Apr 02 2008
Another Trap for the Small Stock Market Traders
The question for today is are we going to see a reversal as we have done each of the last few weeks after a strong rally?
This pattern has actually presented an interesting little side pattern in the Commitment of Traders report. You see, generally speaking the small traders (AKA the public) are wrong at the worst possible times. Every time of late they’ve gotten themselves really long they have been burned. In the report covering March 25th (last Tuesday), the Small Speculators in the mini S&P contract jumped up to 65% long from 52% long the week before. Now, that’s not the 69% we saw a bit further back in time, but it’s close.
The funny thing about it is that Monday/Tuesday last week were when the highs got put in. Basically, that range breakout sucked the small players in on the long side, then the market sold off for the rest of the week. Yesterday we had another break higher. Did we suck some more unfortunately small long players in again? Or will things actually stick this time?
Only time will tell, of course.
Here are some other posts which might interest you:
