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What he says about the commercials being overwhelmingly short is correct
... they have been so for a number of months. As indicated here
previously, I expect a good rally but I don't expect a new bull market
and as far as I am concerned the NASDAQ remains in a bear market until
it proves it is not.
Earl
----- Original Message -----
From: <ericrogers@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Monday, October 30, 2000 3:14 PM
Subject: [RT] C of T
> The following is an excerpt from an email from Crash Proof Advisors.
> Does anyone follow the S&P Commitment of Traders data?
> If so, any comments on his opinion below?
>
> Norman E.
>
>
>
> Good Evening, Sunday October 29, 2000
>
> It's been quite a while since I've sent out an update to
> all of my past subscribers. We are at, what I feel will
> prove to be the most important market juncture, for many
> years to come. As October comes to a close we once again
> are hearing that November will bring back the Bull. My feeling is
> that nothing could be further from the truth. I feel that we have
> entered a multi year bear market that could be the most sever
> since the 1929 bear. I could point to a multitude of reasons but
> thought it best to focus on one that I feel is the most graphic
reason,
> as well as one of the most important.
>
> I follow a statistic called the S&P Commitment of Traders data.
Basically
> this is a report that shows the number of S&P futures contracts that
are held,
> long or short, by Commercial Hedgers (smart money) and small
speculators (the
> public). This has never been a short term indicator but more a long
term indicator.
> Currently the Commercial hedgers are short a record 66,352 contracts
while the
> speculators are long a record 55,273. Both groups have been increasing
their
> respective positions as the market has declined. This is important
because
> the commercials normally short into strength and buy into weakness.
Just the
> opposite has been happening. By contrast, in 1994 with the S&P around
400
> the commercials were net long over 100,000 contracts while the
speculators were
> net short about 50,000 contracts. At the bottom in October 98 the
commercials
> were net long 20,000 contracts while the speculators were short. The
most interesting
> thing about the data is that the commercials and the public were both
net
> long
> through out the 1100 point rise in the S&P's. The massive divergence
that we currently
> have is the first major divergence since the 1994 bottom. The point is
that this
> data should not be taken lightly.
>
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