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It seems the little game the market is playing these days is to woosh downward at the day's opening (which, in my opinion, is the "natural" market trying to show itself) and then spend the rest of the day getting POMO'd into heaven again. It's annoying, to say the least.
I'm looking forward to the day when the "woosh" stays put. It isn't happening yet.
In reviewing some charts for the writing of my weekly newsletter (comes out early Sunday evening) … I have been struck by the change in the relative performance of the small cap index (Russell 2000) and in particular, several individual small cap stocks. The example I am going to illustrate for you in the blog tonight is the difference between FCX and SCCO.
Normally the COT report comes out every Friday for the prior week ending on Tuesday but with the holidays of late the reports have been coming out on Monday, hence the double COT report this week. In the prior post I mentioned how it looked like based on commercial traders positions in oil, copper and the long bond that the SPX could in fact be ready to turn here. The data still supports that as shown in the following charts:
Chart 1 – 30 Year Treasury Price VS 30 Year Commercial Net Position
Traders continue to main a more short position implying coming bond strength (higher price lower yield). Check out Chart 2 below for a comparison on S&P 500 VS 30 Year Bond Yield.
Chart 2 – 30 Year Treasury Yield VS S&P 500
Chart 3 – S&P 500 VS Copper Commercial Net Position
Copper correlates very closely as shown in last week's charts with the SPX. Looks like commercial traders are continuing to trade around lower copper prices or at least less strength.
Chart 4 – S&P 500 VS Oil Commercial Net Position
Oil correlates nicely with the SPX although lately not as well as copper. Regardless, similar to the position in copper, commercial traders look to be positioned around coming oil weakness.
Chart 5 – S&P 500 VS S&P500 Consolidated Commercial Net Positions
Honestly, not sure how much you can read into week to week changes here but the charts do somewhat correlate. What's standing out is the broad divergence right now. Would imply SPX weakness.
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My only long position right now is FXE (the Euro/USD fund). It seems to be low enough within its Fibonacci retracement to warrant a long position, which I established strictly as a hedge. I am far more enthusiastic about my equity shorts.
