open of trading based on the latest Commitments of Traders data:

- bearish for natural gas (this signal to last just one week)
- bullish for gold and the 30-year Treasury bond
- cash for copper

See my latest signals table for more details on trader positioning in these and the other markets I trade using the free weekly COT data.

Good luck this week.