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Buzz & Banter



Quiet day, doing a ton of reading. Just want to point out, if you pull up the GP chart of, say, the SPX, how much "work" the index has been doing over the last two months yet has made successively lower highs (and lower lows I might add).

Two mechanisms may be at work: weak hands selling to strong hands (bullish) or strong hands selling to weak ones (bearish). Impossible to say for sure which one is taking place but today's CFTC commitment of traders data (3:30 pm ET release here) should help us understand which one it is on the margin.

It has shows, particularly for the NDX, but of late too for the SPX, an historic net short position by commercial traders and, not surprisingly (since someone has to be taking the other side of that trade), a near record long position by small traders.

These data aren't perfect timing indicators but rather, like Kevin's work, show a skewed risk/reward for long positions, as the commercials have a much better track record of recognizing intermediate term moves.

So there's at least one data point that suggests strong hands are selling to weak ones. I encourage you to check out the data when it becomes available at 3:30 ET.

Position in NDX

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