9 replies to this topic

[rkd80]

Small specs are more bullish...by 1%
Commercials are the same at 50% but have started to short more.
Large specs went from 49% to 46% bullish - but xD says these guys are just trend following dumb money.

http://www.softwaren...t/charts/SP.png

[89S10]

Did I miss the conclusion?

[rkd80]

Did I miss the conclusion?

conclusion:
dumb money is buying more
smart money: selling more

stay out of smart money's way?

[A-ha]

Large Specs are trend followers and they are usually wrong at the reversal points. But sometimes they are not. (usually they get caught long at the top and short at the bottom since they are trend followers) Commercials are trend makers and they are usually right at the reversal points. (They go short at the top, buy at the bottom) What you want to watch is a big change in commercials' position. For example if they have been short the market for a while, and if they significantly increased their position recently, it is likely that the market will reverse soon. According to this week's COT, commercials shorted more, small specs bot more. Thats bearish. Recent action in Equity PC also confirms small retail investor sentiment... they are getting seriously bullish

Edited by xD&Cox, 15 June 2007 - 03:58 PM.

[rkd80]

Right on, so at this point for the past two weeks this has been the trend. Studying their past behavior, my guess is that this trend will probably continue as it's highly uncommon to see commercials dramatically change their stance unless something happens in the market. So whether we start a big sell off or not, we will probably see more shorting commercials and more buying small specs by end of next week.

To add on to xD's sentiment statement, I showed a link yesterday from Investor's Intelligence and the bullish % there is 56%+ which is generally where the market tends to top out. It's not a timing tool, but something to keep in mind.

Large Specs are trend followers and they are usually wrong at the reversal points. But sometimes they are not. (usually they get caught long at the top and short at the bottom since they are trend followers)

Commercials are trend makers and they are usually right at the reversal points. (They go short at the top, buy at the bottom)

What you want to watch is a big change in commercials' position. For example if they have been short the market for a while, and if they significantly increased their position recently, it is likely that the market will reverse soon.

According to this week's COT, commercials shorted more, small specs bot more. Thats bearish.

Recent action in Equity PC also confirms small retail investor sentiment... they are getting seriously bullish

[Mr Dev]

Here's today's conclusion ..

[Gary Smith]

Small specs are more bullish...by 1%
Commercials are the same at 50% but have started to short more.
Large specs went from 49% to 46% bullish - but xD says these guys are just trend following dumb money.

http://www.softwaren...t/charts/SP.png

In the 80s and 90s as the market ticked higher and higher during what many consider the greatest bull market of all time the large specs remained resolutely bearish. In fact, you could count on one hand how many times the large specs were net long. And when the market took off in 2003, the large specs remained net short throughout the run from under 800 in the S&P to 1150. In bull markets the large specs tend to be counter trend traders against the bull trend while in bear markets they tend to do the opposite and trade with the bearish trend. There are a few exceptions the most recent being where the large specs were trading the bullish trend off the summer 06 lows. A dream scenario if you are long is when the large specs and small specs are net short and the commercials net long in the large S&P contract.

[rkd80]

so Xd is correct then, the large spec might as well be dumb money. then i guess them buying last week is not encouraging

Small specs are more bullish...by 1%
Commercials are the same at 50% but have started to short more.
Large specs went from 49% to 46% bullish - but xD says these guys are just trend following dumb money.

http://www.softwaren...t/charts/SP.png

In the 80s and 90s as the market ticked higher and higher during what many consider the greatest bull market of all time the large specs remained resolutely bearish. In fact, you could count on one hand how many times the large specs were net long. And when the market took off in 2003, the large specs remained net short throughout the run from under 800 in the S&P to 1150. In bull markets the large specs tend to be counter trend traders against the bull trend while in bear markets they tend to do the opposite and trade with the bearish trend. There are a few exceptions the most recent being where the large specs were trading the bullish trend off the summer 06 lows. A dream scenario if you are long is when the large specs and small specs are net short and the commercials net long in the large S&P contract.

[Vector]

my COT indicator is extremely bullish right now...at levels indicative of a major bottom perhaps its broken this time, like the market is broken

[danzman]

My COT work is nicely bullish still. It's been almost a full year now...11 more days! Only one thing matters for tracking the COT: Small Speculators. I could care less about the rest. I have no idea when the sell signal will come. I just keep buying. D