Saturday 14 July 2007

Commitment of Traders - When to follow the Professionals

Emini Commitment of Traders Image

This week's Commitment of Traders reading is +7.6%

Professionals are net long and their net long positions make up 7.6% of total open interest in all stock index futures. This is another increase of 1.3% from last week.

Last week we said that "this level of bullishness by Professionals suggests any downturn in the market will be shallow and short lived." And it was. Tuesday's fall this week was quickly wiped out and the market rebounded almost 50 points by the end of the week. It's uncanny how well the COT data alone is forecasting market direction.

Note: Commitment of Traders data is collected after the close on Tuesday each week and then published after the close on Friday. On the chart below: Light blue dot = Low turning point; Red dot = High turning point.

Emini Commitment of Traders Oscillator Image

This week's Commitment of Traders Oscillator reading is 0

The COT Oscillator rose this week from -56 to 0. We have been looking for the next long entry signal and the move to zero this week confirms the best long entry was 2 weeks ago. The Emini remains over-bought and we've seen distribution above 1,560. Let's see if any market weakness early in the week brings back more bullish volume.

Remember, this is a longer term Emini indicator and designed to highlight broad trends. Click here for a full explanation of this Commitment of Traders analysis.

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