16 replies to this topic

[Spectacular Bid]

Commercial traders are now heavily short the combined Mini and Large contract in
the S&P They are not heavily short the Nasdaq. The shorting levels on the S&P do
show there is now market risk for the first time in a while and suggest a pullback.

[Iblayz]

I must be missing something. Truthfully, it looks to me that the Commercials are leaning heavier to the short side on the Nasdaq than they are on the SPX. And I have seen the Commercials way shorter than they are now (on the SPX) with the market still advancing. I am not predicting anything here......just saying that, based on what I have seen over the years, I would not say that the Commercials are heavily short the SPX right now. Leaning further in that direction.....yes. And may I point out one more time that Commercial positions on the indices ARE NOT straight bets. Commercials by definition are using the Futures to HEDGE. In fact, that is what classifies them as "Commercial" according to CFTC rules. So the question is......what are they hedging. To some degree, I would guess that a lot of those "Commercial" short positions represents large funds hedging LONG positions. In other words, the more short they get......the more nervous they are getting. And the more nervous they get.....it would only make sense that they would buy less. The "reportable" positions represent large STRAIGHT bets on the market. I am not sure of the current number, but in 2010 an individual or entity that held 1000 or more S&P contracts had to report the position. In my opinion, when the indices are most "at risk" of a pullback are when the Commercials are heavily short (and I mean heavily), and the reportables and the non-reportables are both heavily long......as in, too many leaning in the same direction.

[lawdog]

nice analysis; i find it hard to find much consistently useful from these commitment numbers.

[Iblayz]

I agree. I used to watch these religiously. In fact, for many months years ago, I posted a weekly summary of the COT positions on a mIRC based stock chat room. I then did the same thing for many months (maybe longer) on Marketswing. I even have a form saved on my hard drive with the wording.......all I had to do weekly was fill in the numbers. I also have a saved file that converts the numbers to dollar amounts based on contract values (in order to accurately combine the large contracts with the e-minis). After a long while, a lightbulb went off in my head. I realized that I had never figured out a way to make the numbers useful on a short or even an intermediate term basis. As a market timing tool, the COT report can get you in real trouble.

[da_cheif]

commercials are just a bunch of guys with nose bleeds.........watch the sky.....they gotta lotta shorts to cover

[pisces]

An example of their usefulness :. i was watching the Bearflag in WTI last week [5hr chart],when somebody,somewhere said that the Commercials were heavily SHORT.

I loaded up on the shortside and the rest is history..From~$54 to $47 in~3 days.you cannot argue with money in the Bank.

[tradesurfer]

The commercials tend to be early right ? Even if they are heavily shirt something right now it may take weeks for it to lead to a price move .

If the commercials are shirt the spx then we need technical confirmation

[colion]

The commercials tend to be early right ? Even if they are heavily shirt something right now it may take weeks for it to lead to a price move .

If the commercials are shirt the spx then we need technical confirmation

 

Agree.  COT is just another indicator and in my world no indicator is used in a vacuum by itself.

[Spectacular Bid]

Hi Guys  I was traveling to the Dominican and just saw this. Dividing the ES shorts by 5 and adding to the S&P shorts I get about 50,000 to the short side. That total as far as I can tell is the largest combined total in a long time. The NQ commercial shorts were at just over 80,000 and were over 140,000 short a few months ago and this is not divided by 5. It's only one indicator and nothing more. The market seems to be acting a little tired and that combined with the increase in the combined ES & S&P commercial shorts, I thought was noteworthy. I could be completely wrong. Just trying to share what I thought was useful information. Best of luck to all. 

[alexnewbee]

Thks Bid

Edited by alexnewbee, 19 March 2017 - 01:32 PM.