Where is the Dow & others heading in 2005?

[lemput]

what a day. great action from crude and the dow. I got 20% of my position out at the lows of the day, and was hoping for a close right at the lows. I was a bit surprised that the indices sought to lose momentum with 1/2 an hour to go. Thoughts on tomorrow and friday? will the witching on everything be mostly played out or will be there more volatility in store?

I think we may do very little tomorrow or bounce but i would not be surprised to see us finish the weeks at the lows, I am watching 1183 on the S&P as key, I guess about 10580-590(My exit points!) on the Dow. That will probably hold though! The trendline is definately busted so we will have to see if the bulls can resurrect their challenge. I reluctantly agree with Tradesmart though when he says that we probably have more work to do on the upside.

'The reports of my death have been greatly exaggerated'- Mark Twain

 

[counter_violent]

I reluctantly agree with Tradesmart though when he says that we probably have more work to do on the upside.

😱 Is there anything you would like us to know TS ? 😉

 

[kriesau]

Crude Futures at $57.03 this morning - where does that leave the Dow today ?
Will it test support at 10600 and bounce or will it break through and see 10550 ?

 

[User]

I think its due a bounce today and its at 10650ish at the moment.

We could test 10700 but would most probably fail that area should we touch it. I can see a close above 10650. Can't see us closing below 10600 today. That what be too much too soon. Also a few of the indicators are suggesting short term oversold.

 

[kriesau]

I think its due a bounce today and its at 10650ish at the moment.

We could test 10700 but would most probably fail that area should we touch it. I can see a close above 10650. Can't see us closing below 10600 today. That what be too much too soon. Also a few of the indicators are suggesting short term oversold.

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You may be right but I'm short at 10645. :!:

 

[roguetrader]

We have a swing low at 10608 from 23 feb, breach of that would be an ominous sign imho, similarly SPX is within about 4 poinst of it's swing low, and Naz is within 7 points of its Jan low, so I also suspect a bounce is in order.

 

[peterpr]

When we hit 10K if you look at the chart of short positions held at that time in relation to the commercial hedgers then you can see that they had the lowest number of shorts in the last five years.
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I think you're putting far to much emphasis on the COT's report. There is also unresolved confusion over interpreation as well. (see earlier posts)

The chart you show appears to be for SHORT positions only. Whereas the important information is the size of the NET position for each category. The large commercials firms (as defined by CFTC regulations) with open positions on the DOW and S%P contracts, both mini and regular in last week's report numbered about 150. Large spec firms were about 300 with the balance of positions held by those not required to report - ie the small guy's - you and me.

We do not know how many of them held short positions, but we DO know that some of them (possibly even most of them!) held long positions. As I pointed out earlier, it is the NET position of each category that tells the story and the story is much less one-sided than your post indicates.

For example, the Commercials were net LONG on the YM contract on Friday, Net short on the DJ contract, and net short on both S&P contracts - but not dramatically so - and less so than in the past few weeks.

Also the categories are not so clear cut as you seem to suggest - in fact they're pretty arbitrary (see http://www.softwarenorth.com/trading/commitmentscurrent/cotnote.html ) and I have no doubt - from experience - that there's a lot of water muddying going on as between both categories and their respective positions on a whole range of equities contracts.

The basic NET position charts are available from http://www.softwarenorth.com/trading/commitmentscurrent/
The CSV data underlying them - containing both long and short positions is available from the same source on subscription. I look at the lot evey week but find them most useful for Gold and Silver where there is real and very obvious manipulation going on and where you can see exactly what the pros are up to - (reluctant to broadcast that too widely as it's been a nice little earner but getting so long-in-the-tooth now that I guess it will end soon)

 

[User]

Peterpr lets agree on one thing.

You have a chart of the Dow Jones.

Lets say we're both using daily bars.

Now lets also assume that we are using technical analysis and drawing trend lines etc

Now lets both agree on the fact that we could easily interpret the chart in two very different ways in relations to one's analysis.

Agreed?

Each investor could draw totally different trend lines, spot totally different patterns and could arrive at a conclusion that conflicts the person on the other side. Hence the make up of a 'market'.

Back to the chart I posted of Short positions for the Dow Jones. Analyse it in the way you want that is fine.

If commercial power wanted to take the market to 11,000 then it easily could of done so. My interpretation is the commercials accumulated short positions while other investors were all going long in anticipation for 11,000+ and even calling for 12,000-13,000.

Yes I think the current positions the chart is showing me in relation too 2000 is very significant. Just think how we dropped from those highs in 2000? So bearing this simple analysis in mind, it should be enough to make people realise that longs are dangerous unless they think the declines from year 2000 weren't vigorous enough.

Just my views....

 

[lemput]

i think we will test lower, we have not got to the point where we are totally oversold, we should at least have a look at the 1183 level on the S&p today. crude at 57.40 wow! the may contract is even tighter-$58.

 

[User]

Lemput Crude prices rising is certainly a wow on my behalf aswell!

Some good upmoves. But its been quite volatile!

 

[orky]

wallstreetcourier.com

I obtained the data from Wallstreetcourier.com. It is very useful to know this information.

User

Do you subcribe to them and if so has it been useful

Orky

 

[User]

Yes I have subscribed to them. Don't ask me how I came accross them. Yes its always interesting to know this sort of data in my opinion. Its great to see these sort of charts. It costs $59 for six months which I feel is peanuts as the information they provide is great. They also show other charts and then weigh the situation up on a techinical bases.

 

[peterpr]

Peterpr lets agree on one thing. <snip>

Sorry, but you made a pretty strong forecast - apparently based largely on that chart. I happen broadly to agree with that forecast, but the COT's reports are pretty slender justification for it - and that shorts-only chart, by itself, is no evidence at all.

Too often people cast about for 'evidence' that will justify and/or strengthen their already held view - we all do it in fact (I certainly do, but I try to be ruthless with myself in acknowledging it). I suggest that's what's happening with that chart of yours. It's like saying that one side won an election because they got X votes but totally ignoring the votes of the opposition.

It is not a case of 'analysis of the chart' at all. My contention is that, in isolation the chart is MEANINGLESS because, without taking the opposite positions of each category into account, their respective net position could in fact be the exact opposite of those shown.

In reality they were not, but they were/are certainly far less one-sided than you suggest. That is not a matter of analysis or interpretation. It is a matter of fact.

 

[peterpr]

I reluctantly agree with Tradesmart though when he says that we probably have more work to do on the upside.

TS is a 'She' - and proud of it - quite right too! She could probably teach most of us MCP's a thing or two as well - unless I miss my guess. 🙂

 

[User]

The opposite chart would be opposite to what your are seeing on the shorts chart. It would just be vice versa.

Peterpr I am not basing my whole argument on one chart and please do not question my inteligence by branding that chart as 'meaningless'.

That chart was simply posted so that others can have a glance. It takes my time and effort to post charts that I feel can be shared with others so that some 'newbies' can benefit.

You can come to whatever conclusion you like and that may comprise of 'facts' but my interpretation is not really being changed by what you are stating.

I am sorry for the confusion created by the chart lets just set it aside as it seems your a little slighted by it.

Good luck

 

[frugi]

Peterpr - And I'm a small knitted creature with a long pink nose - look, it says so in my profile 🙂

No seriously, I would hazard a guess that yesterday's gap will be filled today or Friday before more down side, unless it's one of those ultra rare breakaway gaps that doesn't get filled for aeons. Thanks TS for that gap article link by the way. Either way, options expiry on Friday (is it quad witching?) should preclude any capitulation style moves in either direction. The traditional volatility associated with op ex would be a perfect backdrop to quickly test the gap and then continue down, allowing the big option players to book profits at both ends of a 200 odd point range. Possibly.

 

[roguetrader]

TS is a 'She' - and proud of it - quite right too! She could probably teach most of us MCP's a thing or two as well - unless I miss my guess. 🙂

He / she? Who cares, the better question is, is she a bull, a bear, or just a very balanced trader. Unfortunately for me I am a bit of a bear and always have to fight that to see the bullish side 😀

 

[User]

Long at 10611 as 10600 should provide support bearing in mind that no other level has provided any support from the highs as of yet.

Also it could get a bounce as it is a little oversold so far.

 

[peterpr]

Hey there - take it easy.

1. I'm not questioning anybody's intelligence.
2. Neither am I trying to change anybody's mind.
3. Neither did I suggest you were basing your whole argument on it - just that you did not 'simply post it' but made a forceful argument based on it.
4. Neither do I feel slighted by anything.

Having got the extraneous stuff out of the way you say:

The opposite chart would be opposite to what your are seeing on the shorts chart. It would just be vice versa.

No it wouldn't. It would show a line for each category representing their respective long positions and until you view it you can have absolutely no idea whatsoever what it will look like. It is categorically NOT the mirror image of the shorts-only graph (if that is what you are suggesting).

The more rational and useful approach would be to show just one graph with lines representing the values of longs minus shorts around a zero line axis. That way you would know what the real position of each category is rather than 'counting the votes of just one party' so to speak (you know "The shorts have it because we're not going to count the Longs votes" - that kind of thing)

I won't be returning to this subject unless asked because frankly, if the point I am making is not clear by now, then it never will be.

 

[peterpr]

Peterpr - And I'm a small knitted creature with a long pink nose - look, it says so in my profile 🙂

Can I tickle your tummy please ? 🙂

But seriously:

.... Either way, options expiry on Friday (is it quad witching?) should preclude any capitulation style moves in either direction. The traditional volatility associated with op ex would be a perfect backdrop to quickly test the gap and then continue down, allowing the big option players to book profits at both ends of a 200 odd point range. Possibly.

Now that's what I call an astute observation