Aug 04 2009
COT Data Suggests More Stock Gains May Be Coming
I’ve been following the Commitment of Traders data for some time now, finding it to be a very useful indication of when markets may be getting ready to turn, and when they are not. I particularly like to keep an eye on the Small Specs in the mini S&P 500 futures, which is what the graph below from www.commitmentoftraders.com depicts.
The yellow bars are the Small Specs. They are basically the retail market, by and large. That tends to be the group that gets it wrong the most, so watching what they are doing provides some perspective of things in the stock market. In other words, when the yellow bars are above the zero line, especailly way above, stocks probably are not going higher, and vice versa.
The table of how the different groups are positioned provides a bit more detail. As you can see, the Small Specs are currently 58% short (42% long), having been as much as 67% short recently – all while stocks have been rising.
It’s rather cynical, I know, but I’ll start worrying about the market turning down when the Small Specs flip to long.
Here are some other posts which might interest you:
