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Buzz & Banter

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Scott mentioned the Commitments of Traders information, and how it can tell us if the strong is selling to the weak or vice-versa. I watch this report very closely, and historically it has been quite accurate across a broad section of indices and commodities.

So you have some background if you pull up the info this weekend, the following is a chart of the commercial traders (strong hands) versus the small speculators (weak hands) for the past couple of years for the large S&P 500 futures contract. On the COT report, commercials are labeled "COMMERCIAL" and small speculators are "NONREPORTABLE POSITIONS". The data can be found here for free when you click on "Short Form" next to Chicago Mercantile Exchange. Just scroll down to the section for the S&P 500 Stock Index.

I look for extreme positions from either group, or sudden changes in direction or velocity, or other unusual behavior. As an example, small speculators have added to their net long position for 10 straight weeks - this is an all-time record, and to me is not encouraging.


No positions in stocks mentioned.

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