Saturday 4 October 2008

Commitment of Traders and Ban on Short Selling

The latest Commitment of Traders data shows short sellers may have moved to the futures market to take positions. Check out the COT chart below.

Emini Commitment of Traders Image

Commitment of Traders: Professionals -4.3% (short)

Over the last two weeks the Commitment of Traders Report shows Professionals are now net short over 4% of total open interest (SP large contract). This was a pretty big change from the almost zero level of the previous month and coincides with the ban on short selling of Financial stocks. My conclusion is that at least some of this additional short exposure is the result of hedge funds and Professionals moving to the futures market to take short positions.

Emini Commitment of Traders Oscillator Image

Commitment of Traders: Oscillator -43

The Commitment of Traders Oscillator has turned up and reached -43 this week. We're making higher lows in the Oscillator and lower lows in the Emini - a bullish divergence setup. The Professionals are still net short but we could be reaching over-sold levels and a short covering rally could be just around the corner.

The Commitment of Traders data is collected weekly after the close on Tuesday and the Commitment of Traders Report is published after the close on Friday. Follow this link to a feature article with a full explanation of this Commitment of Traders analysis.

Emini trading articles filed under Commitment of Traders :