Tuesday, December 18, 2007
COTs Predict Santa Coming, Dollar to Sink
My COTs U.S. Equity Index is giving its fourth straight renewed bullish signal, based on the latest Commitments of Traders data issued Friday. This index is based on my trading setups for the S&P 500, NASDAQ 100, Dow Jones industrials and Russell 2000 - all built around the COTs reports, which report how major traders are positioned in the markets.
My U.S. equity index has been on a bullish signal since last March. It now stands at a super-bullish 0.97, up from last week's reading of 0.88. Regular readers will recall that a "1" reading means all four setups are effectively giving a bullish signal on average, for execution on next week's open of trading. So I'd say this is happy news for equity bulls. (See the table on my "Latest Signals" page for all the signals from my setups based on the COTs reports.)
In other developments, the latest data portends still more horrors for the greenback. The commercials are dumping their U.S. dollars faster than you can say "Gisela Bundchen." It's been 12 straight weeks of steadily lower net long futures positions for the "smart money" crowd. My U.S. dollar index setup is now giving its third straight renewed bearish signal. Oh-oh.The other interesting developments are taking place in the ag sector. My COTs Agriculture Index, based on my setups for wheat, corn, soybeans and sugar, has fallen to -0.44, down substantially from last week's 0.12. This setup provides me signals for the DBA Agriculture ETF. The index now stands not far from flipping to bearish for DBA.
Looking at some of the specific sectors, corn small traders have lowered their net short position in futures and options to a bullish extreme, flipping my setup for corn to bearish. The small traders are now 180 percent above the signal line I use for this setup. (See the explanatory links in the navigation bar to learn more about how my COTs Timer trading system works.) Note that the trade delay for this setup is three weeks.
As well, the sugar commercial traders have suddenly put on a huge net short position. After only a two-week bullish signal, this setup has now flipped back to bearish. Note that my setup for sugar is a little special. It works by going long on the bullish signals and going to cash on bearish signals (not going short).
My U.S. equity index has been on a bullish signal since last March. It now stands at a super-bullish 0.97, up from last week's reading of 0.88. Regular readers will recall that a "1" reading means all four setups are effectively giving a bullish signal on average, for execution on next week's open of trading. So I'd say this is happy news for equity bulls. (See the table on my "Latest Signals" page for all the signals from my setups based on the COTs reports.)
In other developments, the latest data portends still more horrors for the greenback. The commercials are dumping their U.S. dollars faster than you can say "Gisela Bundchen." It's been 12 straight weeks of steadily lower net long futures positions for the "smart money" crowd. My U.S. dollar index setup is now giving its third straight renewed bearish signal. Oh-oh.The other interesting developments are taking place in the ag sector. My COTs Agriculture Index, based on my setups for wheat, corn, soybeans and sugar, has fallen to -0.44, down substantially from last week's 0.12. This setup provides me signals for the DBA Agriculture ETF. The index now stands not far from flipping to bearish for DBA.
Looking at some of the specific sectors, corn small traders have lowered their net short position in futures and options to a bullish extreme, flipping my setup for corn to bearish. The small traders are now 180 percent above the signal line I use for this setup. (See the explanatory links in the navigation bar to learn more about how my COTs Timer trading system works.) Note that the trade delay for this setup is three weeks.
As well, the sugar commercial traders have suddenly put on a huge net short position. After only a two-week bullish signal, this setup has now flipped back to bearish. Note that my setup for sugar is a little special. It works by going long on the bullish signals and going to cash on bearish signals (not going short).
