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Minyan Mailbag - Futures Positions in Dow and NDX

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Maybe I should be smiling?

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

Jason,

I was wondering if you have any opinions/ideas about the recent drop in commercial hedger positions in the DJIA and NAS100?

The drop {in} their (commercial hedgers) DJIA positions has taken an unprecedented nose dive. Also the small speculators have completely loaded up in the NAS100.

Minyan Matt

Matt,

Commercial traders in the Dow futures contracts have, indeed, quickly gone to a net short position lately (see chart below). They are now the most net short, in nominal dollar terms, than any other time save for very early in 2001. Their timing then was notable since the Dow went on to a sharp decline not long afterwards.

As for the small specs in the NDX contract, I wouldn't read much (if anything) into it. I have not been able to make that data "work" consistently in any manner and would have to question any conclusion based on it.

One thing that must be noted here is that the CFTC has recently changed the contract limits for what constitutes a large trader in the Dow and NDX contracts. Previously, the trader had to hold only 100 contracts, now it is 200. So, we are dealing with a potentially different set of traders when looking at this data than we were previously.

Jason

No positions in stocks mentioned.

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