U.S. banks look like they're super-vulnerable based on Friday's Commitments of Traders data, as I reported in Sunday's brief update. As you can see on my latest signals table, the large speculators and small traders in three-month Eurodollars have all of a sudden gotten massively bearish in their total open interest, reversing highly bullish positioning from the previous week. What about other markets? - S&P 500: In this market, the "smart money" commercial hedgers have slightly reduced their hugely bullish net position as a percentage of the total open interest, but my trading setup for this market remains on its bullish call. The commercials have maintained four straight weeks with a net position over 1.8 standard deviations above the average. They haven't been this optimistic in relation to recent data since July, when they got set up nicely for the end of a month-long trading range and the six-month rally that ended in January.
- 30-Year U.S. Treasury bond: My trading setup for bonds is in cash, but it seems like it really wants to go bearish (meaning the yield would rise). The small trader total open interest, which my setup fades, has just seen a vertiginous rise this week. The small trader signal was already bearish coming into Friday. This week, the small traders are joined by my other signal representing the large speculators, whom I also fade. Their total open interest has also shot up since the previous week, giving them a bearish signal. The setup remains in cash for now because both signals operate with delays of several weeks. But if the signals remain aligned a little while longer, the setup will go short. - Gold: Will bullion catch a bid with the rest of the market? Will it go to $3,000 - or maybe $30,000? Or $300? How anyone can predict these things is beyond me. Either way, my setup is long. This week, the COT data is looking a little shinier for gold. Going up are both the large spec total open interest and the net position relative to the open interest. Both are strongly correlated with gold prices the following week, so there's a nice chance of some strength. My portfolio page is now updated with my current positioning and results of open trades. Good luck the rest of this week! TAGS: SPX, S&P 500, gold, BKX, Bank Index, natural gas, Nikkei, crude oil, Treasury, bond, COT, Commitments of Traders,derivatives, Black Swans, market timing, trading system development, CFTC, Commodity Futures Trading Commission,COTs Timer, out-of-sample testing, walk-around testing