Saturday 3 November 2007

Commitment of Traders Update

Apologies for not posting recently - I'm traveling with my wife in France, Italy and Egypt for a month. Anyway, here are the latest Commitment of Traders charts.

Commitment of Traders Image

Commitment of Traders at +4.9%

Professionals have been slowly unwinding their long positions from the peak 2 months ago. However, they still remain bullish overall with the net professional position being +4.9% of total open interest in all stock index futures. This is down 0.3% from the previous week.

Commitment of Traders Oscillator Image

Commitment of Traders Oscillator at -27

The Commitment of Traders Oscillator is now below zero and reached -27 this week. This is down from a reading of -12 last week. We have now confirmed the high of the last upswing was 4 weeks ago. This high point is marked with a red dot on the chart above. As you can see the COT Oscillator did quite a nice job of signaling a peak in the market with an over-bought reading above +80.

The COT Oscillator has now crossed into the buy zone. But is it time to go long? We have had a few positive signs:

Friday's high volume and relatively small range was a Stopping Volume pattern
The Hilbert Sine Wave shows a cyclical low was made on Friday in the 135 minute time frame (my primary time frame for swing trading)
Possible Triple Bottom at 1,500 with this level providing resistance on 22 and 24 October and again today

Remember, the COT Oscillator is a longer term Emini indicator and designed to highlight broad trends. The Commitment of Traders Report data is collected after the close on Tuesday each week and then published after the close on Friday. Click here for a full explanation of this Commitment of Traders analysis.