Saturday 13 January 2007

Commitment of Traders

Here are the latest Commitment of Traders charts for Emini traders:

Emini Commitment of Traders Image

This week's Commitment of Traders reading is -9.2%

Professional net short positions now make up 9.2% of total open interest in all stock index futures. This is an increase in short positions of 0.6% from last week.

Emini Commitment of Traders Oscillator Image            Cyan (light blue) dot = Low turning point; Red dot = High turning point

This week's Commitment of Traders Oscillator reading is -28

The oscillator has turned down this week and dropped from +24 to -28. This drop below the zero line allows us to confirm the top of the last upswing at 1,444.25 made during the week of 15 December 2006.

We now have a very unusual situation with the weekly close above last week's high and the oscillator dropping into the "look for long trades" zone. Remember, long signals are triggered after the oscillator has crossed below the dotted zero line and started to turn up.

Historically whenever the close is above last week's close and the oscillator has just fallen below the zero line, a rally follows. Maybe not for long - but it is a bullish sign. I call this pattern a "SnapBack" as I'm expecting the Commitment of Traders Oscillator to quickly snap back above the zero line. Examples of this pattern are shown on the chart below. Text below the weekly Emini bars is bullish; text above the bars is bearish. Based on this analysis, we could see the current rally from 1,412 continue and the market put in a final Elliott wave 5.

Emini Snap Back Image               Snap text below bar = Bullish; Snap text above bar = Bearish

Click here for a full explanation of this Commitment of Traders analysis.

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