As I said before, the market is in great confusion right now. Will FOMC cut? By how much?
I don’t think even Bernanke knows. But --
- The 30-day Federal Funds futures:
* there is a 42% probability of a 25-basis point rate cut
* 58% probability of a 50-basis point rate cut
Be careful, rate cut has already priced in. If rate cut does not materialized, market will drop!
- Big players (commercials):
* COT chart for the Nasdaq 100 looks bullish
* COT chart for the Russell 2000 is finally starting to perk up
* The Dow Jones COT chart continues to show no signs of life
* S&P 500 COT chart, we see some commercial selling in the last two weeks, but if we look at the 3-year chart, once again this index remains at historically bullish levels in terms of its NET-commercial position.
- VIX
Commercials continue to be sellers of the VIX at the current levels. What I find interesting is that large-traders had their largest net-short position when that VIX was at yearly-highs above 30. Meanwhile commercials had a large net-long position at this exact same time. Were the large-traders right on this market, or were commercials simply hedging risk? From a classical COT setup this market looks bearish: commercials are sellers and large traders are buyers. Come Tuesday, we'll see for certain...
- Gold: Gold's price chart is very similar to oil's, in that they are both sitting just underneath record levels. The trend for gold is clearly bullish, as we broke above key resistance levels at approx. 689 & 699 and never looked back. Commercials are clearly selling into this rally, which is their typical behavior. But as long as gold holds above its support (689/699), we are either going to breakout above 730 near-term, or consolidate first & then breakout above 730. I think gold will consolidate first - before breaking out, but any-body's guess is as good as mine.
I don’t think even Bernanke knows. But --
- The 30-day Federal Funds futures:
* there is a 42% probability of a 25-basis point rate cut
* 58% probability of a 50-basis point rate cut
Be careful, rate cut has already priced in. If rate cut does not materialized, market will drop!
- Big players (commercials):
* COT chart for the Nasdaq 100 looks bullish
* COT chart for the Russell 2000 is finally starting to perk up
* The Dow Jones COT chart continues to show no signs of life
* S&P 500 COT chart, we see some commercial selling in the last two weeks, but if we look at the 3-year chart, once again this index remains at historically bullish levels in terms of its NET-commercial position.
- VIX
Commercials continue to be sellers of the VIX at the current levels. What I find interesting is that large-traders had their largest net-short position when that VIX was at yearly-highs above 30. Meanwhile commercials had a large net-long position at this exact same time. Were the large-traders right on this market, or were commercials simply hedging risk? From a classical COT setup this market looks bearish: commercials are sellers and large traders are buyers. Come Tuesday, we'll see for certain...
- Gold: Gold's price chart is very similar to oil's, in that they are both sitting just underneath record levels. The trend for gold is clearly bullish, as we broke above key resistance levels at approx. 689 & 699 and never looked back. Commercials are clearly selling into this rally, which is their typical behavior. But as long as gold holds above its support (689/699), we are either going to breakout above 730 near-term, or consolidate first & then breakout above 730. I think gold will consolidate first - before breaking out, but any-body's guess is as good as mine.
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